President Barack Obama unveiled his $3.78 trillion budget proposal Wednesday for the fiscal year that starts Oct. 1, promising that it would boost the economy and cut projected deficits by investing in job growth and raising taxes on the wealthy.
Obama cast his 2014 proposal as a “fiscally responsible blueprint for middle-class jobs and growth,” mixing increases in spending on manufacturing, research and construction with tax hikes for the rich and a slowdown in the growth of entitlements such as Social Security.
His proposal includes $1 billion to open 15 “manufacturing innovation institutes”; $50 billion for upgrades to roads, bridges and other infrastructure; plus money for 100,000 science and math teachers. It also calls for raising the federal tax on cigarettes to $1.95 per pack from $1.01, to raise $750 million for a new federal-state partnership to create preschool slots for all low- and moderate-income 4-year-olds.
He’d also use a new formula that would slow the growth of Social Security benefits, cutting $230 billion from projected spending over the next decade. He’d raise taxes by requiring households with incomes over $1 million to pay at least 30 percent of their income in taxes and would limit tax deductions for the wealthiest 2 percent.
Speaking from the Rose Garden at the White House, Obama said his proposal looked beyond the fiscal squabbles that had defined Washington to boost job creation and reduce the deficit.
"The American people deserve better than what we’ve been seeing, the shortsighted, crisis-driven spending cuts that are already hurting a lot of communities out there,” Obama said. “If we want to keep rebuilding our economy on a stronger, more stable foundation, then we’ve got to get smarter about our priorities as a nation."
Usually a day of drama in Washington, the president’s budget proposal is something of an afterthought this year. It comes two months later than usual, follows a Republican budget that the House of Representatives already adopted and a Democratic budget the Senate already approved and includes mostly familiar proposals that he’s made before without success.
Senate Republicans didn’t wait for Obama to finish speaking before labeling the budget a “dud.” House Speaker John Boehner, R-Ohio, was more conciliatory but he made it clear that he opposed tax increases.
“The president got his tax hikes in January. We don’t need to be raising taxes on the American people,” he said. “So I’m hopeful in the coming weeks we’ll have an opportunity, through the budget process, to come to some agreement.”
Obama said his plan would cut projected deficits by $1.8 trillion over 10 years. The budget deficit would amount to about 2.8 percent of the total economy by 2016 and 1.7 percent of the economy by 2023, according to the White House.
Republicans countered that the reduction would be less than half Obama’s figure– $600 billion – because the president wanted to restore across-the-board spending cuts that took effect in March. Obama said he’d replace those cuts with “smarter ones.”
Some Democrats oppose Obama’s plan because of cuts to entitlements programs such as Social Security, implemented by using a more conservative measurement in calculating cost-of-living adjustments for beneficiaries and others who receive some form of government payment. A coalition of groups delivered 2 million petition signatures to White House on Tuesday opposing the measure, and congressional Democrats reacted cautiously Wednesday to a budget that would reduce Social Security benefits.
“His proposals on entitlement reform already have drawn fire from both the left and the right,” said Sen. Mark Warner, D-Va. “I happen to believe the president is doing the right thing: He’s putting everything on the table.”
Obama – who spoke in the Rose Garden in front of about 100 supporters, who applauded regularly during his remarks but whom the White House wouldn’t identify – cast the changes as essential to preserving the programs and said the most vulnerable would be protected.
“If we want to keep Medicare working as well as it has, if we want to preserve the iron-clad guarantee that Medicare represents, then we’re going to have to make some changes,” Obama said. “But they don’t have to be drastic ones.”
White House officials said the president was trying to strike a balance between the House and Senate plans, which passed each chamber last month.
Obama said his plan represented a compromise between slashing the deficit and promoting growth.
“These are not conflicting goals. We can do them in concert,” he said. “The numbers work. There’s not a lot of smoke and mirrors in here.”
Obama planned to dine with Republican lawmakers Wednesday night at the White House as part of his new effort aimed at outreach.