In the coming hours and days, there will be a lot of claims made about President Obama’s budget, but here are the facts.
WHAT THE PRESIDENT’S BUDGET DOES:
MIDDLE CLASS ECONOMICS FOR THE 21ST CENTURY
In last month’s State of the Union, the President
laid out his vision for middle class economics: restoring the link
between hard work and opportunity, and ensuring that every American has
the chance to share in the benefits of economic growth. To achieve this,
the Budget invests in helping working families make their paychecks go
further, preparing hardworking Americans to earn higher wages, and
creating the infrastructure that allows businesses to thrive and create
good, high-paying jobs.
Helping Middle-Class Families Get Ahead
Middle class economics means ensuring that all
Americans have the opportunity to succeed in our global economy and all
working families can afford the cornerstones of economic security: child
care, college, health care, a home, and retirement. The Budget supports
working families by reforming the tax code to help middle-class
families get ahead, tripling the child care tax credit, expanding child
care assistance, encouraging state paid leave initiatives, ensuring
access to quality, affordable health care, making two years of community
college tuition-free for responsible students, bolstering job training
so it leads to careers, expanding access to child care and early
education, supporting and rewarding work, and helping families save for
retirement.
Improving Access to High-Quality Child Care and Early Education -
High-quality child care and early education for young children serves
the important functions of supporting parents in the workforce and
helping support healthy child development and school readiness. The
Budget aims to ensure that children have access to high quality learning
starting at birth, making several key investments:
Expands access to quality, affordable child care.
The Budget proposes a historic investment in child care to ensure that
quality, affordable care is available to all eligible low- and
moderate-income working families with young children, as opposed to the
small share of children who receive this help today. This proposal will
expand access to high-quality care for more than 1.1 million additional
children under age four by 2025 and help States build a supply of
quality care that families can access.
Cuts taxes for families paying for child care with a
credit of up to $3,000 per child. The Budget triples the maximum Child
and Dependent Care Tax Credit (CDCTC) for families with children under
age five and makes the full CDCTC available to families with incomes of
up to $120,000, benefiting families with young children, older children,
and dependents who are elderly or have disabilities. The child care tax
reforms would benefit 5.1 million families, helping them cover costs
for 6.7 million children.
Increases the duration of Head Start programs and
invests in high quality infant and toddler care. The Budget expands
access to high-quality care for tens of thousands of additional infants
and toddlers through Early Head Start-Child Care Partnerships, and
provides over $1 billion in additional funding for Head Start to make
sure children are served in full-day, full-year programs that research
shows lead to better outcomes for children.
Supports universal preschool. The Preschool for All
initiative, in partnership with the States, provides all four-year-olds
from low- and moderate-income families with access to high-quality
preschool, while encouraging States to expand those programs to reach
additional children from middle-class families and establish full-day
kindergarten policies.
Lays the groundwork for Preschool for All. The Budget provides $750
million for the Department of Education’s Preschool Development Grants, a
substantial increase of $500 million over the 2015 level. Preschool
Development Grants are currently helping 18 States develop and expand
high-quality preschool programs in targeted communities; the Budget will
increase that number to over 40 States.
Invests in voluntary, evidence-based home visiting.
The Budget extends and expands evidence-based, voluntary home visiting
programs, which enable nurses, social workers, and other professionals
to connect families to services to support the child’s health,
development, and ability to learn.
Improving Opportunity for All Students – Title I is the Department of
Education’s largest K-12 grant program and the cornerstone of its
commitment to supporting low-income schools with the funding necessary
to provide high-need students with access to an excellent education. The
Budget increases Title I funding by $1 billion and proposes additional
funding to support districts that are using their Federal formula funds
for evidence-based interventions. The Budget also makes other important
investments in improving K-12 education, increasing. For example, it:
Increases funding for special education and efforts
to assist English language learners. The Budget provides additional
funding to help students who face academic hurdles meet rigorous
academic standards so that all students can succeed.
Provides broad support for educators at every phase of their careers.
The Budget invests in developing strong teachers before they reach the
classroom and supporting their growth and success throughout their
careers.
Invests more than $3 billion on science, technology,
engineering, and math (STEM) education. The Budget provides strong
support for STEM education, including a new $125 million competitive
program to promote the re-design of America’s high schools by
integrating deeper learning and student-centered instruction, with a
particular focus on STEM-themed high schools that expand opportunities
for girls and other groups underrepresented in STEM fields.
Reforming the Tax Code to Reward and Support Work –
When both spouses work, a family incurs additional costs in the form of
commuting costs, professional expenses, child care, and, increasingly,
elder care. To address these challenges, the Budget proposes a new $500
“second earner” tax credit, which will benefit 24 million dual-earner
couples. It also proposes to expand the Earned Income Tax Credit (EITC)
for workers without children and non-custodial parents, promoting
employment while reducing poverty and hardship for 13.2 million
low-income workers struggling to make ends meet. In addition, the Budget
continues to propose making permanent improvements to the EITC and
Child Tax Credit that augment wages for 16 million families with 29
million children each year but are scheduled to expire at the end of
2017. Allowing these benefits to expire would result in a roughly $1,700
tax increase for a full-time minimum wage worker with two children.
Encouraging State Paid Leave Initiatives – Too many
American workers must make the painful choice between caring for their
families and a paycheck they desperately need. A handful of States have
enacted policies to offer paid leave. The Budget encourages additional
States to develop paid family leave programs by providing funding for
the initial set-up and half of the benefit costs for as many as five
States through the Paid Leave Partnership Initiative. It also provides
support and technical assistance to those States that are still building
the infrastructure they need to launch programs in the future through
the State Paid Leave Fund.
Ensuring Access to Quality, Affordable Health Care –
The Budget supports the Affordable Care Act, which is already providing
coverage for millions of Americans through the Health Insurance
Marketplaces, the delivery of tax credits to make coverage affordable,
and the expansion of Medicaid.
Helping All Workers Save for Retirement – Millions
of working Americans lack access to a retirement savings plan at work.
Fewer than 10 percent of those without plans at work save in a
retirement account on their own. In 2015, retirement security will be
one of the key topics of the White House Conference on Aging. The Budget
would make it easy and automatic for workers to save for retirement
through their employer – giving 30 million more workers access to a
workplace savings opportunity. The Budget also ensures that long-term
part-time employees can participate in their employers’ retirement plans
and provides tax incentives to offset administrative expenses for small
businesses that adopt retirement plans.
Partnering With Communities to Expand Opportunity –
The Budget improves the coordination of resources to meet unique
community needs and growth opportunities, including through the
Administration’s Promise Zones initiative, which is creating
partnerships between the Federal Government, local communities, and
businesses to create jobs, increase economic security, expand
educational opportunities, increase access to quality, affordable
housing, and improve public safety. The President named the first five
Promise Zones in 2014 and will designate an additional 15 Zones by the
end of calendar year 2016. In support of Promise Zones, the Budget
requests $250 million for the Department of Housing and Urban
Development’s Choice Neighborhoods program and $150 million for the
Department of Education’s Promise Neighborhoods program. The Budget also
includes Promise Zone tax incentives to stimulate growth and
investments in targeted communities.
Supporting Innovative Projects to Improve Upward Mobility – Building on
Promise Zones, the budget also includes a new initiative, the Upward
Mobility Project, that will allow up to ten communities, States or
consortia of States and communities to combine funds from four existing
block grant programs designed to promote opportunity and economic
development and reduce poverty to test and validate promising approaches
to help families become more self-sufficient, improve children’s
outcomes, and revitalize communities so they can provide more
opportunities for their residents. Projects must utilize evidence-based
strategies, track program performance, and evaluate intervention
effectiveness. The funding streams that States and communities can apply
to use – including the Department of Health and Human Services’ Social
Services Block Grant and Community Services Block Grant, and the
Department of Housing and Urban Development’s Community Development
Block Grant, and HOME Investment Partnerships Program – share a common
goal of promoting opportunity and reducing poverty. In addition to these
funds, participating communities will be eligible to receive a total of
$1.5 billion in new funding over five years, to combine with the added
flexibility with currently provided resources.
Helping Americans Upgrade Their Skills
America’s education system led the world in the 20th Century, when we
sent generations to college and cultivated the most educated workforce
in the world, supporting an unparalleled period of economic growth and
rising middle-class incomes. Since then, other countries have followed
our lead to develop globally competitive education systems. As our
economy changes, we need to ensure that Americans are prepared with the
skills and knowledge necessary to compete in the 21st Century economy.
The Administration invests in affordable post-secondary education and
builds on the bipartisan Workforce Innovation and Opportunity Act (WIOA)
with investments that connect workers with good jobs and prepare them
with skills employers need.
Making a High-Quality College Education More Affordable
An estimated two-thirds of job openings will require some postsecondary education and training by 2020. The Budget:
Provides Tuition-Free Community College for
Responsible Students. The President’s America’s College Promise proposal
creates new federal-state partnerships to provide two years of free
community college to responsible students, while promoting key reforms
to improve the quality of community college offerings to ensure that
they are a gateway to a career or four-year degree. If all states
participate, an estimated 9 million students could benefit from this
proposal.
Ensures that Pell Grants Keep Pace with Inflation.
Pell Grants are central to our efforts to help low and moderate income
students afford college. Since 2013, Pell Grants have been adjusted for
inflation annually, but unless Congress acts, this will end in 2017 and
the value of Pell Grants will start to erode. The Budget continues the
President’s commitment to college affordability by ensuring that Pell
Grants keep pace with inflation.
Keeps Student Loans Manageable. The Administration is helping student
borrowers with existing debt manage their obligations through
income-driven repayment plans, such as the Pay-As-You-Earn (PAYE) plan,
which caps student loan payments at 10 percent of monthly discretionary
income. The Budget proposes to extend PAYE to all student borrowers and
reform the PAYE terms to ensure that the program is well-targeted and to
safeguard the program for the future.
Simplifies and Expands Education Tax Benefits. While
the creation of the American Opportunity Tax Credit (AOTC) in 2009 made
college more affordable for millions of students and their families,
our system of tax incentives for higher education is complex, and
families are sometimes unable to take full advantage of the benefits.
Building on bipartisan reform proposals, the Budget would simplify,
consolidate, and expand higher education tax credits. It would cut taxes
for 8.5 million families and students, simplify taxes for the more than
25 million families and students that claim education tax benefits, and
would provide students working toward a college degree with up to
$2,500 of assistance each year for five years. Building on recent
bipartisan legislation, the Budget also includes a proposal to
significantly simplify the Free Application for Federal Student Aid
(FAFSA).
Drives Performance and Innovation in Higher
Education. The Budget invests in evidence-based efforts at colleges and
universities to dramatically improve educational outcomes for all
students through the First in the World Fund, which recognizes that
leading the world in education requires higher college graduation rates,
not just attendance.
Expanding Technical Training Programs for Middle Class Jobs. Community
colleges, like those in Tennessee and Texas, that build strong employer
partnerships and offer training in in-demand fields are creating career
pathways to the middle class. The Budget requests $200 million for a
new American Technical Training Fund to create or expand innovative,
evidence-based job training programs in high-demand fields that provide a
path to the middle class for hard-working, low-wage Americans. Projects
would emphasize strong employer partnerships, work-based learning
opportunities, accelerated training, and flexible scheduling for
students to accommodate part-time work. Programs could be created within
current community colleges, other innovative, non-traditional training
providers, or these entities in partnership with secondary programs.
This initiative would be housed in the Career and Technical Education
Innovation Fund, jointly administered by the Department of Education and
the Department of Labor and builds on the Trade Adjustment Assistance
Community College and Career Training Grants (for which 2014 was the
final year of funding).
Creating Pathways to High-Growth Jobs – Building on
the important improvements to the Nation’s job training system through
the WIOA, the Budget proposes to support more in-person career
counseling and employment services that help unemployed workers find a
career-path job or the training they need to prepare for one. It will
double the number of workers receiving training through the workforce
development system, with a focus on training partnerships for skills
needed in industries and occupations experiencing significant growth in
the years ahead.
Expanding Apprenticeships and Employer-Validated
Credentials – The Budget makes investments to achieve the goal of
doubling Registered Apprenticeships across the United States over the
next five years to allow workers to learn skills while they are earning a
paycheck, and ensures that training leads to high-quality jobs by
investing in projects that feature strong industry partnerships and
incent additional employer investment in worker training.
Creating a 21st Century Economy
Creating jobs that pay good wages is the best way to grow our economy
and the middle class. To compete in the 21st Century economy and make
America a magnet for job creation and opportunity, we need to invest in
American innovation, strengthening our manufacturing base, keeping our
Nation at the forefront of technological advancement, and leading in the
development of clean energy alternatives and the promotion of energy
efficiency while moving toward energy security through safe and
responsible domestic energy production. Because a 21st Century economy
requires 21st Century infrastructure, the Budget proposes to modernize
our ports and build stronger bridges, better roads, faster trains, and
better broadband, creating jobs for thousands of construction workers
and engineers, strengthening our communities, and making it easier to do
business.
Expanding the National Network of Manufacturing
Institutes – To create jobs, continue growth in the industry, and
strengthen America’s leadership in advanced manufacturing technology,
the Budget provides the resources to launch seven more institutes in
2016, building on the nine institutes already funded through 2015, and
calls for the full investment required to complete a national network of
45 manufacturing institutes.
Investing in Home Grown Products and Ideas – The Budget launches a
public-private investment fund for advanced manufacturing start-ups,
known as the American Made Scale-Up Fund, to help ensure that if a
technology is invented in the United States, it can be made in the
United States. The Scale-Up Fund will help emerging American-made
advanced manufacturing technologies reach commercial scale production in
the United States, creating manufacturing jobs for the future and
helping to ensure that America keeps making things the rest of the world
wants to buy.
Rebuilding Our Infrastructure with Transition
Revenue from Business Tax Reform – To create jobs, spur economic growth
and provide States and localities the certainty they need to plan for
the future, the Budget includes a $478 billion, six-year surface
transportation reauthorization proposal paid for with transition revenue
from pro-growth business tax reform. This transition tax would mean
that companies have to pay U.S. tax right now on the $2 trillion they
already have overseas, rather than being able to delay paying any U.S.
tax indefinitely. The proposal would allow us to repair existing roads
and bridges and modernize our infrastructure with new investments in
highways, freight networks, and bus, subway, rapid transit, light rail,
and passenger rail systems in our cities, fast-growing metropolitan
areas, small towns and rural communities across the country.
Boosting Private Investment through a Rebuild
America Partnership – The Budget boosts private investment in
infrastructure through a Rebuild America Partnership by establishing an
independent National Infrastructure Bank to leverage private and public
capital to support infrastructure projects of national and regional
significance. The Budget creates America Fast Forward Bonds, which build
on the successful Build America Bonds program of taxable bonds. It also
creates the new tax-exempt Qualified Public Infrastructure Bonds, which
will help states and local communities to attract new sources of
capital for infrastructure investment projects.
Cutting Red Tape in the Infrastructure Permitting
Process – The Administration continues to modernize and improve the
Federal permitting process for major infrastructure projects, cutting
through red tape and getting more timely decisions on Federal permits
and reviews while ensuring that projects lead to better outcomes for
communities and the environment.
Investing in Innovative Research and Development –
Our long-term economic competitiveness depends upon continued robust
investment in R&D. The Budget provides a 6 percent increase for
R&D, including significant investments in basic research and
advanced manufacturing technology. The Budget invests in biomedical
research—like the BRAIN initiative, which is developing tools and
technologies to offer new insight into diseases like Alzheimer’s, and
Precision Medicine, which can improve health outcomes and better treat
diseases. It also emphasizes agricultural research, looking at climate
resilience and sustainability.
Investing in Homegrown Clean Energy – In order to
secure America’s energy future and protect our children from the impacts
of climate change, the Budget invests in clean energy, improving energy
security, and enhancing preparedness and resilience to climate change.
These investments support the President’s Climate Action Plan, helping
to expand American leadership in the clean energy economy with new
businesses, jobs, and opportunities for American workers.
Keeping Americans Safe at Home and Abroad
Economic growth and opportunity can only be achieved if America is safe
and secure. The Budget provides $561 billion in base discretionary
funding for national defense—$38 billion above sequestration levels—and
$58 billion for Overseas Contingency Operations to provide the resources
needed to sustain the President’s national security strategy,
protecting the country’s security and well-being both at home and
abroad.
Degrading and Defeating the Islamic State of Iraq
and the Levant (ISIL) – The Budget provides the necessary resources to
degrade and ultimately defeat ISIL, address the ongoing humanitarian
crisis in the region, continue efforts to train and equip the Iraqi
security forces, support regional partners, and bring stability and
promote the conditions for a negotiated settlement to end the conflict
in Syria.
Countering Russian Pressure and Aggressive Action
Together with our European Allies – In response to the Russian
Federation’s aggressive acts, the Budget includes proposals for
political, economic, and military support to NATO allies and partner
states in Europe, including the governments most targeted by Russian
pressure. This includes funding to support efforts to bolster democracy
and good governance, increase the capabilities of security forces,
strengthen the rule of law and anti-corruption measures, and promote
European Union integration, trade, and energy security.
Promoting Prosperity, Security and Good Governance
in Central America – The Budget provides $1 billion to support a
long-term, comprehensive strategy for Central America designed to
contribute to the evolution of an economically-integrated Central
America that is fully democratic, provides greater economic
opportunities to its people, promotes more accountable, transparent, and
effective public institutions and ensures the safety of its citizens,
addressing the challenges that have resulted in an influx of migration
from the region.
Protecting our Nation Against Cyber-Attacks – No
system is immune to infiltration by those seeking to steal commercial or
Government information and property or perpetrate malicious and
disruptive activity. The Budget provides $14 billion to support
cybersecurity efforts across the Government to strengthen U.S.
cybersecurity defenses and make cyberspace more secure, allowing the
Government to more rapidly protect American citizens, systems, and
information from cyber threats.
Confronting the Threat Posed by Infectious Diseases –
The Budget provides resources to support the Global Health Security
Agenda, increases funding to eradicate polio and other global health
challenges, and creates a new Impact Fund for targeted global HIV/AIDS
efforts. In addition, the Budget increases funding for domestic
preparedness efforts to more effectively and efficiently respond to
potential future outbreaks here at home. The Budget also makes
investments to address the domestic HIV epidemic to help States develop
HIV implementation plans to support the goals of the National HIV/AIDS
Strategy.
Combating Prescription Drug and Heroin Abuse – The
Budget includes more than $100 million in new investments across HHS to
reduce abuse of prescription opioids and heroin, which together take the
lives of 20,000 Americans per year. These new resources will increases
funding for every state to expand existing Prescription Drug Monitoring
Programs; expand and improve the treatment for people who abuse heroin
and prescription opioids; and support dissemination of naloxone, an
opioid antagonist that reverses the effects of opioid overdose, by first
responders in an effort to prevent overdose deaths in high risk
communities.
Honoring Our Commitment to Veterans – The Budget
invests in the five pillars the President has outlined to support our
Nation’s veterans: providing the resources and funding they deserve,
ensuring high-quality and timely health care, getting veterans their
earned benefits quickly and efficiently, ending veteran homelessness,
and helping veterans and their families get good jobs, education, and
access to affordable housing.
Creating a Government for the Future
The President is committed to creating a Government that makes a
significant, tangible, and positive difference in the economy and the
lives of the American people, and to driving lasting change in how
Government works. This Administration has launched successful efforts to
eliminate wasteful IT spending, reduce the Federal real property
footprint, modernize and improve citizen-facing services, and open tens
of thousands of Federal data sets to spur innovation in the private
sector.
Supporting the President’s Management Agenda – The
Budget includes initiatives to improve the service we provide to the
American public; to leverage the Federal Government’s buying power to
bring more value and efficiency to how we use taxpayer dollars; to open
Government data and research to the private sector to drive innovation
and economic growth; to promote smarter information technology; create
new Idea Labs to support employees with promising ideas, and, to attract
and retain the best talent in the Federal workforce.
Supporting Digital Service Delivery for Citizens –
In 2014 the Administration piloted the U.S. Digital Service, a unit of
innovators, entrepreneurs, and engineers. This team of America’s best
digital experts has worked in collaboration with Federal agencies on
their high impact, citizen-facing programs to improve how citizens and
businesses experience government services. The Budget includes $105
million to scale and institutionalize this approach and create digital
services teams in 25 key agencies. It also includes increased funding to
scale up the central USDS team to aid in building the agency teams,
increase oversight and accountability for IT spending, improve IT
procurement, and improve agency cybersecurity and cyber readiness.
Building Evidence and Encouraging Innovation – The Budget invests in
developing and testing effective practices, recruiting social and
behavioral sciences experts, and providing better information on what
works in key areas ranging from improving college completion to creating
greater accountability for job training programs to improving the data
available on Indian Country.
Reforming the Government to Win in the Global
Economy – The Budget also includes proposals to consolidate and
reorganize Government agencies to make them leaner and more efficient,
and it increases the use of evidence and evaluation to ensure that
taxpayer dollars are spent wisely on programs that work.
Achieving Fiscal Sustainability and Promoting Sustainable Growth
This year’s Budget supports the President’s ambitious vision for
supporting growth and opportunity, and does so while meeting a key test
of fiscal stability: reducing deficits to below 3 percent of GDP,
stabilizing debt as a share of the economy, and putting it on a
declining path. It achieves these goals by replacing mindless austerity
with smart reforms, paying for all new investments, and obtaining $1.8
trillion in deficit reduction primarily from health, tax, and
immigration reforms.
Reversing Mindless Austerity – Returning to the
mindless austerity of sequestration in 2016 would bring discretionary
funding to its lowest level, adjusted for inflation, since 2006. The
Budget proposes to end sequestration, fully reversing it for domestic
priorities in 2016, matched by equal dollar increases for defense
funding. These investments are more than paid for with smart spending
cuts, program integrity measures, and commonsense loophole closers –
including, for example, targeted reforms to crop insurance programs;
program integrity investments across a range of programs; and closing
the “carried interest” tax loophole.
While many of the investments described above are
made possible by reversing sequestration, the contrast between what can
be achieved under sequestration versus under the President’s Budget is
particularly stark in a few key areas:
Research and Development. Under 2016 sequestration
levels, assuming roughly current funding patterns, research funding
adjusted for inflation would reach its lowest levels since 2002 – other
than when sequestration was in full effect in 2013. By comparison, the
President’s Budget would increase R&D funding by nearly 6 percent
over 2015, including investments in Precision Medicine, the Brain
Initiative, and other areas.
Early Learning. The last time sequestration took full effect in 2013,
more than 57,000 children lost access to Head Start and Early Head
Start, with enrollment falling to the lowest level since 2001.
Researchers have established that supporting children during this
critical stage yields benefits that far outweigh the costs of the
investment. The President’s Budget makes major investments in early
learning (described above), including, for example, making sure children
can be served in full-day, full-year Head Start programs that research
shows lead to better outcomes for kids.
National Security. The Joint Chiefs have made clear
that a return to sequestration-level cuts would significantly reduce the
military’s ability to fully implement the President’s defense strategy.
The military would be unbalanced and eventually too small and
insufficiently modern to meet the needs of our strategy, leading to
greater risk of longer wars with higher casualties for the United States
and our allies and partners. In contrast, the Budget makes the
investments needed to protect the Nation’s security and well-being both
at home and abroad.
Paying for all new investments – Every investment in the Budget –
including the new and expanded tax credits for middle-class and working
families, and mandatory investments in community college and preschool –
is more than fully paid for through spending or tax reforms. In
particular, the Budget pays for many of its investments in helping
middle class families get ahead through three important reforms to the
tax system. First, it would eliminate what may be the largest single
loophole in the tax code – a provision known as “stepped-up basis” that
lets wealthy households avoid taxes on hundreds of billions in capital
gains taxes each year. Second, it would raise the top capital gains and
dividend rate for high-income households to 28 percent, the rate under
President Reagan. Third, it reforms financial sector taxation to make it
more costly for large, highly-leveraged financial firms to finance
their activities with excessive borrowing, reducing risks to the broader
economy.
Reducing Deficits through Health, Tax, and
Immigration Reform – While the Budget’s new investments are paid for
with smart reforms across a range of programs, as well as commonsense
tax loophole closers, the $1.8 trillion in deficit reduction in the
Budget is achieved primarily by focusing on the key drivers of our
Budget challenges: health care cost growth and inadequate revenue levels
in the face of an aging population. Specifically, the Budget includes:
$400 Billion in Health Savings. Over the last few
years, we’ve seen historically slow rates of health care cost growth,
which are already yielding fiscal dividends. The Budget includes $400
billion in health savings that build on the Affordable Care Act to help
maintain slower cost growth while improving health care quality –
complementing the Administration’s other efforts on delivery system
reform. Notably, the Budget’s health savings grow over time – raising
about $1 trillion in the second decade, and extending the Medicare
Hospital Insurance trust fund solvency by approximately 5 years.
$640 Billion in Net Deficit Reduction from Tax
Reforms. The Budget raises about $640 billion in net revenue for deficit
reduction from curbing high-income tax expenditures. These savings come
from limiting tax benefits that are not efficient in achieving social
goals, raising revenue without raising tax rates.
Through these policies, the President’s Budget
brings annual deficits well below the 40-year historical average of 3.2
percent of GDP during every year of the budget window. A key test of
fiscal sustainability is whether debt is stable or declining as a share
of the economy, resulting in interest payments that consume a stable or
falling share of the Nation’s resources over time. The Budget meets that
test, showing that investments in growth and opportunity are compatible
with also putting the Nation’s finances on a strong and sustainable
path.
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