WASHINGTON – President Barack Obama is moving to raise new revenues and curb a massive deficit through two key channels under his maiden budget plan: a green energy scheme, and taxes on the richest Americans.
The 10-year plan unveiled Thursday forecast revenues to dip to 2.186 trillion dollars in fiscal year ending September before more than doubling to 4.446 trillion dollars in 2019 as an enormous trillion dollar budget deficit thins out.
As he throws the axe on key tax benefits for the wealthy and sets a new revenue stream by forcing firms to buy permits for exceeding pollution emission caps, Obama banks on big spending cuts to save precious money.
The cuts will strive to end "direct" payments to mega farm businessess as well as halt "no-bid" Pentagon contracts in Iraq and education programs "that don't work" and Cold War-era weapons systems "we don't use."
The 3.55 trillion dollar budget "begins to restore a basic sense of fairness to the tax code," Obama said as he unveiled his fiscal vision at the White House.
A new source of "climate revenues" come on stream in 2012 that will draw more than 600 billion dollars over seven years, according to the budget estimates.
One green scheme will compel companies to buy permits for exceeding pollution emission caps, under Obama's much touted green energy program that may become law by end 2009.
Obama's budget director Peter Orszag estimates that the so-called cap-and-trade scheme could generate 112 billion dollars by 2012, and up to 300 billion dollars a year by 2020.
Under his energy plan, Obama wants to both cap the emissions of gases, particularly carbon dioxide, blamed for climate change, and push development of nonpolluting energy alternatives.
The fiscal strategy by the Democratic president years will see a radical shift from budgets under his Republican predecessor, especially a controversial policy to rake in more taxes from the rich.
Obama will move to let his predecessor George Bush's tax cuts on wealthy households expire in 2011, and block the estate tax from disappearing as scheduled under current law.
The tax increases on those earning above 250,000 dollars a year would raise an estimated 318 billion dollars over 10 years by slashing the value of such longstanding deductions as mortgage interest and charitable contributions for people in the highest tax brackets.
The White House said it was unfair for high-income people to get a bigger tax break than middle-income people for claiming the same deductions or making the same charitable contributions.
"We'll save billions of dollars by rolling back tax cuts for the wealthiest Americans, while giving a middle class tax cut to 95 percent of hard-working families," Obama said.
His new tax plan is seen by some as a pronounced move to redistribute wealth by reimposing a larger share of the tax burden on companies and the most affluent taxpayers.
Obama said since he came to office on January 20, his officials had identified two trillion dollars in deficit reductions that will "help us cut our deficit in half by the end of my first term."
"We will end no-bid contracts that have wasted billions in Iraq and end tax breaks for corporations that ship jobs overseas," he said.
"This is just the beginning of the cuts we're going to make. No part of my budget will be free from scrutiny or untouched by reform."
In fiscal 2010 which starts October 1, the budget forecasts a deficit of 1.171 trillion dollars down from a projected 1.750 trillion in fiscal 2009.
The budget also includes an optimistic forecast that the struggling US economy will post robust growth next year, projecting a contraction of 1.2 percent in calendar 2009 but an expansion of 3.2 percent in 2010.
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