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April 10th, 2013 
Peter Nolan
Updated
The White House has proposed a budget aimed at slashing the US deficit over three years by increasing taxes on millionaires and enacting spending cuts that went into place last month.
US president Barack Obama’s 2014 budget blueprint ensures that those making $US1 million a year or more would have to pay at least 30 per cent of their income, after gifts to charity, in taxes, officials said.
That increase, along with spending cuts and a 28 per cent cap on tax deductions for high earners, would bring the US budget deficit down to 2.8 per cent of GDP by 2016, senior administration officials told reporters.
In February, the non-partisan Congressional Budget Office projected the deficit to be 5.3 per cent of GDP this year.
Mr Obama is due to release his proposed budget in the early hours of Thursday morning (AEDT), but it stands little chance of being enacted into law.
But, despite resistance to tax increases by Republican leaders, senior administration officials say they hope it could lead to a deficit reduction accord.
“There continue to be people who are on the Republican side … in the Senate at least, who are saying things that would give you some hope that there is a path to a deal,” a senior administration official told reporters.
The president is breaking from the tradition of using the largely symbolic budget release to outline his ideal tax and spending proposals.
Instead, he is trying to relaunch talks to resolve a long-running fiscal battle with his Capitol Hill adversaries.
To do so, Mr Obama is offering a concession that has enraged many of his supporters – adopting a less generous measure of inflation to calculate cost-of-living increases for the beneficiaries of many federal programs.
One result would be diminished benefits for most recipients of the popular social security retirement program.
Although the president has pledged to shield some of the most vulnerable beneficiaries, the proposal has drawn strong opposition from Democrats and groups representing labor and the elderly.
Unlikely compromise
The White House’s budget proposal faces seemingly insurmountable opposition from Republican leaders, who reject any new tax revenues.
Mr Obama’s hope is to build a coalition of politicians willing to compromise, although most observers see that as unlikely.
He has invited 12 Republicans to dinner at the White House on Wednesday in an effort to soften resistance.
Both sides are so dug in that they were unable to prevent some $US85 billion in across-the-board “sequestration cuts” from going into effect March 1.
Mr Obama’s budget proposal would replace those cuts with his original deficit reduction proposal from December.
That offer included $US930 billion in spending reductions and some $US580 billion in tax revenues.
The president’s budget includes spending on policy priorities such as infrastructure and early childhood education.
He would pay for those programs with additional new taxes and the elimination of some tax breaks for the well-off.
The budget also includes a 10 per cent tax credit for small businesses that raise wages or hire new workers.
The president’s advisers said the budget proposal would achieve $US1.8 trillion in deficit reduction over 10 years.
Added to the $US2.5 trillion in deficit cuts from past efforts, the total would be above the $US4 trillion reduction both Republicans and the White House have said would be an acceptable goal.
The proposed budget is a clear contrast with a rival blueprint put forward by Paul Ryan, the 2012 Republican vice-presidential nominee and potential 2016 presidential candidate.
Reuters
Topics:
budget,
government-and-politics,
united-states
First posted
Source Article from http://www.abc.net.au/news/2013-04-10/obama-to-target-millionaires-in-budget/4621664
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