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Old 02-14-2012, 02:45 PM
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Default Obama budget: Govt. gets bigger

Obama budget: Govt. gets bigger

Andrew Taylor

Feb. 14, 2012

WASHINGTON Taking a pass on reining in government growth, President Barack Obama unveiled a record $3.8 trillion election-year budget plan Monday, calling for stimulus-style spending on roads and schools and tax hikes on the wealthy to help pay the costs. The ideas landed with a thud on Capitol Hill.

Though the Pentagon and a number of Cabinet agencies would get squeezed, Obama would leave the spiraling growth of health care programs for the elderly and the poor largely unchecked. The plan claims $4 trillion in deficit savings over the coming decade, but most of it would be through tax increases Republicans oppose, lower war costs already in motion and budget cuts enacted last year in a debt pact with GOP lawmakers.

Many of the ideas in the White House plan for the 2013 budget year will be thrashed out during this year's election campaigns as the Republicans try to oust Obama from the White House and add Senate control to their command of the House.

"We can't just cut our way into growth," Obama said at a campaign-style rally at a community college in the vote-rich Northern Virginia suburbs. "We can cut back on the things that we don't need, but we also have to make sure that everyone is paying their fair share for the things that we do need."

Republicans were unimpressed.

"It seems like the president has decided again to campaign instead of govern and that he's just going to duck this country's fiscal problems," said House Budget Committee Chairman Paul Ryan, R-Janesville.

By the administration's reckoning, the deficit would drop to $901 billion next year still requiring the government to borrow 24 cents of every dollar it spends and would settle in the $600 billion-plus range by 2015.

The deficit for the current budget year, which ends Sept. 30, would hit $1.3 trillion, a near record and the fourth-straight year of trillion-plus red ink.

Obama's budget blueprint reprises a long roster of prior proposals: raising taxes on couples making more than $250,000 a year; eliminating numerous tax breaks for oil and gas companies; and approving a series of smaller tax and fee proposals. Similar proposals failed even when the Democrats controlled Congress.

But there are spending increases, too: The Obama plan seeks $476 billion for transportation projects including roads, bridges and a much-criticized high-speed rail initiative.

Republicans accused the president of yet again failing to do anything meaningful to reduce deficits that could threaten the country with a European-style debt crisis unless they are wrestled under control.

As a political document, the Obama plan blends a handful of jobs-boosting initiatives with poll-tested tax hikes on the rich, including higher taxes on dividends and income earned by hedge fund managers. That would allow Obama to draw a contrast with GOP front-runner Mitt Romney, whose personal fortune and relatively low tax rate would be an issue in the general election campaign.

Another contrast with Republicans will come on Medicare, the enormously popular health care programs for the elderly. Obama leaves the program mostly alone, while Republicans are on record in favor of gradually replacing the current system in which the government pays doctor and hospital bills with a voucher-like plan that would have government subsidize purchases of health insurance.

Nor does Obama tackle Social Security's fiscal imbalance. Payroll taxes paid into the program fall well short of what's needed to cover benefits; the shortfall is made up by tapping into a $2.7 trillion trust fund that's built up since the last overhaul of the program in the early 1980s.
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