The $3.9 trillion blueprint for the fiscal year that begins on
October 1 also would boost spending on roads and bridges and expand
early-childhood education while paying for some of the additional
spending by scaling back tax breaks for wealthier Americans.
The proposal has almost no chance of passage in Congress, where
Republicans control the House of Representatives, but it lays out
Obama's policy priorities ahead of November congressional elections.
Democrats will be fighting to keep control of the U.S. Senate and
avoid losing ground in the House.
"Our budget is about choices, it's about our values," Obama told
reporters during a visit to an elementary school.
"At a time when our deficits are falling at the fastest rate in 60
years, we've got to decide if we're going to keep squeezing the
middle class or if we're going to continue to reduce the deficits
responsibly while taking steps to grow and strengthen the middle
While working within the overall cap of $1.014 trillion for
discretionary spending that Congress set for 2015, the president
proposed $56 billion in additional spending for education, welfare
and defense programs, paid for in part by ending a tax break for
Republicans objected to the plan's spending increases and said it
did not address larger fiscal challenges related to the Social
Security retirement program and Medicare and Medicaid healthcare for
the elderly, poor and disabled.
"After years of fiscal and economic mismanagement, the president has
offered perhaps his most irresponsible budget yet," Republican House
Speaker John Boehner said in a statement. "Spending too much,
borrowing too much, and taxing too much, it would hurt our economy
and cost jobs."
Democrats hope to draw a contrast with the Republicans' focus on
fiscal restraint and portray themselves as better able to deliver
jobs and growth.
Obama's proposal signaled a shift from last year's emphasis on
deficit cutting to a greater focus on fighting poverty, a goal the
president is highlighting as he eyes his legacy with fewer than
three years left in office.
Republicans, cognizant of Americans' slow recovery from the
2007-2009 recession, also have focused on poverty-reduction but they
favor a dramatically smaller government role.
House Budget Committee Chairman Paul Ryan, a potential Republican
presidential contender in 2016, argued in a report on Monday that
the government had barely made a dent in combating poverty in the
past 50 years despite massive spending. He blasted Obama's Tuesday
"This budget isn't a serious document; it's a campaign brochure,"
said Ryan, who will unveil a Republican budget as a counter to
Obama's in the coming weeks.
POVERTY, TAXES AND DEFICITS
Obama's budget proposes expanding the Earned Income Tax Credit, an
anti-poverty measure that is meant to encourage low-income Americans
to continue working.
The change would expand the program to cover some 13.5 million
people who do not have children and make it available to younger
workers who are not currently eligible.
The expansion, which would cost $60 billion, would be funded by
closing loopholes such as the tax break for "carried interest,"
profits earned by wealthy investors who run private equity and other
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Obama has long sought to end that tax break, which allows financiers
to treat their income as capital gains, making it subject to a tax
rate of 20 percent instead of the nearly 40 percent rate on ordinary
income paid by the highest earners.
Representative Dave Camp, the Republican chairman of the powerful
House Ways and Means Committee, also proposed last month to "clean
up" the carried interest deduction, but tax reform is not expected
to get traction in Congress this year.
The White House signaled last month that its new budget would not
extend the olive branch to Republicans on reform of entitlement
programs such as Social Security. Last year Obama proposed changing
how the government calculates inflation for Social Security and
other federal benefits that could have led to income drops for older
White House officials said Obama abandoned the idea after
Republicans declined to offer concessions of their own.
While Obama played down the deficit issue, congressional budget
analysts have warned that longer-term budget picture looks bleak
because of the aging of the population, which will lead to increased
costs for entitlements programs such as Social Security and
The White House projected that in fiscal year 2015 the budget
deficit would total $564 billion, or 3.1 percent of the nation's
gross domestic product. That would be down from a $649 billion
deficit, or 3.7 percent of GDP, in fiscal year 2014.
The Obama budget projects that annual deficits will remain in the
$400 billion to $500 billion range throughout the decade, reaching a
modest 1.6 percent of GDP in 2024.
The outlook from the non-partisan Congressional Budget Office looks
far worse, forecasting that deficits will climb back to $1.1
trillion by 2024, or 4 percent of GDP.
The Pentagon unveiled a $496 billion base budget that shifts the
United States from its war-footing for the first time in a dozen
years, cutting the size of the military to pay for training and new
weapons systems in an era of tighter spending.
The budget set the Obama administration on a collision course with
Congress by seeking to eliminate popular older weapons and reform
military compensation while proposing an additional $26.4 billion in
military spending to be paid for by closing tax loopholes and
cutting mandatory spending.
(Additional reporting by Richard Cowan, Roberta Rampton and Steve
Holland; editing by Eric Beech and Bill Trott)
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