Obama hits GOP with $3.8T budget

A combative President Obama unveiled a $3.8 trillion budget on Monday with a flurry of attacks on Republicans in Congress.

The 2013 budget promises $3 trillion in deficit cuts over 10 years, mostly through $1.5 trillion in new taxes and $800 billion in savings counted from the end of the wars in Iraq and Afghanistan.

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Some of the savings would be pumped back into the economy, as Obama’s budget proposes $350 billion in short-term stimulus spending, including funds for new transportation projects and to help local governments hire teachers. 

In making the case for his budget, Obama warned Republicans not to block targeted investments in a recovering economy. 

“The main idea in the budget is this: At a time when our economy is growing and creating jobs at a faster clip, we need to do everything in our power to keep this recovery on track,” Obama said in comments at Northern Virginia Community College. “The last thing we need is for Washington to stand in the way of America’s comeback.”

Obama has seen his approval ratings rise and Congress’s ratings tumble to an all-time low while pressing for his jobs proposals for the fall and battling Republicans on taxes. 

The budget largely continues those fights, signaling that the White House believes these attack lines will be effective as the president makes his case to voters for another four years this fall. 

Obama’s budget calls for a tax overhaul that includes a requirement that the wealthy pay at least 30 percent of their income in taxes, an idea known as “the Buffett Rule” that was a major theme of the president’s State of the Union address. 

“That’s not class warfare. That’s common sense,” Obama said.

It would roll back the Bush-era tax rates set to expire at the end of the year on families with annual income above $250,000.

The budget includes dozens of small-bore measures aimed at helping the economy, many of which were included in the jobs bill Obama proposed last September. 

Most of that package was all but dead on arrival when it reached Congress, but Obama was able to convince lawmakers to extend a payroll tax cut at the end of December for two months, and he earned a significant political victory when House Republicans overplayed their hand and were seen as blocking it. 

Once the jobs bill replaced the debt ceiling as the main topic of political discourse, Obama’s approval numbers began their steady ascent. 

House GOP leaders seeking to cut their losses on that payroll tax fight on Monday announced they would not demand that the tax cut be offset with other spending cuts as part of an extension through the end of the year. 

Republicans blasted Obama’s latest request for inflating the debt and aggravating what they dub class warfare. 

“Because he can’t stand by his record, the president is forced to turn to the politics of envy and division. What is fair about proposing the largest tax increase in history on small-business job creators?” said House GOP conference Chairman Jeb Hensarling (R-Texas).

The GOP noted that Obama’s budget projects another $1.33 trillion deficit this year, the fourth straight year of trillion-dollar deficits despite Obama’s promise to cut the deficit in half after his first term.

By 2022, the gross national debt would reach $26 trillion under the Obama budget, up from $15 trillion today. The Congressional Budget Office projects that by doing nothing — including allowing taxes on the middle class to rise — the debt would only be $22 billion by then.

“This is a political plan for the president’s reelection designed to help the president in a reelection campaign and duck taking responsibility for solving a predictable debt crisis,” said House Budget Committee Chairman Paul Ryan (R-Wis.).

Republicans also criticized the savings from the two wars as a gimmick. 

“Today we are witnessing one of the most spectacular fiscal cover-ups in American history,” Senate Budget Committee ranking member Jeff Sessions (R-Ala.) said in a statement.

Acting Obama budget director Jeff Zients, however, told reporters that the new budget actually trims deficits by $5 trillion if budget cuts in the August debt deal and 2011 appropriations bills are included. 

He said the budget deficit is actually halved in 2014, one year later than Obama had promised, and cited the severity of the 2009 economic downturn as the main reason the deficit was not halved on time.

Zients also defended Obama from Republicans who argued the White House took a pass on entitlements, a major driver of the deficit. 

“I don’t think we take a pass,” Zients said. 

He noted the budget projects $360 billion in healthcare savings over 10 years. The savings comes from charging wealthier people higher Medicare premiums and cutting some payments to providers and drug companies.

According to the White House, the savings would extend the life of the Medicare trust fund — set to be insolvent after 2022 — by two years. House Republicans say they plan to offer a bolder vision for preserving Medicare in their budget. 

The White House attacked Congress in response to questions about why it wasn’t doing more on Medicare.

National Economic Council Director Gene Sperling said Republicans have held back progress by refusing to trade new taxes for entitlement reforms.

Sperling said the budget makes “hard choices” for a Democratic president, such as changes to Medicaid and forcing federal employees to contribute 1.2 percent more over three years to retirement costs. In this context, tax increases on the wealthy are only “fair,” he said.

The budget includes specific changes to the tax code, but also sets out principles for future tax reform.

Among the specific changes put forth is a proposal to generate $206 billion by taxing investment dividends earned by the wealthy at a higher rate.

— Amie Parnes and Vicki Needham contributed.

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