Obama's budget vision: Tax and spend
Mark Wilson/Getty Images

President Obama's budget for the 2015 fiscal year contains lots of populist proposals like more generous tax credits for the working poor, initiatives for education from preschool through college, for roads and other public works, and for research and manufacturing centers. Obama intends to pay for them with taxes, mostly on the rich, which would bring in more than $1 trillion over 10 years. But not all of that would go to government programs — much is, in fact, slated for deficit reduction.
Yet with the deficit declining at the fastest rate since World War II, I — and many others will probably agree — wonder why raising taxes is really necessary at this stage. With interest rates on government borrowing remaining near record lows, the market continues to offer the federal government very cheap money to invest in infrastructure, education, basic research, and measures to reduce economic inequality. That spending can be paid for later, when unemployment is lower, growth higher, and the economy in a stronger position to withstand tax rises.
Faster deficit reduction may be political wisdom — with a large majority of Americans considering deficit reduction a high priority — but it is not economic wisdom when millions of Americans remain out of work, and while economic growth remains relatively timid. It's especially unnecessary for a major superpower like the United States, whose currency and government debt securities are highly prized in global markets as "safe assets."
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Let's not forget the reason why economic growth wasn't higher last quarter: Deficit reduction.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
John Aziz is the economics and business correspondent at TheWeek.com. He is also an associate editor at Pieria.co.uk. Previously his work has appeared on Business Insider, Zero Hedge, and Noahpinion.
-
How to create a healthy 'germier' home
Under The Radar Exposure to a broad range of microbes can enhance our immune system, especially during childhood
-
George Floyd: Did Black Lives Matter fail?
Feature The momentum for change fades as the Black Lives Matter Plaza is scrubbed clean
-
National debt: Why Congress no longer cares
Feature Rising interest rates, tariffs and Trump's 'big, beautiful' bill could sent the national debt soaring
-
Depleted FEMA struggling as hurricane season begins
speed read FEMA has lost a third of its workforce amid DOGE cuts enforced by President Donald Trump
-
White House tackles fake citations in MAHA report
speed read A federal government public health report spearheaded by Robert F. Kennedy Jr. was rife with false citations
-
Judge blocks push to bar Harvard foreign students
speed read Judge Allison Burroughs sided with Harvard against the Trump administration's attempt to block the admittance of international students
-
Trump's trade war whipsawed by court rulings
Speed Read A series of court rulings over Trump's tariffs renders the future of US trade policy uncertain
-
Elon Musk departs Trump administration
speed read The former DOGE head says he is ending his government work to spend more time on his companies
-
Trump taps ex-personal lawyer for appeals court
speed read The president has nominated Emil Bove, his former criminal defense lawyer, to be a federal judge
-
US trade court nullifies Trump's biggest tariffs
speed read The US Court of International Trade says Trump exceeded his authority in imposing global tariffs
-
Trump pauses all new foreign student visas
speed read The State Department has stopped scheduling interviews with those seeking student visas in preparation for scrutiny of applicants' social media