US President’s Budget Proposal: The Continuity of Grim Business and Government Finances

President Obama has delivered his budget proposal to Congress for the 2013 fiscal year (October 2012 to September 2013). Among the new strategies were an urgent stimulus for businesses and raising taxes on the rich, and the midterm financial reform’s consistent plans.

Looking toward November’s presidential election, the president is using his budget proposal and a strong confrontational attitude instead of campaign weapons. His aggressive turnaround is feared.

Still, the opposition between the Democratic and Republican parties is fierce. It can be said that the implementation of political measures is opaque and the soundness of government finances is grim.

Above all, the budget proposal demonstrated a plan that supports, among other things, business conditions with infrastructure improvements and employment policies. Although U.S. business conditions have recovered, original methods were slow and the employment situation is still terrible. Europe’s ongoing crisis is still sparking fears.

The president is right to raise the importance of business conditions for the short term.

The president promised to cut the budget deficit in half during his four-year term, but the 2012 fiscal year budget proposal estimates that the deficit will swell around 1.3 trillion dollars. The government’s deficit would exceed $1 trillion for four consecutive years.

In addition to the antirecession policy of the financial crisis, business recovery has also slowed, but deteriorating government finances is the main cause. The president will probably lose points for the promises that he could not keep.

For this reason, the budget proposal estimates that approximately $900 billion will be cut from the deficit in 2013. After a 10-year period, the scale of $3 trillion stressed again tackling the government deficit reduction.

To support deficit reduction, the rich would pay about $1.5 trillion more in taxes. Former President Bush’s large-scale tax cuts for the rich would be halted at the end of the year and the defense budget would also be reduced.

In the mid-term, the clear position to reduce the deficit will probably be contributed to the U.S. economy. However, the problem is the compatible views of the strategy of the president’s business policies and government financial reform are not open.

The Republican Party, which opposes ending the Bush tax cuts and raising taxes on the rich, is strengthening its opposition to the proposal. On the contrary, the Republicans want to reduce Social Security benefits, a plan rejected by Democrats.

Judging from the presidential election, it is no mistake that bargaining is in the least intensifying. Last summer, both parties sparred over increasing the debt ceiling and America’s credit rating was reduced.

If the U.S. government’s finances cannot demonstrate durability, it should not forget the lesson it learned from losing the market’s acknowledgement. It looks like that chaos will not be repeated; the president is leading and the parties want to compromise.