Tuesday, February 14, 2012

Obama's FY2013 Budget: Campaign Rhetoric or Sound Solutions?

President Barack Obama’s FY2013 budget proposal has instigated a whirlwind of bipartisan debate as Republicans launch accusations that the president’s proposal is no more than a piece of campaign material that will harm more than help the nation’s economy.

The president has allocated $350 billion for “short-term measures for job growth,” $50 billion for transportation improvements, and eliminations of several tax cuts for high-income Americans.
The budget includes an extension of the 2 percent payroll tax cut through the end of 2012, and a 10 percent tax cut for small businesses that add new jobs.
Under the proposed budget, HUD would receive a 3.2 percent increase in funding with an additional $1.4 billion more than the department’s 2012 budget.
HUD’s total budget for the new year is proposed at $44.8 billion.
Pending Congressional approval, the increased budget allows for $141 million in additional support for housing counseling.
The budget also includes the recent increases in FHA premiums, which according to the proposal, “will boost FHA’s capital reserves-to better protect taxpayers against the risk of credit losses by the program-and increase Federal revenues.”
In its budget proposal, the administration predicts the FHA will insure $149 billion in mortgage loans in 2013.
In his statement released with the proposal, Obama largely blames the housing industry from the state of the economy.
“Too many mortgages had been sold to people who could not afford – or even understand – them,” he said, adding that banks created risky loan packages and misled investors about their contents, while regulators “either looked the other way or did not have the authority to act.”
“In the end, this growing debt and irresponsibility helped trigger the worst economic crisis since the Great Depression,” Obama stated.
Senate Republican Leader Mitch McConnell (R-Kentucky) stated Monday that Obama’s budget proposal “isn’t really a budget at all. It’s a campaign document.”
According to McConnell, not only will Republicans not support the proposal, but also “the President’s own party doesn’t want to have anything to do with it.”
Singing a similar tune, Rep. John Boehner (R-Ohio) termed the budget proposal “a gloomy reflection of [Obama’s] failed policies of the past,” calling the proposal’s contents “a collection of rehashes, gimmicks, and tax increases that will make our economy worse.”
However, Treasury Secretary Tim Geithner spoke out in support of the budget proposal, saying, “The proposals strike a balance between supporting growth and laying out a responsible, long-term deficit reduction plan that simplifies the tax code and asks the most fortunate to pay their fair share.”
Likewise, Senate Budget Committee Chairman Kent Conrad (D-North Dakota), said, “President Obama’s budget would continue to move the nation in the right direction.”
“Now others are going to have to be willing to step up and be part of the solution,” he stated.

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