Bill Manzi.com

President Barack Obama yesterday presented a budget blueprint for the next fiscal year, with change coming in many different areas. Obama’s budget will likely set off a pitched battle about the priorities he has chosen to fund in his budget, as well as tax changes proposed. From the Wall Street Journal:

President Barack Obama delivered a $3.6 trillion budget blueprint to Congress Thursday that aims to “break from a troubled past,” with expanded government activism, tax increases on affluent families and businesses, and spending cuts targeted at those he says profited from “an era of profound irresponsibility.”

The budget blueprint for fiscal year 2010 is one of the most ambitious policy prescriptions in decades, a reordering of the federal government to provide national health care, shift the energy economy away from oil and gas, and boost the federal commitment to education.

One war would end, as troops leave Iraq, while another would ramp up in Afghanistan. To fund it all, families earning over $250,000 and a variety of businesses will pay a steep price, but Mr. Obama implored Americans to own up to the mistakes of the past while accepting profound sacrifices.

“We need to be honest with ourselves about what costs are being racked up, because that’s how we’ll come to grips with the hard choices that lie ahead,” Mr. Obama said Thursday morning. “And there are some hard choices that lie ahead.”

President Obama has made some politically difficult calls, including a first step to funding health care reform, investments in education, a carbon cap and purchase system, cuts to agricultural subsidies, a call for higher taxes on those earning $250,000 or better, and a slew of other public policy choices that will make many politically uncomfortable. The call to battle by the perceived losers in this battle is just begining.

To finance his proposals, the president has clearly chosen winners and losers — with the affluent heading the list of losers. In populist tones that reflect an anger he notably avoided on the campaign trail, Mr. Obama wrote, “Prudent investments in education, clean energy, health care, and infrastructure were sacrificed for huge tax cuts for the wealthy and well-connected. In the face of these trade-offs, Washington has ignored the squeeze on middle-class families that is making it harder for them to get ahead… There’s nothing wrong with making money, but there is something wrong when we allow the playing field to be tilted so far in the favor of so few.”

In that sense, the budget is payback. As expected, taxes will rise for singles earning $200,000 and couples earning $250,000, beginning in 2011 — for a total windfall of $656 billion over 10 years. Income tax hikes would raise $339 billion alone. Limits on personal exemptions and itemized deductions would bring in another $180 billion. Higher capital gains rates would bring in $118 billion. The estate tax, scheduled to be repealed next year, would instead be preserved, with the value of estates over $3.5 million — $7 million for couples — taxed at 45%.

This is quite a change from the Bush years, and frankly from the Clinton years as well. He is addressing some of the core issues facing the country, and actually saying that some changes need to be made in the way we pay for government. The political battle over this will make the stimulus debate seem like a love fest. I have attached the blueprint, as well as the President’s message at the bottom of this post.

budgetblueprint02262009

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