The House GOP vs. President Obama’s 2013 Budget Proposals

Each year, the President of the United States submits a budget request to Congress for the following fiscal year as required by the Budget and Accounting Act of 1921. Recently, President Obama and the House Republicans have submitted competing budget proposals for fiscal year 2013. Due to the upcoming election, both plans are seen as political documents with little chance of being enacted in their original form. In this article, I will list and explain the proposals for both plans.

President Obama's Budget	House GOP Budget
Size: $3.8 Trillion	Size: $3.53 Trillion
Deficit in 2013: $901 Billion	Deficit in 2013: $797 Billion
Debt Accumulated Through 2022: $6.4 Trillion	Debut Accumulated Through 2022: $3.1 Trillion
	Balance the Budget?: Yes by 2040
	New Revenues?: No

Taxes

Under President Obama’s plan, the Bush Tax cuts would be allowed to expire for families earning over $250,000. Also, his administration would implement the “Buffet Rule” which requires millionaires to pay an effective tax rate of 35%. Obama would also lower the corporate tax rate to 28% and close corporate tax loopholes. These proposals would accumulate to $1.5 trillion in new revenues over the next 10 years.

Under the House GOP plan, tax deductions and credits would be eliminated, and two tax brackets would be created: 10% and 25%. They will also eliminate the Alternative Minimum Tax and lower the corporate tax rate from 35% to 25%. They would compensate for the lost revenue by closing the tax loopholes and deductions previously mentioned.

Health Care

Under President Obama’s plan, there would be no structural changes made to Medicare or Medicaid. However, the administration claims that entitlement spending is projected to fall from 8.7% of GDP in 2011 to 5.0% of GDP in 2022 and they will build on the $500 billion in savings over the next 10 years from the Affordable Care Act.

On the other hand, the House GOP proposes major changes to Medicare and Medicaid. For Medicare, their budget plan would offer seniors a choice between the traditional fee-for-service plan or a Medicare approved private insurance plan. The GOP would also block grant Medicaid to the states.

Military Spending

Under President Obama, the Pentagon plans to spend $487 billion less by pulling two of its four brigades out of permanent European bases and getting rid of older Navy ships that don’t have the latest ballistic missile defense.

The House GOP plan protects defense spending by undoing a scheduled $55 billion cut in the Pentagon budget. They would allow the military budget to grow with inflation over the next 10 years.

Domestic Spending

President Obama and the House Republicans also differ on domestic spending. Under the Budget Control Act passed last summer, discretionary spending is capped at $1.047 trillion. President Obama’s allocates his domestic budget under this cap, but the House Republicans domestic budget plan is capped at $1.028 trillion.

As I mentioned before, both of these budget proposals are political documents that outline the political parties’ priorities for the upcoming election. If either side sweeps Congress and the Presidency, look for a lot of these reforms to be enacted. However, if power is brokered between the two political parties in both branches of government, Republicans and Democrats will be forced to compromise on a new budget. All eyes are on November 6, 2012 to see who the winner will be.

Reconstruction in Disaster-Affected Areas of Japan: Companies that Create Communities (and Jobs).

3/11/12 marks the one-year anniversary of the earthquake and tsunami that deeply affected the Japanese society. At Cornell, the East Asia Program, the Clarke Program for East Asian Law and Culture, and the Mario Einaudi Center for International Studies hosted a two-day symposium commemorating the tragedy in Japan. Having family and friends in the affected areas, it was heartwarming to hear from professors and students who were passionate about Japan's reconstruction. In particular, I had the chance to hear thoughts about job creation in Fukushima prefecture from Professor Yuji Genda from University of Tokyo.

Professor Genda believes that reconstruction of the Japanese society has been too slow. He is in line with the Japanese media, and blames the all talk no action nature of the bureaucrats and think tanks. In addition, with the so-called political amnesia, the country can no longer rely on the federal government to recover from the economic and physical damage. If Japan can't rely on their own government for reform, the only Japanese firms must reconstruct their prospective businesses entirely, and respond to the communities’ needs.

Currently, job creation in affected areas is facilitated by private enterprises called Community Creation Companies (CCC). What makes CCCs appealing is the potential to revitalize a community. CCCs gather a broad range of people, regardless of gender, age, or education, and encourage them to take action in their community. In Fukushima prefecture, CCCs recruit individuals with skills or resources to find ways to cater to those who are in need. For example, a man who owns a car can drive an elderly woman to the hospital for a routine check-up. In return, CCCs provide training to the man to develop new skills so he could contribute more to his community.CCCs do not give out resources, expecting the individuals to figure out a way to find a job. Instead, these companies facilitate community development and reconstruction in the affected areas by actively matching skills with needs.

Too often, Japan focuses too much of their attention to the unemployment rate. However, the employment alone does nothing to reconstruction in the affected areas, as employees tend to get relocated to bigger cities. CCCs will incentivize victims to stay in the affected areas and ensure that individuals feel needed in their community. Japan needs more intermediaries and support CCCs to create jobs based on the needs of the community and to guarantee a more sustainable reconstruction.