Obama also wants to enact a "buffet rule" which would "make sure that people earning more than $1 million paid their "fair share" of federal tax -- which he defined as a minimum of 30%."Obama also wants to raise taxes on cigarettes and other tobacco products Specifically, it "would raise the federal tax on cigarettes by 94 cents to $1.95 per pack. The White House estimates the tax hike would raise $78.1 billion."With this extra money, he plans to expand pre-kindergarten education.
Obama also wants changed the way inflation is measured. He plans on doing this by switching to chained CPI (Consumer Price Index). The chained CPI is "a new way to measure inflation that would reduce projected federal spending by slowing the growth in federal benefits that are annually adjusted for cost of living. Those include Social Security benefits."
He also plans to cut the deficit by 1.8 trillion. Around 600 billion is estimated to come from new revenue. Specifically from the "buffet rule". The other 1.2 trillion is expected to come from spending cuts. $200 billion from defense,"$400 billion from Medicare and other federal health programs in ways that largely affect hospitals and drug companies. And $600 billion in cuts affecting non-health spending on things like agricultural subsidies and unemployment insurance."
What do you think of Obama's Budget Plan?
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4 comments:
The first thing that stuck out to me is the increase in cigarette tax. Ironically, Mr. Silton talked about cigarette taxes in class today, and what he said about it was scary. The goal of new taxes is usually to tax the rich and tax the middle and poor people softly. Well cigarettes are usually not bought by the wealthy, but by middle and lower class citizens. They don't have "any class." Rich people will usually buy something such as cigars or pipe if they smoke. So, this cigarette tax actually will cause the lower classes to suffer. I'm for it though, a tobacco free country is good for people who don't smoke.
For the "buffet rule" they are already supposedly paying around 30%, but they abuse swiss banks and other places to avoid taxes. So, what Obama wants to do is make sure they don't outsource their money correct? I'm not sure what that actually means and am kind of boggled by it. However, after writing my last research paper, I'm skeptical of anything can really help the economy. I say let it recover by itself or start World War III if Obama is that desparate.
1.8 trillion in deficit cuts is quite the tall order. While the "buffet rule" seems logical and prudent, how much in budget cuts could medicare and other federal health programs take? Earlier this week in class, Mr. Silton explained how Medicare/health programs were already monetarily stretched. With even more cuts placed under this category, future generations face being dealt a much harder hand than our current situation.
I believe that Obama's goal is quite ambitious, but even more necessary. It is paramount that we manage to shrink the national deficit, while continuing to maintain current standards of governmental aid. Therein, this predicament is quite stagnated by multitudes of factors; I see what Bruce is saying. I agree for the most part, barring the WWIII.
As Bruce said before, the cigarette tax is indeed a regressive tax. I suppose this is because normal old cigarettes aren't considered "classy." However, as Mr. Silton coincidentally (not ironically)said today, in the past, too much of a tax on cigarettes did start hurting federal income gain rather than hurting it. It seems to me that almost doubling the tax might be counterproductive. That is a large change in a short time, making it much more noticeable to cigarette consumers. If the government really wants to increase the tax to such a great degree, smaller, more segmented increases would probably yield better results. Of course, the tax could still work out fine--no one can really know how these policies will work for certain without trying.
On a side note, I would just like to point out that there is again more favoritism going towards the military with the spending cuts. I am not exactly one to say where money should go, but it is very likely that there might be some public dissatisfaction with the distribution of the cuts. Of course, on the other hand, others will be perfectly happy that the military is retaining priority. Especially if there's going to be a World War III, eh? Gotta keep that army strong, just in case the economy needs some fixin'!
Well, it is always good to know that President Obama is making an effort to fix our deficit problem. I think increasing taxes for high income households can be beneficial as long as the government makes efficient use of the revenue. Still, we shouldn't pretend that throwing money at a problem will automatically solve the problem. Stimulating the economy has been shown to work in the past of course, but it depends on whether the president increases spending in the right areas.
I think the wealthy can take a higher tax (though the Gallup poll seems split) considering tax rates aren't exactly as high as they used to be. They probably won't be feeling less incentive to work either (Laffer Curve aside). However, I agree with Bruce that the cigarette tax would be more likely to affect the poor than the wealthy since it's a regressive tax. I cannot complain if it convinces more people to stop smoking though.
I'm not sure how changing the way inflation is measured would work out in the long-run. But if it cuts the budget by 1.8 trillion, I'm all for it. Unfortunately for the programs suffering cuts, they will have to make do with the situation since the deficit is a serious problem. But as we recently learned, it's not like defense is severely lacking when it comes to governmental aid.
In conclusion, I hope Obama's plan works out for the best. Tax rates on the wealthy shouldn't be an issue. As Patrick McHenry said: "Marginal tax rates are the lowest they've been in generations, and all we can talk about is tax cuts.
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