By Polina Chernitsa
The budget estimates for 2013 announced by U.S. President, Barack Obama has enraged the Republicans. Economists are divided over the projections, while Barack Obama himself remains confident that higher taxes for the rich and the creation of new jobs will lead to economic growth. But experts are uncertain when the budget will be passed and how it will be adopted.
The budget estimates for the fiscal year beginning in October this year provide for 3,8 trillion dollars expenditure, and a deficit of 900 billion dollars. That is less than the trillion dollars mark in the past 4 years, points out Professor Vladimir Krasavin, an economist.
“Obama has reduced the expenditure section by 4 trillion dollars, by slashing spending in areas which are regarded as traditionally belonging to his administration. The U.S. economic growth is moderate, but in view of the post-crisis adaptation, nobody is demanding a high growth rate”, Professor Krasavin said.
The Defense Department, which for ten years received the lion’s share of the American budget, is the major loser in the across the board reductions. The Pentagon is to lose almost 500 billion dollars. NASA’s space programme is also a net loser; the secret services and public sector employees will equally get less money and the number of government workers will be reduced drastically. In contrast, the State Department, the anti-missile defense system and the American nuclear programme will get more money to spend. The U.S. budget projections also provide for the financial support of the so-called Arab spring countries- about 800 million dollars. Six billion dollars are allocated for sponsoring international organizations. Republicans have strongly criticized the budget estimates, calling them irresponsible. The leader of the Senate Minority, Mitty McConnell has accused Obama of pre-election populism, vowing to block the adoption of the budget.
The canceling of tax concession, which was instituted by the previous administration, is the most heavily lambasted. Banks are to pay higher taxes and they are expected to pay to the State Treasury 61 billion dollars within ten years. The oil sector is also to pay more tax. The tax on dividends is to go up by 40 per cent. Income tax for those who receive more than a million dollars per year will be increased by 30 per cent. Some experts say that the measure will benefit only the lower rank officials.
The budget estimates have been criticized not only by Republicans, but also by Democrats, who remain rather cautious about their effectiveness. Experts believe that the document will not be adopted in its present form by the end of February.