Reaction to the president’s $4 trillion 2016 budget proposal were predictably negative from Congressional Republicans and from the business community. The White House plainly targets high income earners and large businesses for higher taxes in order to fund tax breaks for the less fortunate and increased spending on domestic priorities, including the nation’s crumbling infrastructure.
The budget, in the extremely unlikely event it were to be adopted as proposed, would do away with the so-called “sequester” to increase discretionary spending on both the military and domestic programs by $38 billion each next year. It would also pump $478 billion over six years into construction of highways, bridges, and other major pieces of the country’s infrastructure. The increased spending would be paid for, in part, by a major change in how businesses are taxed on overseas income, an increase of the top capital gains tax rate to 28 percent, and other changes to the federal income tax code that would strip away many of the current benefits available to the wealthy.
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Crucially, while the president’s proposal does theoretically reduce both the federal deficit and the debt, it does not bring the budget into balance over its 10-year window, just reduces both to a size that economists consider manageable under most economic growth scenarios.
House Ways and Means Committee Chairman Paul Ryan (R-WI) dismissed the plan out of hand. “For six years the president has pursued higher taxes and higher spending, and our economy has paid the price. This budget is simply more of the same,” he said.
“The American people are working harder than ever to get ahead, and this administration wants to put up yet another roadblock: $2.1 trillion in new taxes. And despite this massive tax hike, the president's budget never balances, adding $8.5 trillion in more debt. This is simply unacceptable.”
Ryan, who will be the point man on any tax proposals heard in Congress during this session, added, “I want to work with this administration, and I hope that we can find common ground. But the president has to demonstrate that he’s interested in governing, not just posturing.”
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House Speaker John Boehner (R-OH) was similarly unimpressed. “Today President Obama laid out a plan for more taxes, more spending, and more of the Washington gridlock that has failed middle-class families. It may be Groundhog Day, but the American people can’t afford a repeat of the same old top-down policies of the past.”
Boehner promised a Republican budget proposal, later this year, in which “We will address our government’s spending problem and protect our national security. Our budget will balance, and it will help promote job creation and higher wages, not more government bureaucracy.”
On the Senate side, Majority Leader Mitch McConnell (R-KY) called the proposal “another top-down, backward-looking document that caters to powerful political bosses on the Left and never balances—ever.” He promised that the GOP would “work to pass the serious kind of budget all Americans deserve: one that roots out and reforms wasteful spending, and that aims to grow middle-class jobs and opportunity instead of Washington’s bureaucracy.”
In a joint statement, the chairs of the House and Senate Budget Committees, Rep. Tom Price (R-GA) and Sen. Mike Enzi (R-WY) signaled that the president’s proposal was going nowhere in their respective committees. “We are ready to move past the new normal of President Obama’s budget and in a new direction. We want to make government more efficient and accountable to hard-working taxpayers by lifting the regulatory burden on families and job creators, and by embracing the innovative spirit that drives American entrepreneurship and success.”
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Representatives of the business community, whose members still have to coexist with a regulatory regime overseen by the Obama administration, were somewhat less strident, but nonetheless expressed their displeasure.
In a statement, the Business Roundtable said, “America’s business leaders encourage the administration to work with congressional leaders to find common ground on pro-growth tax policies.”
While noting that they agree with the president’s goal of reducing the corporate tax rate, they objected strongly to proposals that would hit businesses that have stashed profits overseas to avoid U.S. taxation. “Unfortunately, the administration has proposed steep tax increases on businesses that will negatively impact their competitiveness – especially those businesses that compete in the global marketplace. Tax reform should increase the competitiveness of businesses to fully strengthen the U.S. economy and enhance job creation.”
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