Putting yourself on a budget isn't the most exciting thing to do, but when it comes to President Obama's first federal budget the details inspire hot debate. The final outline is yet to come, but Obama plans on cutting the federal deficit in half by the end of his term. The money will come from higher taxes on businesses and wealthy Americans, and much of it won't be spent in Iraq and Afghanistan, as the president plans to slash spending on the wars.
This year, the gap between federal spending and income could reach $2 trillion, more than 8 percent of the overall US economy. How does Obama plan to scale that number back? Here are some of the details:
- The budget keeps the Bush tax cuts for middle-income families, but rolls them back for those making over $250,000. The top tax rate would jump from 35 percent to 39.6 percent.
- The capital gains tax would rise to 20 percent from 15 percent for the wealthy.
- The estate tax on estates over $3.5 million would remain at 45 percent.
- There would be an aggressive effort on tax enforcement, targeting corporate loopholes.
- The plan would kick off healthcare reform, by reducing spending on some health programs so Obama would have money to devote to new, expanded programs.
- Less money would be spent on the efforts in Iraq and Afghanistan.
- The budget includes the cost for the war in Iraq and domestic disasters, something Bush excluded to make the deficit look smaller.
While critics argue against raising taxes in a recession, Obama aide David Axelrod says this is the plan that won the election. Do you agree?