President Barack Obama unveiled a 10-year budget blueprint on Wednesday that would raise taxes on smokers, energy companies and most people who pay income taxes, while making major cuts in government aid to farmers and reducing the annual increases in Social Security checks.
The budget would cut annual deficits well below the $1 trillion level that has become the norm and make investments in presidential priorities such as early childhood education, clean energy and public works.
And it would replace the $1.2 trillion in across-the-board cuts that took effect in March with more targeted reductions.
The Defense Department would face $150 billion in cuts over 10 years, rather than $500 billion as the sequestration cuts mandate.
The president's budget for the fiscal year beginning in October would spend about $3.8 trillion. The projected spending for 2023 would be $5.7 trillion.
Obama's blueprint was submitted two months late and comes after the House and Senate have approved their own budget outlines. However, the president's budget is also a negotiating position for the next showdown this summer over raising the nation's borrowing limit.
"When it comes to deficit reduction, I've already met Republicans more than halfway," Obama said at the White House on Wednesday.
"So in the coming days and weeks, I hope that Republicans will come forward and demonstrate that they're really as serious about the deficits and debt as they claim to be."
Rep. Tom Cole, R-Moore, a member of the House budget committee, criticized the president for not submitting a budget that balances in 10 years, as the House did. However, he said he was encouraged that Obama proposed changes to entitlement programs such as Medicare and Social Security.
"We have a significant distance to bridge between the Republican budget that balances in 10 years and the Democratic plan that never balances," Cole said. "Now that all plans are on the table -- including the Democratic Senate's first budget in four years -- I am hopeful that we can achieve significant progress in the coming months."
Among the key changes in the president's budget is the way inflation is figured. Obama proposes that the government use a calculation called chained Consumer Price Index, which takes into account consumer reaction to price inflation.
That change -- supported by some in both parties -- would mean smaller inflation-based benefit hikes for Social Security recipients, veterans and others and save $230 billion over ten years. The president's plan would shield some of the neediest from the reduction. For Social Security, the change is expected to mean a reduction of 0.3 percent annually in cost-of-living increases.
The National Committee to Preserve Social Security and Medicare blasted the proposal, saying the formula was "stingier and less accurate" and would mean benefit cuts for millions of seniors.
The change would also affect individual income taxes because the personal exemptions, standard deductions and brackets are adjusted upward each year to account for inflation. Smaller increases for inflation would mean more income would be taxed.
The president would also further limit income tax deductions for the wealthiest taxpayers and make high-income seniors pay more for Medicare.
Cigarette smokers would pay 94 cents more per pack in federal taxes to help fund Obama's early childhood initiatives.
For the fifth straight year, Obama proposed eliminating tax deductions used by oil and gas companies -- many of which have been in place for decades and are similar to tax breaks used by other industries. Obama's proposal would increase taxes on the companies by about $39 billion over ten years.
Chairman Virginia Lazenby, chairman of the Independent Petroleum Association of America, said, "If the president's budget proposal was enacted, independent oil and natural gas producers, who drill 95 percent of the nation's wells, would reduce their capital investments by up to 25 percent. This means fewer jobs, less revenue to government treasuries, and a halt to the progress our nation has made toward achieving energy security."
The president would slash more than $40 billion over ten years to farmers by eliminating the direct payments received by certain crop producers and reducing federal subsidies for crop insurance.
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