President Obama on Wednesday unveiled his $3.77 trillion budget for next fiscal year, calling for higher taxes in exchange for cost reductions in Social Security and Medicare, setting the stage for another fight with Congress over the nation’s fiscal priorities.
Within the president’s budget — which would produce a $744 billion deficit in 2014 — are roughly $800 billion in new taxes, including a higher levy on tobacco products. Obama’s proposal would raise taxes on cigarettes by 94 cents per pack, up to $1.95.
From the Rose Garden on Wednesday, the president said such taxes were nonnegotiable if Republicans wanted the White House and Democrats to agree to cut entitlement programs.
“If anyone thinks I’ll finish the job of deficit reduction on the backs of middle class families or through spending cuts alone that actually hurt our economy short term, they should think again,” the president said. “When it comes to deficit reduction, I’ve already met Republicans more than half way.”
Republicans and Democrats alike are already dismissing the budget plan, leaving Obama on a lonely island in which neither side likes his blueprint.
Obama is taking heat from Republicans for the proposed tax increases and being battered by the left for recommending reductions in spending on Social Security. Obama is calling for a new inflation tool for Social Security, known as chained consumer price index, but critics say the change is more cosmetic than a major reduction in spending on the entitlement program.
Under the president’s fiscal blueprint, cost-of-living calculations would be lowered for Social Security payments as part of a deal to close tax loopholes and deductions for certain corporations and wealthy individuals.
Obama is proposing $1.8 trillion in savings over the next decade, but because his plan would replace $1.2 trillion in across-the-board spending cuts that went into effect in March, it would reduce borrowing by roughly $600 billion. Republicans say such an offer proves Obama isn’t serious about stemming a soaring national debt.
“Republicans are offering a different path,” Brendan Buck, a spokesman for House Speaker John Boehner said. “Our plan to balance the budget will end the waste of taxpayer dollars and foster a healthier economy, delivering real solutions to help improve people’s lives.”
Obama’s budget calls for $170 billion more in spending than outlined by the Congressional Budget Office. And the $744 billion deficit would represent 4.4 percent of GDP.
Presenting his budget more than two months late, Obama is recommending the higher tobacco taxes to pay for expanded preschool. The budget also includes the so-called Buffett Rule, which sets a minimum 30 percent tax rate for households earning more than $1 million a year.
In essence, the budget is a repackaging of Obama’s final offer to Boehner during negotiations over avoiding the so-called fiscal cliff at the start of the year. Under that deal, income taxes were increased for households earning more than $450,000 annually — a return to the Clinton-era rates.
In previewing the budget, one senior administration official said, “We don’t view this budget as a starting point in the negotiations. This is our sticking point.”
As outlined in his State of the Union Address, Obama’s budget calls for a national minimum wage of $9 an hour and another $50 billion in stimulus spending for infrastructure projects.