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Politics

Tax Hike Planned on Oil, the Rich

WASHINGTON, DC — President Barack Obama sent Congress his eighth and final budget on Tuesday, proposing to spend a record $4.1 trillion on a number of initiatives, from a new war on cancer to combating global warming to fighting growing threats from Islamic State militants.

The new spending plan, for the budget year that begins Oct. 1 — just 3½ months before he leaves office, is facing heavy fire from Republicans who hope to capture the White House. The proposal has dim prospects of winning approval in a GOP-controlled Congress.

In all, Obama’s budget would increase taxes by $2.6 trillion over the coming decade, nearly double the $1.4 trillion in new taxes Obama sought and failed to achieve in last year’s budget.

GOP lawmakers said Obama’s proposal to impose a $10-per-barrel tax on crude oil to bring in an additional $319 billion over the next decade had no chance of winning approval in Congress. Obama’s budget would use that extra money to fund billions of dollars in alternative transportation programs as part of the president’s efforts to deal with global warming.

“President Obama will leave office having never proposed a budget that balances — ever. This isn’t even a budget so much as it is a progressive manual for growing the federal government at the expense of hardworking Americans,” said House Speaker Paul Ryan.

Ryan, R-Wis., pledged that House Republicans would produce a budget that does reach balance in coming weeks.

While Republicans insisted Obama’s budget was dead on arrival, White House officials expressed hope they could obtain bipartisan support for a number of Obama’s initiatives such as the effort to combat heroin and opioid addiction, fund a “moonshot” to find cancer cures and expand tax credits for the working poor.

Even with the increased taxes, Obama’s budget projects sharply higher deficits in coming years, totaling $9.8 trillion over the next decade. Just last summer, Obama’s baseline forecast a deficit of $8 trillion over the next decade.

Much of the problem stems from the surge in spending on the government’s big benefit programs of Social Security and Medicare, which are forecast to soar with the retirement of millions of baby boomers.

The budget sees the economy growing at a 2.6 percent rate this year, though administration officials noted that projection was finalized in November, prior to the recent stock market slide. Inflation would remain low, registering a 1.5 percent gain this year.

Obama’s new budget projects a deficit for the current 2016 budget year of $616 billion, sharply higher than the latest forecast by the Congressional Budget Office that this year’s deficit would total $544 billion.

Both projections are above the actual deficit of $438 billion recorded last year, the lowest deficit total for Obama’s presidency, a period when the deficits soared to above $1 trillion annually for four years as the government was buffeted by the worst recession in seven decades and a serious financial crisis.

Republicans have long complained that Obama has failed to attack the chief cause of future deficits, the soaring cost of entitlements. Previous Obama budgets did propose such things as slowing the automatic inflation increase for Social Security. But Obama abandoned those proposals when it became clear that Republicans were opposed to his suggestions to raise taxes on the wealthy as a way to reduce the size of the benefit cuts needed to improve the outlook for the benefit programs.

Obama’s final budget has a playbook filled with ideas sure to appeal to Democrats: A “moonshot” initiative to cure cancer; increasing Pell Grants for college students from low-income backgrounds; renewed incentives for GOP-governed states to join the expanded Medicaid system established under the health care law, and incentives to boost individual retirement accounts.

The budget also pledges to make Americans safer in an increasingly dangerous world through higher military spending to fight the Islamic State terrorist threat and increased support for cybersecurity in the wake of last summer’s hack of government computers that compromised the personal information of 21 million Americans.

The administration’s budget asks for a $19 billion increase in spending to upgrade cybersecurity across government agencies, including $3 billion for an overhaul of federal computer systems.

“These cyber threats are among the most urgent dangers to America’s economic and national security,” Obama wrote in an opinion piece Tuesday in The Wall Street Journal.

The $10-per-barrel tax hike proposal comes as the price of crude has dropped to the $30-per-barrel range.

Republicans, however, immediately rejected the idea after its release last week and it will meet the fate of previous dead-on-arrival proposals such as increasing capital gains taxes on the wealthy, imposing a fee on big banks, and cutting the value of charitable deductions for upper-income taxpayers.

The administration is again seeking to bolster funds for the Securities and Exchange Commission and the Commodity Futures Trading Commission, Wall Street regulators struggling to meet their heightened responsibilities following the 2008 financial crisis. The additional money would be used to fill obvious gaps in the agencies’ oversight of investment advisers and clearinghouses for financial products, the administration says.

Separately, Obama has proposed $1.8 billion to combat the Zika virus, asking for the money immediately as emergency spending on top of the $1.1 trillion catchall spending bill that passed in December.

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