Everybody leads with President Obama's decision to put some money in a piggy bank. In the budget proposal that will be released today, Obama will announce that he wants to start his promised overhaul of America's health care system by creating a $634 billion reserve fund over the next 10 years that will be paid for by increasing taxes on the wealthy and cutting government spending. At the center of the plan is a call to gradually reduce the value of itemized deductions that those in the highest tax brackets can take for things like mortgage interest and charitable contributions. Separately, Obama will also propose to extend his tax cuts for most Americans and pay for them with the revenue he would get from polluting industries. These two proposals, combined with Obama's stated goal of rolling back some of the Bush administration's tax cuts, add up to "a pronounced move to redistribute wealth by reimposing a larger share of the tax burden on corporations and the most affluent taxpayers," declares the New York Times.
USA Todaycalls the $634 billion reserve fund "a big step toward extending health coverage to 46 million uninsured and subsidizing premiums for others who have insurance." But the administration made it clear it was just the first step, and most papers cite an administration official who characterized it as a "very substantial down payment" on Obama's health care goal. The plan contains few details on how the money would be used. "Rather, the president's proposal to raise revenue is intended to signal his seriousness about moving the talks forward on Capitol Hill," notes the Los Angeles Times. The Washington Post points out that this "strategy is largely intended to avoid the mistakes of the Clinton administration, which crafted an extensive proposal in secret for many months before delivering the finished product to lawmakers, who quickly rejected it." The proposal to raise taxes is expected to create a huge ruckus in Congress, and one of the key questions will be "whether a change to the deductions formula would discourage charitable giving among the wealthy," says the Wall Street Journal.
The proposal to raise taxes on the wealthiest Americans involves reducing the value of tax deductions by about 20 percent for families making more than $250,000 a year or thereabouts. For those of us who aren't used to getting big deductions, the NYT does the best job of explaining the logic behind it and what it means. The way the tax law is written, those in a higher tax bracket get a bigger deduction in their tax liability. So, for example, someone in the 35 percent bracket gets a bigger reduction for having $10,000 in itemized deductions than someone who is in the 28 percent bracket, which the White House says is unfair. Republicans obviously oppose this move, saying that it would hit many small businesses.
The change in itemized deductions would provide about half of the money for the reserve fund. Where's the rest coming from? The biggest chunk would come from a proposal to cut payments the government makes to insurance companies that provide care for those in Medicare under what is known as Medicare Advantage. Obama also wants to cut costs by reducing the amount that Medicare pays hospitals with high re-admission rates, a move that is part of a broad plan to improve care. In addition, wealthier Medicare beneficiaries would be asked to pay more to receive the program's prescription-drug coverage.
In the 10-year budget Obama will release tomorrow, he will also note that he wants to pay to extend the tax cuts for low and middle-income Americans with some of the billions the government will get from the "cap and trade" program that has been a centerpiece of the president's platform. The program would basically require companies to buy permits if they want to exceed limits on pollution emissions. "Cap-and-trade is code for increasing taxes and killing American jobs," said House Republican Leader John Boehner, "and that's the last thing we need to do during these troubled economic times." The program wouldn't be instituted until 2012, at which point the administration expects the recession to be over.
The WP is all over Obama's budget and dedicates three separate front-page stories to the issue. In one blunt piece, the WP declares that the president's budget not only assumes that lawmakers can resolve some issues that have been plaguing them for years but also "relies on a few well-worn budget tricks." In his big speech before Congress, Obama said his administration "already identified $2 trillion in savings," but the truth is that about half of those are really tax increases. And much of the rest "comes from measuring Obama's plans against an unrealistic scenario in which the Iraq war continues to suck up $170 billion a year forever," details the Post. Although everyone says that Obama has successfully eschewed some common budget tricks that previous administrations were fond of, the plan isn't quite free of what the paper calls "budgetary maneuvers."
Considering the numbers he's starting out with, many are saying that Obama's goal of halving the deficit by the end of his first term isn't very ambitious. The Congressional Budget Office recently said the deficit could be cut in half by 2013 simply by winding down the Iraq war and allowing some tax cuts to expire. Not everyone agrees. In an analysis piece inside, the LAT says that halving the deficit won't be an easy task and may end up costing Obama dearly. Some of the methods Obama said he will use to follow through "have fallen short in the past" and, perhaps more importantly, "Congress is not ready to mend its free-spending ways." The huge spending bill that the House passed yesterday increases expenditures by 8 percent and is full of earmarks from both sides of the aisle.
What is undoubtedly ambitious is Obama's agenda, which "amounts to a long work order for a legislature that has seen its productivity sag in recent years," notes the Post. The young president is basically asking Congress to pass one huge piece of legislation about once a month. Many Democrats are getting nervous that the huge expectations Obama is creating could result in a big defeat in the 2010 midterm elections if it turns out they can't follow through.
At least Democrats can take heart that one of the GOP's rising stars has lost some of his shine. Both the NYT and LAT go inside with the searing criticism that was heaped on Louisiana Gov. Bobby Jindal for his response to Obama's speech, much of it from members of his own party. Many said the 37-year-old governor, who is seen as a possible presidential contender in 2012, failed in both message and delivery. Still, many caution against writing him off just because of one speech. "It was a disaster," said Paul Begala, a former aide to President Bill Clinton, "but you can come back from disaster."
The LAT fronts, and everyone covers, a new study that concluded it doesn't matter what diet people choose to follow as long as they cut calories. In the largest study of its kind, researchers tested several popular weight-loss methods for two years and found that all the participants lost and regained the same amount of weight. The study's authors say it shows that people should choose whichever diet they can stick to the longest. "There isn't any one way," one expert said. "That is the nice thing about none of these diets in particular winning."
You know that plush and soft toilet paper you love so much? Well, hope you enjoy it, because you're killing lots of trees in the process, notes the NYT. It costs about the same to make toilet tissue from recycled material, but it's not as soft and so is much less popular in the United States. Environmental groups say they will begin a push to educate Americans on the effects of their love for the soft stuff.
The WP's David Broder writes that Obama's speech on Tuesday "was a dramatic reminder of the unbelievable stakes he has placed on the table in his first month in office." Veteran lawmakers know how difficult it is to get one ambitious piece of legislation through Congress, but on Tuesday they heard how Obama wants them to overhaul energy, health care, and education. Oh yeah, and there's that little problem with the economy and some wars being fought on foreign soil. "Is he naïve? Does he not understand the political challenge he is inviting?" writes Broder. "When we elected Obama, we didn't know what a gambler we were getting."
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