WASHINGTON (AP) — President Barack Obama on Monday was selling a a $3.8 trillion election-year budget — a spending outline designed to cut $4 trillion from the deficit in 10 years through spending restraints and higher taxes on the wealthy. Republicans said the plan fails to tackle the nation's deep fiscal problems.
Obama's budget — as much a political document as spending plan — clearly sets him apart from Republicans who are rabidly opposed to higher taxes and believe the only way to cut government red ink is to slash the heavy burden of social programs, particularly the federal Medicare health insurance program for Americans at age 65.
The budget frames and likely will intensify the deep partisan divisions that have kept Washington in gridlock since Republicans regained majority control of the House of Representatives in the 2010 election.
The president would achieve $1.5 trillion of the deficit reductions in tax increases on the wealthy and by removing certain corporate tax breaks. Obama rejected Republican charges of class warfare. "This is not about class warfare. This is about the nation's welfare," he insisted.
In a message that repeated populist themes Obama also sounded in his State of the Union address, the president defended his proposed tax increases on the wealthy, saying it was important that the burden of getting deficits under control be a shared responsibility.
"This is about making fair choices that benefit not just the people who have done fantastically well over the last few decades but that also benefit the middle class, those fighting to get into the middle class and the economy as a whole," Obama said.
Obama used an appearance before students at Northern Virginia Community College to unveil the budget and highlight a $8 billion proposal that aims at boosting the ability of the nation's community colleges to train students for the jobs of the future.
While administration officials defended the overall plan as a balanced approach, Republicans found ready material for attacks, particularly over Obama's failed 2009 promise to cut the skyrocketing deficit in half by the end of his first term.
"It seems like the president has decided again to campaign instead of govern," Republican Rep. Paul Ryan, chairman of the House Budget Committee, said in an interview. "He's just going to duck the responsibility to tackle this country's fiscal problems." Ryan is preparing an alternative to Obama's budget that will be similar to a measure that the House approved last year but failed in the Senate.
The top Republican in the Senate, minority leader Mitch McConnell, deepened that criticism, saying: "This isn't really a budget at all. It's a campaign document. The president is shirking his responsibility to lead and using this budget to divide."
Jack Lew, Obama's chief of staff, said the administration had to contend with a deep recession and soaring unemployment that had driven the deficits higher than anyone anticipated. He said Obama's plan would cut the deficit below 3 percent of gross domestic product by 2018, to levels that economists generally view as sustainable.
He said faster deficit cuts now would set back an economy still struggling with high unemployment. Lew, Obama's former budget chief, also said it was critical that Congress agree to extend a payroll tax cut due to expire at the end of February. Failure to extend it, he said, would cause another hit to the economy.
The debate is almost certain to go all the way to Election Day in November, with gridlock keeping Congress from resolving many pressing issues on expiring tax cuts and across-the-board spending cuts until a lame duck session at year's end. That is the period between the November elections and the following January, when newly elected officials take their seats in Congress. Depending on the outcome of the presidential race, Obama, too, could be facing a departure from the White House in January.
Obama's spending blueprint for the budget year that begins Oct. 1 projects a deficit for this year of $1.33 trillion. That would mean four straight years of trillion-dollar-plus deficits.
The budget projects a decline in the deficit to $901 billion in 2013 and continued improvements shrinking the deficit to $575 billion in 2018.
Lew blamed House Republicans for pushing extreme measures rather than trying to reach consensus with Democrats and avoid the kinds of last-minute crises that roiled financial markets in 2011, such as the summer showdown over raising the government's borrowing limit.
The Obama budget sticks to the caps on annual appropriations approved in August that will save $1 trillion over the next decade. It also puts forward $1.5 trillion in new taxes, primarily by allowing the tax cuts to expire at the end of this year for families making $250,000 or more per year. Those cuts were put in place during the presidency of George W. Bush, Obama's predecessor.
Obama, as he has in the past, also proposed eliminating tax deductions the wealthy receive and would put in place a rule named for billionaire Warren Buffett that would seek to make sure that households making more than $1 million annually pay at least 30 percent of their income in taxes.
Obama would also impose a new $61 billion tax over 10 years on big banks aimed at recovering the costs of the financial bailout and providing money to help homeowners facing foreclosure on their homes. It would raise $41 billion over 10 years by eliminating tax breaks for oil, gas and coal companies and claims significant savings from ending the wars in Iraq and Afghanistan.
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Associated Press economics writer Martin Crutsinger contributed to this report.
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