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Editorial: Obama budget ambitious, but unrealistic

BY DI EDITORIAL BOARD | FEBRUARY 03, 2015 5:00 AM

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The beginning of a new year brings with it new budgets. President Obama has released a nearly $4 trillion budget to fund the government for fiscal 2016. For those who tuned in to Obama’s State of the Union address, the budget contains few surprises. The most significant programs are reflections of the promises he made.

Some of the more notable programs include a new infrastructure program, ending sequestration spending cuts, education programs, increase in paid leave, higher taxes on the wealthy, environmental initiatives, and taxing overseas earnings.

In an effort to continue America’s lead in developing clean energy, the new budget contains $7.4 billion in clean energy technologies. Additionally, the new budget takes the current initiative to lower state’s emissions to a new level. A special provision includes a $4 billion effort to speed up the cuts to emissions that come from power plants. The budget also increases investment in clean energy through tax credits, extending them for both the wind and solar industry.

The move is a smart one, considering that most Americans are now in support of governmental action on climate change. A telephone poll conducted by the New York Times, Stanford University, and Resources for the Future concluded that whether or not politicians advocate for action on climate change influences these Americans’ decision to vote for them. Even more surprisingly, 48 percent of Republicans indicated that they would support a candidate who fought global climate change.

Less popular, however, is the budget’s proposal to add a 14 percent one-time tax on corporate earnings. U.S. companies have more than $2 trillion in overseas earnings that they refuse to bring back to their homeland. This is largely done to avoid taxes, as the U.S. 35 percent corporate tax rate is the largest corporate tax rate in the global Organization for Economic Cooperation and Development, a group that includes 34 of the most advanced, industrialized nations. When state and local taxes are added, the actual figure averages out to about 40 percent. Instead of changing the tax code, the new policy aims to track down the foreign earnings and tax them as well. This may result in companies leaving the United States entirely.

The moneymaking effort would be used to fund a $478 billion infrastructure project. The revenue would be used for public-works tasks such as roads, bridges, and transit systems. The American Society of Civil Engineers produces a report card every four years on the status of America’s infrastructure, measuring such factors as “health, safety, and welfare of the public.” In 2013, America received a D-plus on the report card. Clearly, this is an issue that needs to be addressed.

Obama has many other ambitious programs in his new budget. He proposes subsidizing childcare and funding for a program that would enable free community-college tuition. Tobacco taxes are nearly doubled, and increases funding for states for the purpose of giving parents paid leave.

The Daily Iowan Editorial Board believes that while Obama’s budget includes many items that are attractive to Americans, it is ultimately unrealistic. It contains few, if any compromises, and the chance of passage is miniscule given the new Republican-controlled Congress.

Despite an $18 trillion debt, the president’s budget contains no solutions to dealing with it. Instead, if enacted, it would actually increase spending from last year. The president’s budget does present some much needed solutions; if he had reined in spending and tried to throw the Republicans some bones, the budget would have had more of a chance.


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