President Obama’s budget plan consists of big expenditures for infrastructure, the armed forces, and research. The budget foresees a 474 billion USD deficit, which is less than 3% of the GDP, and a government debt of 75% of GDP, the highest safe level suggested by economists. Obama is calling for a 7% rise in military spending, bringing the military budget to 534 billion USD in 2016. It requests additional funding for US troops stationed in Asia-Pacific and efforts to fight Islamic State militants, strengthen cyber security, and handle problems in Eastern Europe.

Priority for the middle class

Obama’s fiscal 2016 budget blueprint, to be applied in October 2015, continues to favor the middle class and try to narrow the income gap. Obama has proposed a series of programs to help middle-income Americans and placing higher taxes on corporations and wealthy individuals. The budget would reform rules governing trust funds and raise the capital gains and dividend tax rates to 28 percent from the current top rate of 23.8 percent. Obama expects that these measures will boost the US economy and create more jobs at the fastest pace since the 1990s.

Obama’s budget is seen as a draft campaign platform for the Democratic Party which focuses on improving the economy and supporting social security policies. In his 2015 State of the Union address, President Obama mentioned several indicators of the US economic recovery and attributed the success to the contributions of the middle class. That is in contrast to the Republicans, who hail the paramount role of the upper class.

Differences from the Republican Party

A few hours after the announcement of President Obama’s budget plan, every Republican in the Senate and the House had rejected it. The most controversial item is Obama’s proposed tax on profits accumulated overseas by US companies. Obama calls for a one-time 14 percent tax on an estimated 2.1 trillion USD in profits piled up abroad over the years, targeting a loophole that lets companies pay no tax on earnings held abroad. The government would collect 238 billion USD for infrastructure projects such as building and upgrading highways, bridges, ports, and traffic constructions.

Republicans say the budget plan aims “to polish” the prestige of the Democratic Party prior to next year’s presidential election. Chairman of the Senate Finance Committee Orrin Hatch said Obama’s plan aims to raise government spending through tax increases. Hatch said the proposal benefits the Democratic Party, but does not help the US gain a firmer financial basis.

At a meeting with the Department of Homeland Security, President Obama warned the Republican Party not to play a political game with the economy and national security.

In his State of the Union address, Obama called on Republicans in Congress to work with the White House to reach consensus on reforming tax and cyber security laws, the budget, immigration policies, and economic recovery measures. He also mentioned his presidential right to veto a law.

Obama’s fiscal 2016 budget has little chance of being approved by a Congress controlled by the Republican Party. The public is waiting for the next moves by both Parties to sell their policies and gain voter support for the next election.