Monday, February 23, 2009

After String of Quick Loans, Obama Plans to Shrink National Debt

President says he’ll cut deficit by two-thirds

After he handed out billions of dollars in quick loans to banks, auto retailers and the nation as a whole, President Barack Obama’s next goal may surprise you.  He plans to cut the annual deficit by two-thirds in the next four years.

Big plans

At the beginning of Obama’s presidency, the national debt was $1.2 trillion. That amount will rise to $1.5 trillion after initial spending from the quick loans and other programs in the economic stimulus package. However, Obama’s economic projections say that by the end of 2013, the deficit will be down to $533 billion.

How to slash a deficit

The major components of Obama’s plan are Iraq troop withdrawal and higher taxes on the wealthy. Obama says he’ll release his budget outline Thursday. This outline will also make clear how he intends to deliver campaign promises on health care and energy policy, according to the New York Times.

Funding the Iraq war has accounted for a huge percentage of the nation’s spending, and Obama says his troop withdrawal plan will save about $90 billion.

A few new taxes

Obama proposes taxing income from investments in hedge funds and private equity partners at ordinary income tax rates. Right now those types of income are taxed like capital gains, at the rate of 15 percent. His policy would consider those funds income, and thus they could be taxed up to 35 percent, which is what the most wealthy pay in income tax.

Fewer tax cuts

During Obama’s campaign, he said he would immediately get rid of  the Bush tax cuts on income, dividends and capital gains. However, because of the economy crisis, he plans to instead let them lapse, as scheduled, after 2010 for individuals who make more than $250,000 a year. ... click here to read the rest of the article titled "After String of Quick Loans, Obama Plans to Shrink National Debt"

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