The budget of contention

Barack Obama talks with congressmen photo: Whitehouse.gov

The draft federal budget of the United States for the 2016 financial year, which President Barack Obama will send to the congress, will amount to $ 4 trillion. In addition, it provides for a deficit of $ 474 billion, which is 2.5% of GDP. The project of the country's main financial document will be proposed by congressmen on Monday, February 2, reports The New York Times, which had a 10-year budget plan at the disposal.

“We are looking forward to working with Congress on the budget in the usual order,” said Emily Cayne, a representative of the White House management department and the White House budget.

The media notes that the budget deficit of 2.5% of GDP, most economists consider it acceptable, however, according to the document, the deficit will increase from year to year and will be $ 687 billion in 2025. However, given the growth of the economy, the deficit will still remain stable, the material says.

As for the regularly growing US public debt, it is supposed to be slightly reduced from the current 75% of GDP to 2025 - to 73.3%. The media note that this is the highest level of duty in the history of the United States, not counting the times of World War II and the period immediately after its end.

Barack Obama

As the White House previously stated, Obama will ask the Congress to increase the expenditure part of the federal budget for 2016, the financial year, thereby stepping over formal restrictions. In total, expenses are proposed to increase by almost $ 75 billion, that is, by 7%.

Of these, about 38 billion dollars should be transferred to military needs. Thus, the Pentagon budget in the future financial year will increase to $ 561 billion. The remaining approximately $ 37 billion will go to civilian needs. In this case, the “civilian budget” will amount to $ 530 billion, TASS reports.

Obama will make up a considerable part of the budget proposals of the middle class support, which he spoke about in his annual message to Congress. It is, for example, about paying for school education for children from low -income families and facilitating financial burden for working mothers who are forced to take leaves for child care.

At the same time, Obama proposes to increase taxes for the richest part of the population, as well as tighten the tax policy in relation to large corporations that leave profit abroad.

According to Reuters, when accepting the budget for 2016, the president will insist on accepting a one-time 14 percent taxation of approximately $ 2 trillions of corporate profit received abroad. On the profit made by American corporations in the future, the US administration proposes to establish a 19 percent tax. It is assumed that the income received by the budget will be spent on the construction of roads, bridges and other infrastructure projects.

Obama’s proposal is aimed at closing a tax loophole, which allows transnational corporations to evade taxes on foreign profits and cover their income received in the United States through various strategies abroad, RBC notes.

The White House has long been criticized by American companies trying to avoid domestic taxation. According to the latest estimates, the approximate amount of foreign income of American companies in 2014 is about 2.1 trillion dollars, but it is possible that the real figure is much larger.

Only General Electric has $ 110 billion profit abroad, and Microsoft and Apple technological giants, together with pharmaceutical Pfizer and Merck, are included in the first five companies in terms of such profit, notes The Wall Street Journal.

The tax reform conducted by the US administration is designed to reorient the advantages of the tax system for the middle class of Americans. A representative of the White House noted that when American companies begin to pay a constant 19 percent tax on foreign profit, they will be provided with loans for foreign tax payments.

In order for Obama’s budget for 2016 to enter into force, it must be approved by Congress. However, as the media noted, Congress is unlikely to become possible, since it is controlled by opposition Republicans, and serious political battles will unfold around the new draft budget in Washington.

Barack Obama in the US Congress. Photo: Whitehouse.gov

It is assumed that it is the issues of taxation of US companies that will be at the center of the presentation of the presidential draft budget. Experts suggest that in the current form such a bill is doomed to failure, but it is possible that during the discussion, Republicans will still make concessions.

The Republican Party still see one of their goals to reduce government departments and the size of the state apparatus, meanwhile, Obama intends to offer Congress to abandon the automatic sequestra of expenses.

Recall that in the course of difficult negotiations in 2011 between the Republican, the majority in the Congress and the Democratic Administration of the White House decided on the sequestration of the economy until 2023, that is, automatic cutting of government departments when reaching a certain limit. This decision was made in connection with the impressive public debt of the country, but Barack Obama does not support it.

Note that some Republicans have already spoke skeptical about Obama's proposals. In particular, they note that such changes to the Tax Code are unlikely to contribute to the growth of the economy and the creation of new jobs.

See also: US budget deficit will increase to $ 687 billion by 2025 , Obama signed a defense budget for 2015 Obama signed the federal budget law