Budget expands tax cuts, military spending
— -- Some key areas of President Obama's budget released Thursday:
Taxes
Obama proposal:The budget would extend the new tax cuts of $400 for individuals and $800 for families for at least the next decade. In 2011, couples earning $250,000 a year or more ($200,000 for individuals) would pay higher income taxes, up to 39.6%; have limited itemized deductions; and pay a 20% tax rate on capital gains and dividends.
Context:Obama has made it clear he wants to roll back President Bush's tax cuts, which will expire at the end of next year. The question: when? Republicans, including Rep. Eric Cantor of Virginia, say letting the tax cuts expire amounts to a tax hike at the worst time. House Speaker Nancy Pelosi says she prefers to repeal them sooner.
Defense
Obama proposal:The budget calls for $205.5 billion in war costs for Iraq and Afghanistan over the next year and a half, including $75.5 billion more this year and $130 billion for fiscal 2010. Those costs are included in the overall budget for the first time. The budget includes a 4% increase to $533.7 billion for the Defense Department.
Context:War spending would continue at a rate of roughly $11 billion a month for the next 18 months, even as the administration plans to dramatically reduce troop levels in Iraq. Specifics about spending on weapons and other programs won't be available until the full budget is released in April.
Education
Obama proposal:Obama says he'll end subsidies to banks that lend to students and make the federal government a major student lender, ending the public-private partnership. He wants to raise the maximum Pell grant to $5,550 and link future grant increases to inflation. He'd create a $2.5 billion fund to help low-income students complete college.
Context:Among the 75% of students who finish high school on time, two-thirds graduate from college. Obama says he wants to help put college within reach of more students and make it more affordable. Ending government-guaranteed loans through banks represents perhaps the biggest break from the Bush administration.
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