WASHINGTON — President Barack Obama proposed a $3.77 trillion budget today that combines controversial cuts to social safety net programs with tax increases on the wealthy.
The package is meant to lure Republicans to negotiate a broad deficit-reduction plan, but the details mirror a proposal Obama laid out last year that was rejected by Republican leaders.
Obama’s budget for fiscal year 2014, which begins on October 1, would trim the deficit over three years by requiring people making more than $1 million annually to pay more in taxes while enacting spending cuts that would replace the “sequester” reductions that went into place last month.
It has little chance of becoming law.
Many Republicans reject Obama’s push for tax increases and many Democrats oppose cuts to the popular Social Security retirement program.
But both sides want to lower the deficit, which Obama’s budget projected would fall to 744 billion in 2014, or 4.4 per cent of gross domestic product, from an estimated $973 billion in 2013.
The president said his proposal – particularly the healthcare and pension program cuts painful to his fellow Democrats – meant he had moved in Republicans’ direction.
“When it comes to deficit reduction, I’ve already met Republicans more than halfway,” Obama said in remarks at the White House.
“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.”
Obama’s budget aims to achieve $1.8 trillion in deficit reduction over 10 years. Added to the $2.5 trillion in deficit cuts from past efforts, the total would be above the $4 trillion reduction both parties have said would be an acceptable goal.
The ratio of deficits to GDP would fall to 2.8 per cent in 2016, below the 3 per cent level economists say is necessary to put debt on a path to shrinking as a share of the economy.
Republicans largely dismissed Obama’s proposal.
John Boehner, the Republican speaker of the House of Representatives and Obama’s main opponent for deficit talks, said Obama’s proposed cuts to entitlement programs such as Social Security were praiseworthy but not sufficient.
“I would hope that he would not hold hostage these modest reforms for his demand for bigger tax hikes,” Boehner said.
Obama’s hope is to build a coalition of lawmakers willing to move toward his position, although most observers see that as unlikely. He has invited 12 Republicans to dinner at the White House on Wednesday.
Both sides were unable to prevent some $85 billion in across-the-board “sequestration” spending cuts from going into effect March 1. (Reuters)