TIME India

Five Things to Know About India’s Much-Anticipated Budget

INDIA-ECONOMY-BUDGET-JAITLEY
PRAKASH SINGH—AFP/Getty Images Indian Finance Minister Arun Jaitley, center, leaves his office to table the budget in Parliament in New Delhi on July 10, 2014

Voters look to Modi's government for far-reaching reforms

With just three months to go before Indian Prime Minister Narendra Modi completes his first year in office, expectations are running high as his government prepares to unveil its annual budget on Saturday, Feb. 28.

Investors and economists are hoping that the government will use the occasion to announce reforms that make India more business-friendly, hacking away at red tape and obstructive laws, and opening up the economy to help it grow faster.

Here are five things to know as Modi’s Finance Minister, Arun Jaitley, prepares to unveil the budget in the lower house of the Indian Parliament:

1. Modi’s first budget was underwhelming. Presented less than two months after he came to power on a platform of boosting economic growth, the Modi government’s first budget was widely judged a disappointment, lacking the kinds of initiatives that economists said were necessary to overhaul the Indian economy. This time round, the Modi administration has had months to prepare and the country will be looking for wide-ranging reforms to back up his promises to revitalize the Indian economy.

2. The budget comes as Modi faces growing opposition to his reformist agenda. Although the Modi government has a majority in Parliament’s lower house, it lacks the numbers to push through laws in the upper chamber. As a result, Modi has resorted to a series to executive orders to introduce reforms — including a controversial move to speed up the acquisition of land for industrial projects. That executive order, known as the land ordinance, has sparked opposition from rival political parties as well groups representing Indian farmers, who say it privileges the wishes of corporations over the welfare of poor landowners. Earlier this week, the Indian anticorruption crusader Anna Hazare was joined by Delhi’s new chief minister Arvind Kejriwal as he led protests against the land ordinance, which, like Modi’s other executive orders, must eventually be ratified by the Indian Parliament.

3. In an unusual move, India’s share markets will remain open on Saturday, according to an announcement from the National Stock Exchange and the Bombay Stock Exchange, underscoring the high expectations ahead of the budget announcement by Jaitley.

4. The budget for India’s sprawling railway network has already been announced. And it pointed to an emphasis on improving the country’s aging transport infrastructure, with the Modi government unveiling plans to invest some $137 billion over the coming five years to modernize India’s vast rail system.

5. Tax reform could be among the key talking points this weekend. Jaitley may announce fresh exemptions to personal income taxes, as he attempts to drive up both savings and disposable income for the country’s middle classes. All eyes, however, will be on a proposal to do away with a series of indirect state and central government taxes on goods and services, which critics say have balkanized the Indian economy, and replace them with a single Goods and Services Tax (GST). The idea is to reduce the paperwork and hurdles faced by companies — and turn India into a common market. There are hopes that Jaitley will use his budget speech on Saturday to announce a timeline for the implementation of the GST.

MONEY Savings

4 Surefire Strategies for Powering Up Your Savings

piggy banks of assorted colors on wood surface
Andy Roberts—Getty Images

You can't count on high investment returns forever. Take control of your future with these savings tips.

Welcome to Day 7 of MONEY’s 10-day Financial Fitness program. You’ve already seen what shape you’re in, figured out what’ll help you stick to your goals, and trimmed the fat from your budget. Today, put that cash to work.

It’s been a great ride. But the bull market that pumped up your 401(k) over the past six years won’t last forever. Even though the stock market is up so far this year, Wall Street prognosticators expect rising interest rates to keep a lid on big gains in 2015. Deutsche Bank, for example, is forecasting a roughly 4% rise in the S&P 500, far below last year’s 11% increase.

Over the next decade, stocks should gain an annualized 7%, while bonds will average 2.5%, according to the latest outlook from Vanguard, the firm’s most subdued projections since 2006.

While you can’t outmuscle the market, you do have one power move at your disposal: ramp up savings.

1. Find Your Saving Target

So how much should you sock away? This year Wade Pfau of the American College launched Retirement-Researcher.com, a site that tests how different savings strategies fare in current economic conditions. He found that households earning $80,000 or more must save 15% of earnings to live a similar lifestyle in their post-work years. While that assumes you’re saving consistently by 35 and retiring at 65, it does include your employer match, so in reality, you may be pitching in only 10% or so.

If you weren’t so on top of it by 35, you have a couple of options: Raise your annual number (Pfau puts it at 23% if you start at age 40) or catch up by saving in bursts. Research firm Hearts & Wallets found that people who boosted savings for an eight-to 10-year period (when mortgages or other big expenses fell away) were able to get back on track for retirement.

2. Think Income

New data show that people save more when they see how their retirement savings translates into monthly income, says Bob Reynolds, head of Putnam Investments. The company found that 75% of people who used its lifetime income analysis tool boosted their savings rate by an average of 25%. To see what your post-work payments will look like, check out Putnam’s calculator (you must be a client to use it) or try the one offered by T. Rowe Price.

3. Take Advantage of Windfalls

Don’t let all your “found money” get sucked into your checking account. Instead, make a point to squirrel away at least a portion of bonuses, savings from cheap gas, FSA reimbursements, and tax refunds. Eight in 10 people get an average refund of $2,800; use it to fund your IRA by the April 15 deadline, says Christine Benz of Morningstar.

4. Free Up Cash

Interest rates remain low. If you’re a refi candidate, you may be able to unlock some money that could be better used. Tom Mingone of Capital Management Group of New York suggests using your refi to pay off higher-rate debt. Say you took a PLUS loan (now fixed at 7.21%, though many borrowers are paying more) for your kid’s tuition: Pay that down.

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TIME Congress

Why Congress Is Feuding With Obama Over the Homeland Security Budget

Jeh Johnson Holds News Conference On DHS Appropriations Bill
Alex Wong—Getty Images U.S. Secretary of Homeland Security Jeh Johnson pauses during a news conference February 23, 2015 in Washington, DC.

President Barack Obama warned a gathering of state governors on Monday that the Department of Homeland Security would furlough tens of thousands of employees nationwide if Congress failed to replenish the agency’s funds by Friday.

“We can’t afford to play politics with our national security,” Obama said during a winter meeting of the National Governors Association.

But the political fight over Homeland Security funding shows no signs of letting up due to the hot-button politics of immigration. That was made clear Monday evening when a procedural vote that needs at least 60 senators to avoid the threat of a filibuster fell too short, with just 47 in support and 46 against. Here’s a refresher on how lawmakers got to this point:

Where’s the spending bill?

A bill to fund the Department of Homeland Security passed the House last month, with one essential caveat: None of the money could be used to implement Obama’s executive order to defer deportations of some 5 million undocumented immigrants. Imposed by House Republicans, that restriction is a non-starter for Senate Democrats, who have blocked the bill.

What happens if the agency doesn’t receive funding by Friday?

Homeland Security Secretary Jeh Johnson said the department would run out of funds by Friday, forcing it to furlough upwards of 30,000 DHS employees. Employees deemed essential to national security, who make up roughly 80 percent of the workforce, will continue to work without paychecks.

Are there any signs of compromise on the horizon?

Several prominent Republicans, including Sens. John McCain and Lindsay Graham, have broken rank in recent days, urging their counterparts to fund the agency without restraints and let the immigration fight play out in the courtroom. Last week, a Texas judge temporarily suspended Obama’s executive orders and ruled that states could challenge the administration’s immigration policy in court.

McCain hailed the decision as an “exit sign” for lawmakers, though lawmakers have yet to steer toward this off ramp in significant number. They may choose to punt on the issue instead, releasing a temporary spurt of funding for Homeland Security while girding for another round of debate.

TIME Congress

Homeland Security Goes on Offense for Fight With Congress

US Secretary of Homeland Security Jeh Johnson listens while US President Barack Obama makes a statement to the press after a meeting in the Roosevelt Room of the White House on Oct. 6, 2014 in Washington, DC.
Brendan Smialowski—AFP/Getty Images US Secretary of Homeland Security Jeh Johnson listens while US President Barack Obama makes a statement to the press after a meeting in the Roosevelt Room of the White House on Oct. 6, 2014 in Washington, DC.

The Obama Administration made a last-minute public plea for Congress to fund the Department of Homeland Security, sending Secretary Jeh Johnson on a tour of political talk shows Sunday.

As the deadline approaches for the department’s funding, Johnson echoed the administration line that Congress should simply fund the department without conditions.

Republicans in Congress hoped to attach language to the funding bill that would override Obama’s decision to defer deportations for millions in the U.S. illegally — an idea that both Senate Democrats and the president have rejected.

Johnson used appearances on all five Sunday morning political talk shows to press his case:

• On CNN’s State of the Union, he said it was “absurd that we are even having this conversation,” while noting that some 30,000 employees would have to be furloughed as a result of the fight.

• On Fox News Sunday, he called Congress’s effort to block the executive action on immigration through a funding fight is “unacceptable from a public safety, national security view.”

• On ABC’s This Week, he said funding the agency is “imperative” amid the new threats from terrorist groups like al-Shabaab, which this weekend reportedly threatened an attack on Minneapolis’s Mall of America.

• On CBS’s Face the Nation, he said things from cyber-security to the harsh conditions the nation would be affected if “headquarter staff is narrowed down to a skeleton.”

• On NBC’s Meet the Press, he said flat out, “we need Congress to fund the Department of Homeland Security,” listing people and programs that would be placed in jeopardy if funding runs out on Friday.

The five talk-show effort — known in Beltway circles as the “full Ginsburg” after the first person to attempt it — was a sign of how seriously the White House intends to press its advantage on the dispute with Congress. Polls show the majority of Americans would blame Congress if the agency shuts down.

While that would be a public relations disaster, it’s unclear if it would really affect national security much.

The majority of Department of Homeland Security staff would still report for duty—from TSA agents at airports to the men and women of the Coast Guard—but they wouldn’t be receiving a paycheck.

Some Republicans have argued that they should call off the funding fight, given a Texas judge’s decision last week to temporarily block the Administration from going ahead with the deferrals.

Sen. John McCain called the Texas decision an “exit sign” on Face the Nation on Sunday, while Sen. Lindsey Graham called on Republicanson This Week to back the legal challenge to the executive action rather than blocking funding.

“The worst possible outcome for this nation would be to defund the Department of Homeland Security given the multiple threats we face to our homeland and I will not be part of that,” Graham said, adding that Republicans being the face of the partial shutdown would “add gasoline to the fire.”

MONEY Budgeting

How to Start Tracking Your Spending in 7 Minutes Flat

stopwatch with money/dollar on it
George Diebold—Getty Images

If you want to save more or get out of debt, knowing where your money goes now is an essential first step.

As part of our 10-day series on Total Financial Fitness, we’ve developed six quick workouts, inspired by the popular exercise plan that takes just seven minutes a day. Each will help kick your finances into shape in no time at all. Today: The 7-Minute Spending Tracker

Seven minutes is a little tight to create a budget, but it’s enough to tackle the first step: pulling together all your spending info using a budgeting tool such as Mint. You’ll need your credit and debit cards to get started.

0:00 Surf to Mint.com and register for a free account.

0:42 Mint asks for your credit card providers and bank. As you type in each one, a list of possible matches will pop up. Select the right one and enter the online login and password you use for that account. (Mint is a secure site and cannot get to your money.)

3:02 Mint will need a minute to pull in all of your transactions, which it automatically slots into categories like “Cellphone” and “Groceries.” Problem is, the app doesn’t always get it right. To fix that, click the “Transactions” tab.

3:34 See those “uncategorized” charges? You can select them to choose a correct label. This is pretty tedious, so tick the box that says “always re-categorize X as Y.” That way, Mint will put all future transactions from that retailer in the right place.

5:02 When you did that, you probably also noticed some charges Mint tried to identify but placed into the wrong bucket. Scroll through those and correct them the same way.

6:30 Grab your phone and download the Mint app. Having the program handy will help you keep on top of charges.

7:00 Now you’re ready to click the “Budgets” tab and create a spending plan. For more help with that, check out our Money 101 stories on creating a budget you can stick to and setting financial priorities.

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  • Day 6: Cut the Fat From Your Budget
  • Day 7: Find Ways to Save More
  • Day 8: Boost Your Earning Power
  • Day 9: Learn How Better Health Can Help Your Finances
  • Day 10: Shore Up Your Safety Net
MONEY Food & Drink

Why Organic Chocolate Isn’t Always Worth the Price

Dagoba organic chocolate
James F. Quinn—KRT/Newscom Dagoba organic chocolate

An organic label doesn't mean the candy will taste any better, and premium chocolate that is yummier may not actually be organic.

If you plunk down some big bucks for organic chocolate this Valentine’s Day, your sweetie may or may not be impressed.

Despite what some people say, such candy does not taste better just because the ingredients are organic, according to experts. The manufacturing process plays a major part.

Andy Ciordia, owner of The Secret Chocolatier in Charlotte, North Carolina, says consumers are most likely to notice that mass-produced chocolates using a cacao solution taste flatter than those made on a smaller scale and with natural ingredients.

Among the best-known organic brands are Dagoba from Hershey Co, Green & Black’s from Mondelez International Inc’s Cadbury and Newman’s Own.

To be called “organic,” a chocolate bar must consist only of certified organic ingredients. That means pesticides and genetically modified ingredients cannot be used.

Other chocolates, including the high-end and artisanal kind, may use similar standards but simply lack the certification. Most of what you find at fancy chocolatiers is not organic.

The certification costs money, which is one reason organic chocolate costs more.

You can pay still more if you buy from the growing number of bean-to-bar organic chocolate makers.

Acquiring beans from small co-ops and farms rather than the bulk market and the time-intensive way to produce a chocolate bar results in the big premium.

A typical 1.8-ounce bar made by Raaka Chocolate in Brooklyn, New York, for example, retails for $7.99, or $4.44 an ounce.

At a Walmart store, though, you can find a 3.5-ounce organic Green & Black’s bar for 94¢ an ounce. Ounce for ounce, that is still more expensive than what the chain charges for a premium Lindt bar, which is not organic, at 71¢ or a giant bar of Hershey’s Special Dark for 29¢.

But bean-to-bar chocolate is likely to have only two or three ingredients, usually the beans and sugar, sometimes cocoa butter.

By contrast, a bar of Hershey Special Dark has sugar, chocolate, cocoa butter, cocoa processed with alkali, milk fat, lactose, soy lecithin, PGPR (emulsifier), vanillin, artificial flavor, milk.

A Matter of Principle

U.S. sales of organic chocolate and organic candy bars were up 16.5% in 2013, according to the latest Organic Trade Association data.

That is quadruple the growth rate for the overall chocolate market, says Curtis Vreeland, president of confectionery industry market research firm Vreeland & Associates.

However, he notes, the organic side represents only about 1% of the $20 billion U.S. chocolate market.

Perhaps that is because buying organic is more about principles than product.

“The primary reason for purchasing organic chocolate is the social and environmental motivation,” says Carl Jorgensen, director of global consumer strategy-wellness for the branding firm Daymon Worldwide.

Amy Grey, 24, a writer for exercise bike retailer Spinning’s website in Venice, California, says eating organic chocolate makes sense.

“You wash your fruit and vegetables to get the pesticides off before you eat them, but you can’t really wash your chocolate to get rid of those chemicals,” Grey says. “Organic chocolate means no pesticides and no harmful chemicals being put into your body.”

MONEY Out of the Red

This Millennial Paid Off $23,375 in Student Loans in Just 10 Months

Jordan Arnold

"If you have a game plan, you can accomplish your goals," says 22-year-old Jordan Arnold.

Like many millennials, Jordan Arnold graduated from college five figures deep in student debt. Unlike most of his peers, he paid off all of his loans less than a year after graduation.

This is his story, as told to MONEY reporter Kara Brandeisky.

Jordan Arnold, 22
Bluffton, Ind.
Occupation: credit analyst
Initial debt: $23,150
Amount left: $0
When he started paying it down: May 2013
When he became debt-free: March 2014

How I started building debt

I always knew I was going to go to college, though I figured I’d go to community college for a year or two because it’s cheap. But my parents started talking to me about this private Christian school, Indiana Wesleyan in Marion, Ind. I took a visit, and I really liked it. It’s only like 3,000 students on campus, so it’s a tight-knit community.

Tuition and room and board was about $31,000 a year. And the first year I hadn’t applied for federal student aid, since I didn’t commit to the college until about 10 days before classes started. I got some scholarships and a grant from my church, though. So, ultimately, I owed approximately $9,000 that first year.

Getting to $23,000

I could only borrow up to $5,500 in subsidized loans from the government each year, so I worked to cover the rest so that I didn’t have to take out private loans. I also graduated in three years, which helped.

Still, altogether, I had to take out $15,150 in subsidized federal loans and $2,000 in unsubsidized federal loans. I borrowed another $6,000 from my parents.

My uh-oh moment

In the fall semester of my senior year, I remember being kind of nervous. I knew I had to start paying my debt within six months. It’s stressful, when you don’t have any money. And I heard all these stories about college students who get out of school, they have all this debt, and they can’t find jobs.

Getting my debts paid off was important to me. I didn’t want to get the point where I’d have to be paying student loans for another 10 years. Right now, I’m single. I don’t have any dependents that rely on my income. But I didn’t want to have these loans over my head when I’m trying to feed a family and put a roof over their heads. It’s not just about me, it’s about my future family.

My first step out of the hole

Luckily, I got a job right out of college at an insurance agency (I had majored in finance). I was on salary, and it was pretty good: $36,000 plus bonuses.

I didn’t have to pay my student loans for another four months, but over the summer I decided to go ahead and start making payments before interest began accruing.

I actually moved back in with my parents—which is hard when you have been out on your own. But I didn’t really have a reason to move out. And I was blessed that they actually preferred me to live there because I could help out around the farm they own, baling hay or feeding the horses. Living at my parents’ place for free was a lot better than having to pay $400 or $500 a month for rent.

Kicking it into gear

About four months into my new job, I picked up a second job, delivering for Pizza Hut, to help pay off my debt. I would start work at the insurance agency at 8:30 a.m., change in the bathroom at 4:50 p.m., get to Pizza Hut by 5, deliver pizzas until about 9:30, get home around 10, then shower, eat, and go to bed.

My monthly take-home pay from the insurance company was about $2,200, and I made about $1,000 at Pizza Hut. After gas, car insurance, tithing to my church, entertainment and food, I could put about $2,000 towards my debt every month.

At that rate, I was projected to pay off my debt in May 2014. But I got a $3,000 refund on my taxes, and paid off the rest of my debt with that.

How I celebrated being debt-free

I made my last payment the first of March, then I went to Florida with some friends two weeks later. It was pretty rewarding after a 10-month battle. I had probably worked 65 to 70 hours a week for seven or eight months. It was exhausting, but it was worth it.

What I’d tell someone else in my place

If you have a game plan, you can accomplish your goals. I have an account on Mint.com, that’s where I kept my budget. That’s a big part of it—just seeing your progress and knowing you’re getting closer.

Also, have an emergency fund. While I was paying off that debt, I had a small car accident. I was delivering a pizza, and I hit something in someone’s driveway. It cost me about $760 to fix the car. But I had a $1,000 emergency fund, which was kind of a buffer that I kept because life happens.

Finally, don’t be afraid to move home if you have to. That was a big part of how I got out of debt.

My plan for the future

I quit my Pizza Hut job in April after paying off my debt, and now work at a bank analyzing commercial and agricultural loans, which is more in line with what I wanted to do.

I actually haven’t moved out of my parents’ house yet. Instead I’m saving up for a down payment on a house. I’m putting away 50% of my take-home income for that, and I should have a down payment by mid-summer. I also started investing. I started a Roth IRA, and I plan to max it out this year.

Staying true to myself

Some people have made the argument, ‘Maybe you shouldn’t have paid off the debt so fast because the interest rate is cheaper than what it will be for you to borrow for a home.’

That makes sense in my head, but in my heart, I didn’t want this hanging over me. I want to be responsible with my money and build a strong foundation.

Are you climbing out of debt? Share your story of getting “Out of the Red.”

Check out Money 101 for more resources:

TIME White House

Obama Warns Congress on Looming Immigration Battle

Barack Obama
Carolyn Kaster—AP President Barack Obama speaks in the East Room of the White House in Washington, Jan. 30, 2015.

President Obama urged Congressional Republicans to stand down from a looming fight over Department of Homeland Security spending tied to the hot-button issue of illegal immigration.

Congress has until the end of this month to approve this year’s funding for the agency, the only one not included in a budget deal passed late last year. But some Hill Republicans hope to use the spending bill to try to undo Obama’s decision to defer deportations for millions who came to the U.S. illegally.

In a speech unveiling his FY 2016 budget at the Department of Homeland Security Monday, he noted that over 100,000 employees would have to show up to work if a spending bill is not passed by the Feb. 27 deadline, but they would not be paid.

“Don’t jeopardize national security over this disagreement,” he said.

The department was excluded from a long-term appropriations package passed late last year, but a House bill passed in January would provide $40 billion to the department through September. That bill, however, includes language that would block Obama’s executive actions and restart deportations for people covered by Obama’s executive actions. The President has already threatened to veto the bill, which would lead to a partial shutdown.

Obama noted a comment from a Congressional Republican who last week said it “wouldn’t be the end of the world” if a spending bill were not to pass before the deadline, saying “I guess literally that’s true, but until they pass a funding bill that’s the end of a paycheck of tens of thousands of frontline workers.”

If the spending bill is not passed, DHS employees in critical security positions would likely still report to work. During the 2013 government shutdown, over 80% of key employees reported for duty when many federal employees were furloughed.

White House officials say about 147,000 front-line employees, including TSA agents, Customs and Border Patrol Officers, Secret Service agents and members of the Coast Guard would be forced to work without pay if funding were to expire.

The Senate is set to take up the House bill on Tuesday. “The House-passed bill we’ll consider would do two things: fund the Department of Homeland Security, and rein-in executive overreach,” Sen. Majority Leader Mitch McConnell said Friday. “There’s no reason for Democrats to block it.”

But Senate Democrats are poised to do just that. In several interviews, Sen. Dick Durbin (D-Ill.), the Senate Minority Whip, has made it clear that Senate Democrats plan to vote against the House version of the bill, which would make it impossible for it to get the 60 votes it would need to advance. Roll Call reported last Thursday that House Majority Leader Kevin McCarthy issued a memo noting that if the Senate fails to pass their bill Republicans “will be discussing with the Conference the best way to continue to challenge the President’s unconstitutional amnesty.”

Republicans are facing pressure to maintain Department of Homeland Security funding from beyond the White House and Congress, too. Last week, three former Department of Homeland Security Secretaries—two Republicans and a Democrat— sent a letter to Congress urging members to approve the spending without conditions.

“It is imperative that we ensure that DHS is ready, willing and able to protect the American people,” Secretaries Tom Ridge, Michael Chertoff and Janet Napolitano said in the letter, first reported by the Washington Post. “To that end, we urge you not to risk funding for the operations that protect every American and to pass a clean DHS funding bill.”

Obama said Monday, “We need to fund the department, pure and simple.”

TIME White House

The Real Audience for Obama’s Latest Budget Plan

US-POLITICS-OBAMA
Saul Loeb—AFP/Getty Images President Barack Obama speaks about the economy and early childhood education at the University of Kansas in Lawrence, Kansas, Jan. 22, 2015.

It's not Republicans in Congress

With his proposed budget today, President Obama turned another empty Washington ritual into an opportunity to pitch a detailed blueprint for helping the American middle class, an effort aimed less at present-day politics and more at building his presidential legacy.

As he did with the State of the Union address last month, Obama put forth poll-tested ideas that stand little chance of making it through the current Republican-controlled Congress during the remainder of his term.

The detailed $4 trillion budget proposal lays out an America where preschool is universal, community college is free and student loan payments are limited to 10% of monthly income. It describes a country where lower-income households benefit from a larger earned income tax credit, while working married couples have an additional tax credit to pay for child care. It even assumes that immigration reform, now stalled indefinitely, has been signed into law.

As always, the question comes down to how to pay for these ideas. In the budget, Obama proposes a number of tax increases, including a hike in the capital gains tax rate and a one-time mandatory tax on U.S. corporations’ overseas profits.

Republicans in Congress panned the budget before it had even been presented. In an interview with NBC’s Meet the Press on Sunday, Chairman of the House Ways and Means committee Rep. Paul Ryan of Wisconsin said that Obama is practicing “envy economics.”

“This top-down redistribution doesn’t work,” he said. “It may make for good politics, it doesn’t make for good economic growth.”

But while the focus of the coming days will be what Congressional Republicans have to say about the ideas, the real target of the budget proposal and the State of the Union is elsewhere. As Obama winds down his final term in office, he’s keeping an eye on his own legacy and how it will affect whoever becomes the 45th commander-in-chief.

The policy ideas unveiled in Obama’s 2015 budget aren’t about 2015 at all, but 2016 and the years after that.

TIME White House

Obama Pitches Corporate Tax to Fix Roads and Bridges

Highway Trust Fund
Skip Peterson—AP This photo taken April 14, 2014 shows one section of the $500 million I-75 Phase II modernization project in Dayton, Ohio.

The Republican Congress isn't likely to go along with the plan, however.

President Obama will propose a one-time tax on foreign profits held by U.S. corporations to pay for an ambitious plan to fix roads and bridges across the country.

The plan is included in the proposed $4 trillion budget that Obama will send to the Republican-held Congress Monday. Like other parts of the budget, it is not likely to pass, but is intended more to frame the debate with Capitol Hill over how to spend taxpayer dollars.

Obama’s proposal is a one-time mandatory 14% tax on the $2 trillion in earnings that corporations currently have overseas. In the future, the government would impose a 19% tax on such earnings. The tax would fund about half of a $478 billion six-year plan to upgrade transportation infrastructure, with the rest coming from the existing Highway Trust Fund.

Currently, U.S. companies only pay taxes on money they make overseas once they bring that back to the U.S., which causes many to simply park their money outside the country.

White House officials gave some credit for the plan to a retired Republican lawmaker, former House Ways and Means Committee Chairman Dave Camp, who proposed taxing foreign earnings last year in order to fix roads, though at a much lower rate than Obama is putting forward. A separate bipartisan proposal would allow companies to voluntarily pay taxes on overseas earnings, but officials said the president opposes that plan.

Over the past several years, American investment in infrastructure has been significantly lower in scale and scope than many countries across the globe. The American Society of Civil Engineers has given the U.S. an overall grade of D between 1998 and 2013 in its reports on the state of America’s overall infrastructure.

Overall, the proposed budget piggybacks off of the middle-class economic policies outlined in the President’s State of the Union Address and includes proposals White House officials say would result in $277 billion worth of middle class tax cuts. It also includes a wide range of investments in education and job skills, including Obama’s plan to provide two years of free community college to some students.

Under the proposed budget, the overall deficit figure is $474 billion, or 2.5% of the gross domestic product, and White House officials say the budget would reduce the deficit by $1.8 trillion over the next ten years.

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