The Obama Administration has just released its budget for the 2016 fiscal year, which begins on October 1st. I'll write in a later post about the economics underlying the proposals. In the meantime, based on a reading of the budget documents and a fact sheet posted on the White House Web site, here are some initial takeaways:

With the Republicans controlling both chambers of Congress, the budget is as much a political document as an economic one. The chances that it will be enacted in anything like its current form are nil. Instead, the White House is using it to frame the political debate for this year and for the run-up to the 2016 Presidential election—an effort that began with the State of the Union address. The budget fleshes out the populist political agenda that President Obama laid out in that speech.

The Administration is proposing a series of tax cuts and spending programs aimed at working families, which would be largely paid for by raising taxes on the rich. This agenda is being marketed, as it was in the State of the Union, under the banner of “middle-class economics.” “The ideas I offer in this budget are designed to bring middle-class economics into the twenty-first century,” President Obama said in a statement. “They’ll help working families feel more secure with paychecks that go further, help American workers upgrade their skills so they can compete for higher-paying jobs, and help create the conditions for our businesses to keep generating good new jobs for our workers to fill.”

In adopting an economic agenda that is explicitly redistributive, the White House is seeking to tackle the glaring problems of wage stagnation and rising inequality, while also daring Republicans to oppose some measures that are likely to be popular. These measures include a new five-hundred-dollar tax credit for second earners, an expansion of the earned-income tax credit, and an increase in the value of existing tax credits available to families paying for child care. In addition, the budget would increase funding for Head Start, Pell Grants, and Obama’s initiative to provide universal preschool, which he unveiled last year.

The budget still includes the President’s plan to provide free tuition for two years of community college for all students who graduate from high school with decent grades. Under the original plan, his initiative would have been paid for by eliminating some of the tax benefits attached to college savings accounts, known as 529s, the benefits of which are largely enjoyed by affluent families. But, after objections from Republicans and Democrats, the White House dropped this proposal. Now the money for the community-college plan will come from general tax revenues.

As indicated by No. 4, the White House’s definition of “middle class” is a bit hazy. The extra funds allotted to the earned-income tax credit, Head Start, community college, and Pell Grants would all be directed at households in the bottom half of the income distribution in the U.S. But it looks like all families, regardless of income, would be eligible for the second-earner tax credit, while families who earn up to a hundred and twenty thousand dollars a year would be eligible for the tax credits tied to child care. If your family earns a hundred and twenty thousand dollars a year, you are firmly in the top twenty per cent of the income distribution—it’s hard to describe that as middle class. Still, according to a detailed analysis by the non-partisan Tax Policy Center, by far the biggest beneficiaries from Obama’s proposals would be the working poor.

The budget contains three significant tax increases, all of which Obama mentioned in his State of the Union address. The first would raise the estate-tax bills that very wealthy families face, and would do so by eliminating the so-called stepped-up basis for valuing investments in the federal tax code. The budget would also raise the capital-gains tax rate paid by high earners from twenty per cent to twenty-eight per cent. In addition, the Administration would levy a new surcharge on big, highly leveraged financial firms, reflecting the risks they present to the rest of the economy.

Considered on their own merits, many of these policy proposals are well targeted and worthwhile. But nobody should pretend that they would make a big dent in inequality and wage stagnation. For the broad middle class—households situated between the twentieth percentile and the eightieth percentile of the income distribution—the measures, taken together, would raise after-tax incomes by just 0.1 per cent, or even less, according to the Tax Policy Center. (Households in the bottom quintile would see their after-tax incomes rise by one per cent. Households in the top quintile would see their after-tax incomes fall by 0.7 per cent.)

The budget would abolish the sequester and raise domestic spending by about seven per cent in 2016, with the increase evenly split between defense and non-defense programs. The White House says that this increase in spending would be paid for by cuts to other programs, such as agricultural subsidies, and by the elimination of the “carried interest” deduction for hedge funds and private equity firms. These are also good ideas. It barely needs saying that there is no prospect of Congress going along with them.

The White House is also proposing a one-off levy of fifteen per cent on corporate profits held overseas, the proceeds of which would be used to finance investments in road, airports, and other infrastructure projects. After years of neglect, the country’s infrastructure sorely needs upgrading. But this proposal is really just part of an opening bid in a larger debate about how to reform the corporate tax. Since this debate could lead to big corporations seeing their tax rates reduced from thirty-five per cent to twenty-eight per cent, or even less, this is one area where the Republicans may well be willing to coöperate with the Obama Administration.