President Obama on Wednesday will roll out a $3.77 trillion budget for next fiscal year, calling for higher taxes in exchange for cost reductions in Social Security and Medicare — a plan White House officials said would bring the deficit to $744 billion in 2014.
Republicans and Democrats alike are already dismissing the budget plan, outlined by senior administration officials on Tuesday, but the White House is adamant that Obama won’t compromise any further on his fiscal recommendations.
“We don’t view this budget as a starting point in the negotiations,” a senior administration official said, previewing the budget ahead of the official release at 11 a.m. Wednesday morning. “This is our sticking point. The question is: Are Republicans going to be willing to come to us?”
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’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 will also recommend higher tobacco taxes to pay for universal 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.
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 just $600 billion. Republicans say such an offer proves Obama isn’t serious about stemming a soaring national debt.
In essence, the budget is a repackaging of Obama’s final offer to House Speaker John 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, administration officials would not say by how much Obama would increase tax rates for tobacco products.
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 will recommend 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.
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.
The president will speak about his budget from the Rose Garden at 11 a.m. Wednesday.