Obama budget: Spending cuts, higher smokers' taxes

WASHINGTON — Mixing modest curbs on spending with tax increases reviled by Republicans, President Barack Obama proposed a $3.8 trillion budget on Wednesday that would raise taxes on smokers and wealthy Americans and trim Social Security benefits for millions.

Obama's 2014 blueprint combines a $242 billion infusion of new spending for road and rail projects, early education and jobs initiatives — all favored by Democrats — with longer-term savings from programs including Medicare and the military. It promises at least a start in cutting huge annual federal deficits.

The president pitched his plan as a good-faith offer to his GOP rivals, since it incorporates a proposal he made to Republicans in December that wasn't radically different from a GOP plan drafted by House Speaker John Boehner. But it follows January's 10-year, $600 billion-plus tax increase that has stiffened GOP resolve against further tax hikes.

"I have already met Republicans more than halfway, so in the coming days and weeks I hope that Republicans will come forward and demonstrate that they're really as serious about the deficit and debt as they claim to be," Obama said.

He was having a dozen Senate Republicans, including Florida Sen. Marco Rubio, to the White House for dinner Wednesday evening in hopes of building a dialogue on the budget and other topics.

After four years of trillion-dollar-plus deficits in his first term, Obama's plan projects a $973 billion deficit for the current budget year and red ink of $744 billion for the 2014 fiscal year starting in October. By 2016, the deficit is seen as dropping below 3 percent of the size of the economy, a level that many economists say is manageable.

Obama claims $1.8 trillion in deficit savings over the coming decade, but the budget tables show the savings are actually $1.4 trillion. And $1.2 trillion of that is devoted to reversing automatic, across-the-board spending cuts required because of Washington's inability to follow up a 2011 budget pact with further deficit action.

"This is worse than a status quo budget," said House Budget Committee Chairman Paul Ryan, R-Wis. He said it has about $1 trillion in new taxes and $1 trillion in new spending with deficit reduction of only $119 billion over 10 years under GOP math that sorts through questionable interpretations employed by the White House.

The real cuts include $400 billion scrubbed from health care programs such as Medicare over the coming decade, including cuts in payments to drug companies and higher Medicare premiums for people who are better off.

"He does deserve some credit for some incremental entitlement reforms," said Boehner, R-Ohio. "But I would hope that he would not hold hostage these modest reforms for his demand for bigger tax hikes. Listen, why don't we do what we can agree to do?"

The White House budget claims $580 billion in tax increases on the wealthy over 10 years.

Republicans predictably slammed Obama's plan for its tax increases, while his Democratic allies generally held their tongues over cuts to Social Security benefits.

"It's not the budget I would write on my own, and it includes several policies that I don't think are the best ways to tackle the deficit and debt," said Senate Budget Committee Chairwoman Patty Murray, D-Wash.

Obama budget: Spending cuts, higher smokers' taxes 04/10/13 [Last modified: Thursday, April 11, 2013 12:17am]

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...