President Barack Obama presents his economic plan for America

President Barack Obama on Monday laid out his proposed 2013 budget with a focus on spending on growth and taxing the rich. This spending proposal seems to be aimed at the voters as it brings into focus the major theme of this re-election campaign of “Economic Fairness”. The Republicans on the campaign trail and the Congress have criticized this proposal for not doing enough to bring down the deficit or curb spending.

Though this budget proposal is expected to go nowhere in the divided Congress just as the spending proposal President Obama presented last year, it is a way for the President to draw the public’s mind away from the terrible state of the economy towards a more hopeful future where most of the spending focuses on projects to rebuild America and job creation. This budget proposes a minimum 30% tax on Millionaires, and increasing the taxes on dividends to the level of their income tax instead of the current 15%. He is also proposing that the Bush era tax breaks be allowed to expire, which would result in some people being taxed at as much as 40%. The $3.8 trillion budget calls for more than $800 billion to be used for job creation and infrastructure investment on projects such as building roads, railways and schools and sets aside money to hire more firefighters, police officers and teachers.  He proposes cutting spending on defense by$487 billion.

The budget deficit will which is projected at $1.33 trillion in fiscal 2012,(staying over the $1 trillion mark for a fourth year) or 8.5 percent of gross domestic product  is expected to fall to $901 billion in 2013, or 5.5 percent of GDP. This is an improvement but is still unacceptably high according to financial analysts. They feel that this budget does not address any of the warnings given when S&P cut the United State’s AAA credit rating.

The Republicans have also come down heavily on this budget calling it a tax and spend proposal that is seeking to white wash failed policies of the past three years and would be bad for the economy. They feel that this is a time to cut expenditure and reduce the size of the government. But the Obama administration feels that the country is in sight of a recovery and it is imperative not to cut spending too drastically so that the recovery remains on track.

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