Current Administration Budget and its Effects on our Economy - Essay Example

Current Administration Budget and its Effects on our Economy President Barack Obama made a government spending proposal for the budget year. Discussed in details are the administration’s proposed budget for each sector. Health budget aims toward universal coverage: 2010 proposal: $821.7 billion which includes $78.7 billion for discretionary spending, plus $453 billion for Medicare and $290 billion for Medicaid. The governments vast health insurance programs for the elderly and poor would grow more gradually under Obamas health care budget proposal. Obama wants to squeeze Medicaid and Medicare expenses to facilitate in making a 10-year, $634 billion fund scheduled as a "down payment" on his goal of providing health insurance for all. Obama would use $316 billion in savings from those entitlement programs and forecasts other savings by decreasing the rate by which wealthier people can cut their taxes through certain deductions. Charging upper-income beneficiaries a higher premium for Medicares prescription drug coverage, and increasing the amount of money drug manufacturers rebate to states for prescription drugs covered under Medicaid will comprise the proposal (“Obama 2010 budget highlights by agency,” 2009). Environment would get large increase: 2010 proposal: $10.5 billion Obamas budget indicated that the environment is a main concern by providing the largest increase for the Environmental Protection Agency in eight years. The proposal nearly triples — to $3.9 billion for funding states, local governments and tribes. They can use the money for the improvement of sewage treatment plants and drinking water systems and to protect drinking water sources. These programs already received $6 billion in the recently approved stimulus package. The EPA budget also would provide families, communities and businesses billions to offset the higher energy prices expected if Congress passes legislation to control greenhouse gases. Starting in 2012, the budget proposes to invest $15 billion a year in clean energy — money created from auctioning permits to companies that emit the gases blamed for global warming. The rest of the climate cash will be returned to taxpayers. In another move that could increase energy prices, the EPA budget calls for reinstating taxes on petroleum products, chemical feedstocks and crude oil to pay for cleaning the countrys most harmful waste sites. These taxes expired in 1995. but would set up again in 2011 under Obamas budget (“Obama 2010 budget highlights by agency,” 2009). Proposed Budget on Energy and Climate Change: The Administration is extending a comprehensive energy and climate change plan to invest in safe and uncontaminated energy, terminate our addiction to oil, concentrate on the global climate crisis, and create new American jobs that cannot be outsourced. After enactment of the Budget, the Administration will work promptly with key stakeholders and the Congress will create an economy-wide emissions reduction program to lessen greenhouse gas emissions roughly 14 percent below 2005 levels by 2020, and approximately 83 percent below 2005 levels by 2050. The cap-and-trade system program will be implemented. This program significantly reduced acid rain at much lower costs than the traditional government regulations and directives of the past. Through a 100 percent auction to guarantee that the largest polluters do not benefit from bonus profits, this program will finance important investments in a clean energy future totaling $150 billion over a decade, starting in fiscal year 2012. The balance of the auction revenues will be returned to the people, especially vulnerable families, communities, as well as businesses to assist the shift to a clean energy economy (Claussen, 2009). To truly transform America’s economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy. By calling upon Congress to send him market-based global warming legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America.  And to support that innovation, the Obama administartion will allocate fifteen billion dollars a year to develop technologies like solar power and wind power; clean copal, advanced biofuels, and more fuel-efficient cars and trucks built right here in America (Claussen, 2009). Budget Changes from President Bush to President Obama President Barack Obama, taking his first courageous steps to reverse the Bush administrations budget priorities, released his administrations initial budget outline last week, which proposes to end Bushs tax cuts for the wealthiest Americans and corporations, create a reserve health care fund, curb growth in military spending and dramatically improve funding for the needs of working families (Wendland, 2009). On Military Spending: Previously, the Bush administration funded the wars in Iraq and Afghanistan through supplemental requests outside of the budget process, hiding the true financial cost of war and the extent of the federal budget deficit. On another revitalizing level, the Obama administration suggests to launch a measure of honesty into the process by including war funding in the budget. The fact that all military spending has been lumped together in the Obama budget recommends a radical change from past policies that separated Iraq and Afghanistan spending from the military budget, concealing its total cost and its impact on forcing cuts in other essential programs or raising the total debt. The budget also proposes savings through the elimination of wasteful Pentagon spending and "Cold War-era weapons programs that are no loner needed by our country. With the aid of the right-wing media, President Bush created a climate that exploited terror and fake patriotism to give the Pentagon and military contractors unchecked cash for almost eight straight years. Consequently the Pentagons budget grew to such a level that it is now higher than all of the military budgets of all of the countries in all the world combined (Wendland, 2009). On Health Care: This budget creates a $634 billion fund over the next ten years to support affordable access to health care and to help in controlling the cost of very high prescription drug prices. According to the Office of Management and Budget, the fund will be created by curbing Medicare overpayments created under the Bush Medicare privatization plan, eradicating the Bush tax cuts for the most affluent Americans and corporate tax excuses, capping Social Security benefits for the wealthiest Americans and eliminating tax breaks for major oil companies (Wendland, 2009). On Energy and Environment: Implementing the cap-and-trade system will supply the financial resources necessary to develop new energy efficient green technologies as well as an incentive for polluters to change their production processes by adopting those green technologies. While some environmentalists prefer a "carbon tax" as the quickest method of forcing polluters to change their habits and cap emissions, political will in Washington for such a step will not exist without further public demands. The Environmental Protection Agency, which has already started the scheme of reversing many of the lax standards the Bush administration adopted toward environmental protection, announced that Obama budget boosts that agencys budget by $3 billion for clean-up and public health protection (Wendland, 2009). How Will Obama Administration Budget Help or Hinder Economy? The Obama administration plans to undo the major economic steps it is taking to overcome the financial catastrophe as soon as a recovery starts. Maintaining the current measures longer than required would form political and economic dangers. The Obama administration is committed to reversing its rescue plan for the banking sector and other emergency responses to the economic crisis. The administration’s fiscal and monetary actions to address the crisis are “temporary” and must be undone once a recovery is firmly in place. With this in mind, this administration has proposed a budget plan that maps a course to obtaining sustainable budget deficits in the medium term, so that recovery is not weakened by worries about unnecessary government borrowing in the future. Obama administration is designing financial programs so that it can be reversed as soon as possible and evade the risks that come with sustained government intervention in the financial system.” (Lipin, 2009). The Obama administration specifies that it will add $800 billion into the U.S. financial system by the end of next year, pushing its budget deficit to a record-high. The U.S. Congressional Budget Office predicts the national deficit will hit $1.8 trillion in 2009. Opposition Republicans have strongly criticized the administration’s stimulus and budget plans, saying they waste taxpayer money and burden future generations with too much debt. However, the administration is determined to bring spending under control in the coming years. The American people and investors need to understand that Americans have the will and commitment as a country to go back to the point where we are living within our means, and that is going to require very substantial adjustments to bring our resources and expenditures more into balance. Another economic rescue program the Obama administration wants to slow down is a $700 billion bailout of struggling U.S. banks that Congress adopted last year. The Troubled Assets Relief Program, or TARP, was intended at supporting banks that experienced enormous losses from bad loans connected to the ailing housing market (Lipin, 2009). Possibly that most important new investments earmarked in the budget are for health care and the energy sector. President Obama pointed to health care and energy as among the fundamental pillars of the new economy he envisions. Now is the time to jump-start job creation, re-start lending, and invest in areas like energy, health care and education that will grow the economy, even when hard choices to bring our deficit down have to be faced by every American (Wendland, 2009). 95 percent of working Americans would benefit from President Obama’s $3.6T budget. Higher taxes for wealthy Americans would not come until 2011 once recovery starts. But Republicans argued that a fraction of the budget that would require polluters to purchase permits from the government for their greenhouse gas emissions would basically inflict huge new energy expenditures on all consumers and businesses. A few complained about stipulations that would limit the size of charitable contributions that could be taken by families earning more than $250,000 a year. But the administration defended the overall proposal, saying far more people would benefit from lower taxes under the plan. The budget reflects what Obama viewed as a deep moral imperative to create a more just society. It will mean there is again a fairer, more equitably shared tax burden on the vast majority of Americans. The administration will reveal a series of rules and measures in the near future to limit the ability of international companies to evade U.S. taxes (“Top Obama Officials Defend $3.6T Budget,” 2009). References Claussen, E. (2009). President Obama and Climate Change. Pew Center on Global Climate Change. Retrieved 6 May 2009 from http://www.pewclimate.org/obama-administration Lipin, M. (2009). Obama Administration Promises to ‘Reverse’ Economic Rescue Measures. Rush PR News. Retrieved 6 May 2009 from http://www. rushprnews.com/2009/04/23/obama-administration-promises-to-reverse- economic-rescue-measures Obama 2010 Budget Highlights by Agency. (2009). The Associated Press. Retrieved 6 May 2009 from http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/.../national/w102432S08.DTL Top Obama Officials Defend $3.6T Budget. (2009). CBS News. Retrieved 6 May 2009 from http://www.cbsnews.com/stories/2009/03/03/politics/100days/economy/ main4840169.shtml Wendland,J. (2009). Obama’s First Budget and the Battle of Ideas. Political Affairs Magazine. Retrieved 6 May 2009 from http://www.politicalaffairs.net/article/articleview/8202 Read More