February 13th, President Obama delivered his Fiscal Year 2013 (10/1/12 – 09/30/12) budget proposal to congress. This highly anticipated, 256-page document is seen politically as the physical representation of the President’s vision for the country. Through funding levels, tax policy, and program proposals, it allows the President to detail his national priorities.
Today, we are seeing signs that our economy is on the mend. But we are not out of the woods yet. Instead, we are facing a make-or-break moment for the middle class, and for all those who are fighting to get there. What is at stake is whether or not this will be a country where working people can earn enough to raise a family, build modest savings, own a home, and secure their retirement.
This is the defining issue of our time.
This Budget reflects my deep belief that we must rise to meet this moment—both for our economy and for the millions of Americans who have worked so hard to get ahead…-President Barack Obama
The budget proposal (see the budget overview HERE)cuts the deficit by nearly 4 trillion dollars over the next 10 years, but still leaves a deficit of $901 billion (breaking his promise to cut it in half by the end of his first term). It does this through a combination of spending cuts to government programs and tax increases on the wealthy. The budget also sets aside nearly $350 billion dollars to fund immediate infrastructure projects (many of which were proposed in his Jobs Plan) that are designed to “jumpstart” job creation. For college students, the budget proposal continues funding for the Pell Grant program and makes the American Opportunity Tax Credit Permanent (find out about this thousand-dollar credit HERE).
The reality is, however, this budget proposal is just that: a proposal. In order for it to be enacted, it must be approved by the Republican House of Representatives and the Democratic Senate. The problem with this is Republicans want to see more cuts and have called this budget “debt on arrival) and senate democrats haven’t passed a budget in two years out of political expediency (don’t want to give election opponents something to use against them -_-) and have no desire to do so this year. Its true purpose was to set the President up for November’s election.
Payroll Tax Extension Fight
One budget proposal that will most likely be enacted is the Payroll Tax Cut extension. The payroll tax is the tax that funds the Social Security Trust Fund. In a 2010 deal to extend the Bush Tax Cuts for the wealthiest Americans, President Obama secured a 2% payroll tax cut (from 6.2% to 4.2%) for one year. This tax cut amounts to savings of -on average- $1,000 for working Americans, money that economists partially credit for the recent economic improvement.
This tax extension has met opposition in congress. Republicans, since last fall have called for these tax cuts to be funded by accompanying spending cuts, including an extension of the Federal Employee Pay Freeze (despite not requiring the Bush Tax Cuts to be paid for). Democrats, including President Obama, have proposed paying for these tax cuts with a small surtax on the wealthy, something Republicans are strongly opposed to.
The tax cut expires at the end of the month. However, in recent days Republicans have done an about-face by saying they would agree to this tax cut without spending cuts. This after they suffered much political damage in December for looking like they wanted a middle class tax increase. If this remains so, it will pave the way for the tax cut to be extended through the end of this year.
After sweeping last Tuesday’s primary’s and caucuses with 3 wins, Rick Santorum has been surging in the latest polls. In the latest national poll, Santorum nearly ties the frontrunner Mitt Romney. This pattern holds true in the latest state-by-state polling, as Santorum has taken the lead in Romney’s home state, Michigan. To add to the good news for Santorum, he is also picking up steam in hypothetical match-ups with President Obama, taking away from Romney’s “I am the most electable” argument.
This is an important development because it extends and draws out the primary race even more, helping President Obama’s Re-election campaign. The purpose of this whole primary process is to allow Republican voters to choose the Republican candidate that will go up against President Obama in the November election. From the start, most political observers saw this as an easy Mitt Romney win. A quick win would then allow him to immediately focus all of his attention and resources on defeating President Obama. However, now with Santorum’s rise, Romney must put resources into defeating Santorum.
In the mean time, President Obama can just sit back and fund raise for his re-election campaign as the Republicans fight amongst themselves.
As 2012 rolls along, the political games and posturing will dramatically increase. NavigatingPolitics.com will be here to help you get through it!