President Obama’s budget proposal: is it really a Godsend for the 99%?!

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President Obama's budget proposal for 2012President Obama is looking like a progressive and talking like a progressive, but is he walking like a progressive? His recent budget proposal, at first glance, may appear so; and in some respects, it even had the makings of a progressive plan that the American public desires as evident from a number of recent polls. Our country is fundamentally progressive: it wants to raise taxes on the wealthy; it wants to cut back defense spending; it wants to bring our troops home; it wants to balance our budget; and it wants to preserve social security and medicare. But is the budget of the President really reflective of the progressive position of a majority of Americans? Let’s look at the dirty details.

First off, the President is proposing $2.50 in spending cuts for every $1.00 in taxes raised on people making $250,000 or more. I don’t think this is anything to brag about if I were supposedly a progressive President proposing a budget to accommodate 99% of the citizens of the United States. In essence, Barack Obama is saying to the rich, Corporate America, and Republicans, “don’t worry, I am going to hit the middle class much harder than I hit the rich”. President Obama appears to be appealing to Republicans to assure them that he is really cutting spending for the middle class and the poor.

President Obama's budget proposal's largest cutsLooking at the cuts, we see that defense is being cut by $487 billion. Although this is good news, this cut is a little bit misleading since the troops are being withdrawn from Iraq and Afghanistan, and such actions are already reducing defense spending.

But medicare is being cut by $360 billion, which the Republicans will use against him, even though they had pushed for larger cuts.  And this cut will hurt the lower and middle classes; it is certainly not in their interests and is not progressive but quite conservative, if not regressive.

There is some great news, however:  farm subsidies are being cut by $278 billion.  Farm subsidies are a total waste of spending, the epitome of crony capitalism, benefitting largely the big agricultural conglomerates.

President Obama's budgeted spending plan 2012Now regarding the spending plan, there is some good news here: $30 billion to modernize schools; $30 billion to hire more teachers, police, and firefighters; $140.8 billion for research and development; and $476 billion for a transportation system, that has huge issues, but at least, it is a step toward reinvestment in our country.

President Obama's $1.5 trillion tax increasesNow how much will Obama’s budget proposal get from the rich in terms of tax reform? $1.5 trillion. The President is cutting $4 trillion overall from our deficits and national debt, so only $1.5 trillion will come from tax increases, whereas the other $2.5 trillion will come from cuts in spending. That is not good news.  If the budget were progressive, the ratio would at least be reverse, raising at a minimum $2.5 trillion from tax increases, with no more than $1.5 trillion from cuts in spending.

President Obama's dividend tax increaseBut at least taxes are finally going up for the rich, and this was needed long ago. For dividend income, which has been taxed at 15% under the current capital gains tax rate, it will be taxed up to 39.6% for those in the top bracket earning over $250,000 and filing jointly as a married couple and $200,000 for those filing individually. This alone is expected to raise $206.4 billion over the next ten years. That would be great; however, the Republicans will fight Obama tooth and nail on that proposal.

President Obama's corporate tax cutsSo what’s the catch? Of course, knowing how much of a Wall Streeter Obama is by now, there must be a catch; and, of course, there is.  President Obama is considering lowering corporate taxes!  But why would the President lower corporate taxes when we have a deficit problem?  Why cut medicare in order to lower corporate taxes for the 1%?  Why is Obama cutting $2.5 trillion from spending but lowering corporate taxes when our national debt and our annual deficits are at record levels?  The answer is obvious.  Obama is promising the business community giant tax cuts in order to get re-elected, that’s why.  He needs the corporate contributions for his campaign for the Presidency.  He needs to raise $1 billion in order to win the election in 2012.  So he needs to offer something to his primary donors, the Wall Streeters.

Our system is fundamentally broken. At a time when we are supposed to be worried about deficits and our national debt, President Obama is proposing to lower corporate taxes:  it is a gross injustice to the citizens of our country.

President Obama is always the appeaser, the Neville Chamberlain, willing to concede before the battle begins, giving more to the 1%, and less to the 99%, assuming that the majority of Americans will see this budget proposal as something that it desires, when in fact it cuts medicare and lowers corporate taxes, failing to seize an opportunity to truly cut deficits and restore equity in our tax laws.  What a sham of a budget proposal and what a wuss of a President.  Obama is Corporate America’s man in Washington, bought and paid for.

The Barefoot Accountant

About William Brighenti

William Brighenti is a Certified Public Accountant, Certified QuickBooks ProAdvisor, and Certified Business Valuation Analyst. Bill began his career in public accounting in 1979. Since then he has worked at various public accounting firms throughout Connecticut. Bill received a Master of Science in Professional Accounting degree from the University of Hartford, after attending the University of Connecticut and Central Connecticut State University for his Bachelor of Arts and Master of Arts degrees. He subsequently attended Purdue University for doctoral studies in Accounting and Quantitative Methods in Business. Bill has instructed graduate and undergraduate courses in Accounting, Auditing, and other subjects at the University of Hartford, Central Connecticut State University, Hartford State Technical College, and Purdue University. He also taught GMAT and CPA Exam Review Classes at the Stanley H. Kaplan Educational Center and at Person-Wolinsky, and is certified to teach trade-related subjects at Connecticut Vocational Technical Schools. His articles on tax and accounting have been published in several professional journals throughout the country as well as on several accounting websites. William was born and raised in New Britain, Connecticut, and served on the City's Board of Finance and Taxation as well as its City Plan Commission. In addition to the blog, Accounting and Taxes Simplified, Bill writes a blog, "The Barefoot Accountant", for the Accounting Web, a Sift Media publication.
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