CNN news 2011-04-18
Yesterday was Thursday Thursday, today is Friday Friday. And you know what that means. CNN Student News is breaking down everything from budgets to baseball.
It’s Financial Literacy Month. Monday is tax day, debate raging about the government’s budget. You know we are starting with the money story. First things first.
The US House voted yesterday on the 2011 budget which runs through this September. The bill would cut around 38 billion dollars from what the government will spend this year. Its next stop was the Senate. And you can go to the cnn.com for the latest update on this bill. Remember it has to pass both the House and the Senate before the President can sign it into law. And all of this is just for the remaining few months in the 2011 budget. There’s even bigger fight brewing over the 2012 budget. Democrats led by the President and Republicans who lead the US House of Representatives don’t see eye to eye on how much the government should spend or tax. Mary Snow dives into their differences.
He said it before. And President Obama vowed again not to extend Bush-era tax cuts for families making more than 250,000 dollars a year. "We can not afford one trillion dollars’ worth of tax cuts for every millionaire and billionaire in our society." If those tax cuts are not renewed, it would mean that taxes would go up for about 2% of the population. The President calls them "the richest Americans". But budget experts say it’s not enough to help lower the deficit, even with spending cuts. Here’s a hypothetical scenario. The Congressional Budget Office crunched the numbers. If taxes were rate 1% for people on the top 2 tax brackets, it would amount to 115 billion dollars over a decade. But raise taxes by that same amount 1% on all the other brackets ,it comes to just under 500 billion dollars. CNN Money’s Jeanne Sahadi says there are other reasons why the richest Americans can’t generate the kind of revenue that’s needed.
The income of the very wealthy tends to be more volatile than income of most people ,because it’s tied up with investments and when the economy goes out ,often their income gets hurt. So you are not gonna get as much revenue from them as you might expect especially when you needed in a downturn. And two, there're just not that many rich people much as we think, you know, there are a lot of them. They are not enough to carry the country in terms of deficit reduction.
But with the 2012 presidential election around the corner, budget experts say no one wants to raise taxes on the middle class, Ron Haskins who served as a senior advisor on welfare policy to President George W. Bush says both democrats and republicans are wrong.
Republicans are betting that if they say no new taxes, the American people like that would try to do it all on the spending side. The problem is spending affects American public, too. A lot of people are gonna lose their benefits. And Democrats say we'll just tax the rich and not the middle class, but that won’t produce enough revenue, so that’s not gonna work, either.
And if the last fight over the bushier tax cuts is any indication, this will be a furious battle. The President had vowed many times not to extend tax cuts to the wealthiest Americans. But in December, he did. He says he did so to prevent a tax hike on middle class Americans.
Mary Snow CNN New York.