President Obama's New Budget Invests in Early-Childhood Education, Child Care Tax Credit
President Obama released a $3.9 trillion budget proposal for fiscal year 2015 on Tuesday.
The president’s budget contains initiatives that would be widely popular with the American people, according to opinion polls, including job training, education, and closing corporate tax loopholes. However, the president still favors expanding military spending – even as we withdraw from Afghanistan and research suggests that the American people do not approve of devoting an astonishing 57 percent of discretionary spending to the military.
Here are the top five things to know about Obama's budget:
1. Invests in Early Childhood Education
The president wants to provide pre-kindergarten education to every student and expand the existing Head Start program, which provides early childhood education to low-income families. The budget proposal would dedicate $66 billion over 10 years to this initiative, which would be paid for through a tobacco tax.
2. Increases Military Spending
Excluding war costs, the budget contains $549 billion for military programs, a more than 5 percent increase relative to 2014. In addition, the Department of Defense receives a separate budget for war activities. Though the president has not yet released his proposed war budget for 2015, in 2014 it totaled $85 billion in additional military spending, even as troop levels in Afghanistan decline. This part of the budget is not subject to funding caps or cuts, and billions of dollars of war funding have been widely referred to as a “slush fund.”
3. Closes Some Tax Loopholes for Corporations and the Wealthy
The president projects $3.34 trillion in tax revenue in fiscal 2015, an increase of 11 percent relative to 2014. The increase is due to improvements in the economy as well as tax reform. In particular, the proposal would tighten tax breaks for wealthy taxpayers to bring in an additional $37 billion in revenue in fiscal 2015 and $651 billion over the next 10 years, and limit the ability of corporations to deduct interest expenses for their overseas operations, which would raise $43 billion over a decade.
4. Expands the Child and Dependent Care Tax Credit and the Earned Income Tax Credit for Low-Income Households
The president proposes expanding the Child and Dependent Care Tax Credit, a change that would mean about $600 for 1.7 million low-income families. The new budget also would expand the Earned Income Tax Credit (EITC), a successful anti-poverty program, for low-income childless workers. The change would benefit an estimated 13.5 million additional Americans and cost $60 billion over 10 years.
5. Runs an Average Deficit
The president’s budget proposal would run a deficit of $561 billion in 2015. As a share of the economy, the deficit is expected to be 3.1 percent in 2015. That’s down from a high of 10 percent in 2009 following the Great Recession. Over the past 50 years, budget deficits have averaged around 2.8 percent of the economy.
In order to become law, the president’s budget would have to be approved by Congress.
National Priorities Project has complete analysis of the president’s new budget.
Mattea Kramer is research director at National Priorities Project, which is a nominee for the 2014 Nobel Peace Prize.