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The President's budget

February 15, 2011

The President's fiscal blueprint isn't going over well. From the center-left TaxVox:

Obama would get there mostly with a collection of ideas that he failed to sell to even a Democrat Congress. They include: allowing the 2001 and 2003 tax cuts to expire at the end of 2012, capping the value of itemized deductions at 28 percent, taxing the compensation of hedge fund managers and other financiers at ordinary income instead of capital gains rates, and increasing taxes on multinationals.

These proposals will make lobbyists happy and even richer than they are. But there is no chance that tea-party obsessed congressional Republicans would support any of them. Thus, even with an improving economy, tax revenues are likely to remain a relatively small share of the overall economy through Obama’s first term.

The upcoming debate over that small chunk of non-defense domestic spending that is subject to annual congressional review is healthy and important—and it will get very nasty. But compared to burgeoning entitlements on one hand and tax revenues that remain near historic lows on the other, the fight over 12 percent of the budget is a fiscal sideshow.

I won't spend much time talking about the President's tax proposals until there seems to be a possibility that they might be enacted. If you want to look into them anyway, the TaxProf has links to the documents. Kay Bell and Janet Novack have more.

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