President Obama’s 2013 Budget: Five Things You Should Know

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U.S. President Barack Obama's 2013 budget proposal will give Republicans and Democrats plenty to fight about.

The $3.8 trillion budget proposal, submitted to Congress, essentially follows the blueprint President Obama outlined in his State of the Union address.

That means fewer spending cuts and more taxes than Republicans will like.

So if you thought last summer's wrangling over the raising of the debt ceiling was nasty, watch the rhetorical Armageddon when those battles get re-fought in an election year.

President Obama's 2013 budget sets much of the agenda for the stormy election season ahead. These points will help you make sense of the chaos.

What You Should Know About President Obama's 2013 Budget

  1. Congress Sets the Budget: The fact is Congress, not the president, ultimately controls the federal purse strings. While much hoopla will accompany President Obama's 2013 budget, presidential budget proposals often serve more as a political billboard than a framework for how money is collected and spent by the government.

    So President Obama's budget will provide talking points for his 2012 re-election campaign and targets for the Republicans who seek to defeat him.

    "Every budget proposal is partly a serious policy document and partly a political statement,"Stan Collender, a former staffer for both the House and Senate Budget Committees, told msnbc.com.

  2. No Budget, No Problem: Not only can Congress reject the president's budget, it doesn't even have to vote on it. Congress has little incentive to vote on the budget this year. In addition to Republican opposition, many Democrats in swing districts won't want to go on record voting for any kind of tax increase.

    Last year the Senate rejected President Obama's 2012 budget by a 97-0 vote.

    In fact, Congress has not approved a budget for over 1,000 days, getting by with stopgap spending bills in the interim.

  3. A Taxing Issue: As expected, President Obama's 2013 budget includes tax increases for the wealthy. That will keep tax issues in the spotlight this year, since Republicans have vowed to oppose tax increases of any kind.

    The president included the so-called "Buffett Rule," which creates a 30% minimum tax for anyone making $1 million or more. It would replace the Alternative Minimum Tax (AMT).

    More controversial is the proposal to tax dividends as ordinary income for those making $250,000 and up. Now the top dividends rate is 15%. President Obama would also raise the top rate on taxes on capital gains from 15% to 20%.

    Those proposals will help President Obama position himself as a defender of the middle class against the rich, while giving the GOP ammunition to accuse him of "class warfare."

  1. Another Year Older and Deeper in Debt: Although President Obama will say his budget includes $4 trillion in deficit reductions over the next decade, Republicans will tell you that the 2013 budget deficit is $1.33 trillion.

    That's the fourth straight year the president's budget deficit has exceeded $1 trillion. Expect to hear a lot about it, as the Republicans will waste no opportunity to remind Americans of President Obama's promise in 2009 to cut the deficit in half.

    It also could reignite the debate over the national debt, which is now over $15 trillion and equal to the country's annual gross domestic product.

  2. Fuzzy Math: You'd think the government would at least be able to keep accurate figures on how much money it spends, but no. It literally depends on whom you ask.

    For example, the Office of Management and Budget (OMB) put 2010 spending by the Department of Health and Human Services at $854 billion. The Census Bureau says the figure is $944 billion. Differences in accounting methods account for the whopping $90 billion discrepancy.

    And that doesn't get into all the accounting voodoo in the budget itself, which often relies on unrealistic assumptions.

    "ToWashington, these are rounding errors," Pete Sepp, executive director of the Alexandria, Virginia-basedNational Taxpayers Union, told Bloomberg News. "To the rest of America, this is real money that could help real people with real problems."

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