family in America has to reconcile what they spend with what they have; they must find a way to pay the mortgage, monthly bills, and insurance premiums; put food on the table and fill up the gas tank; and sock whatever they can away for a rainy day or to send a son or daughter to college—all at the same time. Often, it’s a struggle. But at the end of the year, the family budget has to add up. It’s the same for our entrepreneurs and for our largest corporations.
But over the past eight years, Washington has ignored those rules and we have seen a dangerous erosion of the principles that have allowed our economy to thrive. Those who can make big campaign contributions or hire high-priced lobbyists are able to carve out huge loopholes in our tax code and win massive subsidies that shift the tax burden to small businesses and the middle class. Massive tax cuts have gone to the wealthiest individuals and hundreds of billions of dollars on tax breaks have been showered on big corporations. More than a half-trillion dollars have been spent on invading and occupying Iraq. Large future expenditures have routinely been omitted from the budget to mask their true cost. In total, legislation enacted over the last eight years has added $4 trillion to the deficit. As a result, we have seen a surplus of $236 billion at the end of the Clinton Administration that was projected to grow still larger over time instead turn into a deficit of more than $400 billion today. This has been the most fiscally irresponsible Administration in American history.
Barack Obama will change how the government spends your money. He will restore honest, transparent government. He will make sure Washington spends taxpayer dollars wisely—investing in the future, not mortgaging it. He will modernize and simplify our tax code so that it provides greater relief to more Americans. He will lead an Administration that will make sure its numbers add up, and the result will be economic growth and prosperity for all Americans. As President, Barack Obama will:
Pay for All Proposals and Cut the Deficit.
Barack Obama recognizes that when you are in a deep fiscal hole, the first thing you do is stop digging. That is why he will pay for all of his proposals and reduce the deficit. We cannot afford another four years of a President who uses balanced budget targets as a political sound bite while actually adding hundreds of billions of dollars to our national debt. With the current uncertainty surrounding the state of our economy, Barack Obama believes the best way to demonstrate a genuine commitment to fiscal responsibility is to lay out how he will pay for all new proposals, return to conservative budget practices, and put forward tangible plans for immediate deficit reduction.
Cut Spending and Reduce Government Waste.
Barack Obama’s budget plan is a net spending cut—all of his new investments are more than paid for by cutting wasteful spending and streamlining government. As President, Barack Obama will cut spending by responsibly ending the war in Iraq, cutting subsidies for private plans in Medicare, eliminating subsidies for private student loan companies, reforming agricultural subsidies for high-income farmers, continuing the progress Democrats have made on earmarks by cutting them to at least the level they were in 1994, ending no-bid contracting, and phasing out unnecessary and duplicative programs. In an Obama Administration, overall spending will be lower than the average level of the last forty years, as well as lower than the average level under the current President.
Put Medicare on Solid Footing by Reducing Costs and Improving Quality.
Barack Obama understands that the biggest threat to our fiscal future is the fact that health costs system-wide, in both the public and private sectors, are growing rapidly. While some want to deal with this long-term fiscal threat by simply cutting benefits for Medicare and Medicaid and turning them into a second-class health system, Barack Obama believes that will violate the trust we have made with our nation’s seniors. As President, Barack Obama will put Medicare on sound fiscal footing by reducing health costs throughout our health system while improving quality.
Give Tax Relief to the 98 Percent of Households Making Less than $250,000 a Year.
The Bush tax cuts dangerously distorted our tax system by rewarding pure wealth and not rewarding hard work and success. Over the past eight years, the wealthiest of the wealthy have enjoyed large income gains while almost every single other American has struggled. Barack Obama believes that the rest of America deserves a break. As President, he will vow to not increase taxes for any household making less than $250,000 a year. That means that 98 percent of all households—and nearly 99 percent of small business owners—will not see their taxes rise. At the same time, the Obama plan will ask families making over $250,000 a year to give up a portion of the tax cuts they have gotten in recent years in order to restore fairness to our system without increasing the deficit.
Eliminate Special Tax Breaks for Corporations.
According to a recent congressional investigation, offshore tax abuse costs this country up to $100 billion each year. Almost half of all foreign profits of U.S. corporations in a recent year were hidden in tax havens, and as many as two million individual taxpayers may be hiding funds in offshore tax havens as well. Barack Obama has been a leader in cracking down on tax havens by requiring greater disclosure of financial transactions in tax secrecy jurisdictions and giving the Treasury Department the tools and time it needs to enforce the law. In addition, the tax code is filled with special provisions that subsidize companies that invest overseas, provide lower rates for industries with powerful lobbyists like the oil and gas industry, and allow tax shelters to proliferate. As President, Barack Obama will close the door to international tax havens and plug offshore tax loopholes, saving the United States tens of billions of dollars each year.
Simplify Tax Filings for Middle-Class Americans.
Barack Obama believes that the IRS has created a tax filing process that, for millions of Americans, is far too complicated for the filings they ultimately make. Deductions and exemptions are built into the system, but ordinary people don’t have the time to figure them out without going to an expert preparer—yet another cost at tax time. In 2004, the IRS estimated that it took twenty-eight hours for an individual to complete his or her tax filing. As President, Barack Obama will dramatically simplify tax filings so that millions of Americans will be able to do their taxes in less than five minutes. An Obama Administration will ensure that the IRS uses the information it already gets from banks and employers to give taxpayers the option of prefilled tax forms to verify, sign, and return. According to expert estimates, this will save Americans up to two hundred million total hours of work and aggravation and up to $2 billion in tax preparer fees.
Create a Reserve Fund for Emergencies and Deficit Reduction.
One can never know what kind of emergency may occur that will require the help of the federal government. If we have no money put away for these possibilities, we run the risk of allowing these unforeseen events to cause even more economic pain and derail our long-term growth. That’s why Barack Obama will not only pay for all his proposals, but also will put aside additional projected savings into an emergency reserve fund to meet any unexpected needs and reduce the deficit.
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