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Obama budget: Trim Social Security, tax wealthy

By Martin Crutsinger

Associated Press

LAST UPDATED: 03:55 p.m. HST, Apr 10, 2013

WASHINGTON » President Barack Obama sent Congress a $3.8 trillion spending blueprint today that strives to achieve a "grand bargain" to tame runaway deficits, raising taxes on the wealthy and trimming popular benefit programs including Social Security and Medicare.

The president's budget projects deficit reductions of $1.8 trillion over the next decade, achieved with nearly $1 trillion in higher taxes, reductions in payments to Medicare providers and cutbacks in the cost-of-living adjustments paid to millions of recipients in Social Security and other government programs. Obama's budget would negate nearly $1.2 trillion in automatic spending cuts, replacing some of those with smaller reductions of his own.

The president's proposed spending for the 2014 fiscal year, which begins Oct. 1, would rise 2.5 percent from this year.

The budget projects a deficit for the current year of $973 billion, falling to $744 billion in 2014. Those would be the first deficits below $1 trillion since 2008. Even with the president's deficit reductions, the budget projects the red ink would total $5.3 trillion over the next 10 years.

The plan includes a compromise proposal that Obama offered to House Speaker John Boehner during "fiscal cliff" negotiations last December. Boehner walked away from those talks because of his objections to raising taxes on the wealthy.

By including proposals to trim Social Security and Medicare, the government's two biggest benefit programs, Obama is hoping to entice Republicans to consider tax increases.

"I have already met Republicans more than halfway, so in the coming days and weeks I hope that Republicans will come forward and demonstrate that they're really as serious about the deficit and debt as they claim to be," Obama said in the White House Rose Garden.

But instead of moving Congress nearer a grand bargain, Obama's proposals so far have managed to anger both the Republicans, who are upset by higher taxes, and Democrats unhappy about cuts to Social Security benefits.

The White House highlighted $580 billion in tax increases on the rich over 10 years, which would be obtained primarily by limiting deductions the wealthy can take. But the figure climbs closer to $1 trillion after adding in a 94-cents-per-pack increase in taxes on cigarettes, slower inflation adjustments to income tax brackets, elimination of oil and gas production subsidies, an increase in the estate tax and a new "financial crisis responsibility" fee on banks.

Responding to the budget, Boehner said Republicans were unwilling to go beyond the $660 billion in higher taxes approved as part of the "fiscal cliff" deal. "The president got his tax hikes in January. We don't need to be raising taxes on the American people," Boehner said.

House Budget Committee Chairman Paul Ryan, R-Wis., said Obama's budget "doesn't break new ground. It goes over old ground. It takes more from families to spend more in Washington." Senate Republican Leader Mitch McConnell dismissed Obama's budget as "not a serious plan. For the most part, just another left-wing wish list."

Maya MacGuineas, president of the Committee for a Responsible Budget, a bipartisan group that promotes deficit reduction, praised Obama for retaining the deficit reduction elements of his December offer to Boehner in his new budget. She said this showed Obama was "still serous about fiscal reform."

Briefing reporters on the budget, Alan Krueger, chairman of the president's Council of Economic Advisers, said the economic growth assumptions for this year are a bit more optimistic than those of some private forecasters. He said the administration's forecast was done in November and assumed that the March 1 across-the-board spending cuts would not occur.

The president's spending and tax plan is two months late. The administration blamed the delay on the lengthy negotiations at the end of December and then fights over the resulting March 1 automatic spending cuts.

The Obama budget proposal will join competing outlines already approved by the Republican-controlled House and the Democratic-run Senate.

Obama's plan is not all about budget cuts. It also includes an additional $50 billion in spending to fund infrastructure investments, including $40 billion in a "Fix It First" effort to provide immediate money to repair highways, bridges, transit systems and airports nationwide.

Obama's budget would also provide $1 billion to launch a network of 15 manufacturing innovation institutes across the country, and it earmarks funding to support high-speed rail projects.

The president's plan to establish a program to offer preschool to all 4-year-olds from low- and moderate-income families would be financed by the higher tax on tobacco, which the administration said would raise $78 billion over a decade.

The administration said its proposals to increase spending would not increase the deficit but rather would be paid for either by increasing taxes or making deeper cuts to other programs.

Among the proposed cuts, the administration wants to trim defense spending by an additional $100 billion and domestic programs by an extra $100 billion over the next decade. However, those cuts would actually be less than the automatic spending cuts they would replace in the "sequester" that would have trimmed government spending by $1.2 trillion over 10 years. Obama's budget, if adopted, would eliminate future sequester reductions. Those cuts began taking effect on March 1 with an initial $85 billion in cuts.

The Obama budget proposes cutting $400 billion from Medicare and other health care programs over a decade. The cuts would come in a variety of ways, including negotiating better prescription drug prices and asking wealthy seniors to pay more.

It would obtain an additional $200 billion in savings by scaling back farm subsidies and trimming federal retiree programs.

The most sweeping proposal in Obama's budget is a switch in the way the government calculates the annual cost-of-living adjustments for the millions of recipients of Social Security and other benefits. The new method would take into account changes that occur when people substitute goods rising in price with less expensive products. It results in a slightly lower annual reading for inflation.

The switch in the inflation formula would cut spending on government benefit programs by $130 billion over 10 years, although the administration said it planned to protect the most vulnerable, including the very elderly. The change would also raise about $100 billion in higher taxes because the current CPI formula is used to adjust tax brackets each year. A lower inflation measure would mean more money taxed at higher rates.

In the tax area, Obama's budget would also implement the "Buffett Rule" requiring that households with incomes of more than $1 million pay at least 30 percent of their income in taxes.

Congress and the administration have already secured $2.5 trillion in deficit reduction over the next 10 years through budget reductions and with the end-of-year tax increase on the rich. Obama's plan would bring that total to $4.3 trillion over 10 years.

It is unlikely that Congress will get down to serious budget negotiations until this summer, when the government once again will be confronted with the need to raise the government's borrowing limit or face the prospect of a first-ever default on U.S. debt.

As part of the administration's effort to win over Republicans, Obama will have a private dinner at the White House with about a dozen GOP senators tonight. The budget is expected to be a primary topic, along with proposed legislation dealing with gun control and immigration.

Early indications are that the budget negotiations will be intense. Republicans have been adamant in their rejection of higher taxes, arguing that the $660 billion increase on top earners that was part of the late December agreement to prevent the government from going over the "fiscal cliff" is all the new revenue they will tolerate.

The administration maintains that Obama's proposal is balanced with the proper mix of spending cuts and tax increases.

Obama has presided over four straight years of annual deficits totaling more than $1 trillion, reflecting in part the lost revenue during a deep recession and the government's efforts to get the economy going again and stabilize the financial system.

The budget plan already passed by the GOP-controlled House projects reaching balance in 2023, a year in which Obama's proposal projects a $439 billion deficit. The budget outline approved by the Democratic-controlled Senate tracks more closely to the Obama proposal, although it does not include changes to the cost-of-living formula for Social Security.


Associated Press writers Andrew Taylor, Jim Kuhnhenn, Donna Cassata and Julie Pace contributed to this report.

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Kalli wrote:
Not surprisingly Obama wants to continue his plan to destroy America's military. Cutting another $100 Billion wil bring us to the Jimmy Carter miliary. Why don't you cut the food stamps and Obama phones?
on April 10,2013 | 05:25AM
Charliegrunt wrote:
You mean there's something wrong with cutting military manpower, benefits and weapons systems while stomping around talking tough, spending millions on his and his family's vacations, and his VP's $585K one night in Paris? Of course, he and his VP work so hard and do so much for this country that they deserve it more than those who have paid into social security all their working lives. Wanna buy some beach front property in the Everglades?
on April 10,2013 | 08:18AM
OldDiver wrote:
The military's bloated budget is full of waste, abuse and fraud. As of now the Pentagon is unable to locate about 2 trillions dollars from it's budget. It's time to close many of the 700 overseas bases and spend that money in the United States.
on April 10,2013 | 11:42AM
Kawipoo wrote:
Obama should spend it on sending you to Cuba.
on April 10,2013 | 11:51AM
nodaddynotthebelt wrote:
Don't forget to include the Republicans in the whole mess. They were at least in part responsible for the spending cuts on the military. Because of the Republicans' refusal to give up on tax loop holes used by the rich to reduce their taxes we have the Sequester. Yes, Obama has a hand in it but the Republicans have as much responsibility for that. I am guessing that the tax loop holes were more important to them than the military. Not saying all of the cuts were foolish. Some of the cuts were long in coming. We speak of bloated government agencies but the military has not been exactly running lean. The wasteful spending is not unique only to other government agencies. The military could stand to cut some fat itself.
on April 10,2013 | 08:24AM
Anonymous wrote:
The sequester was Obama's idea, Obama's proposal, included in the debt ceiling deal at his insistence AND based on an agreement that spending must be cut/controlled. He's not holding up his end of the deal, has declared that he would veto any legislation giving him flexibility to move the cuts around to less critical areas, AND the democrat senate has aided and abetted by refusing that very flexibility as offered by the GOP. --- So to blame the rich and "loopholes" is just more of the same democrat policy: infinite spending increases, continued crony capitalism, continued waste in the form of green energy initiatives down the Solyndra rat hole.
on April 10,2013 | 08:44AM
OldDiver wrote:
The idea that the sequester was Obama's idea is an idea promoted by Fox News.
on April 10,2013 | 11:38AM
Dragonman wrote:
The Republicans could have shot down the sequeter in the House which they control. The Republicans and Democrats both voted for the sequester, Obama and the Democrats could not have passed the sequester by themselves. Lets stick to the facts, blame all of Congress for passing the sequester if you don't like the results.
on April 10,2013 | 11:59AM
pcman wrote:
IRT nodaddy on the budget. Obama has cut so much of the "meat" in the military such as over 200 F-22's, one aircraft carrier, hundreds of tanks, etc., there really isn't much fat to cut. When you cut personnel and benefits you are looking at renewal of the draft "after" the "stuff" hits the fan. Obama's cuts of the military over the past four years will leave this successor with a "hollow" military to face threats that are already in development, such as North Korea, Iran, China, and Russia. Obama will force his successor with his philosophy of having to lead from behind. Obama will go into history as being the worst president in history, leaving us with our pants down, if that happens.
on April 10,2013 | 09:30AM
Dragonman wrote:
Orginally the military wanted around 1200 F-22's. These planes are probably the best fighters in the world but extremely expensive. Over the years the total number of F-22's to be bought slowly shrank as cost per unit rose. Although the military was unhappy about the cuts to the F-22 program they did not protest the cuts agressively. Makes me think their is something even better being developed, perhaps they are leaning toward UAV's. The real money being spent by the military is in R & D, thats research and development.
on April 10,2013 | 12:07PM
EightOEight wrote:
Kali, if you're going to bring up food stamps and 'Obama phone', why don't you mention that red states use the most food stamps and the phone program began under Reagan and was expanded under BushII?
on April 10,2013 | 10:49AM
EightOEight wrote:
on April 10,2013 | 10:53AM
Pacej001 wrote:
Yup. the free phone chart goes vertical under obama. That's a difference.
on April 10,2013 | 11:41AM
EightOEight wrote:
So what? The president has no direct impact on the program according to Factcheck.org.
on April 10,2013 | 11:57AM
lee1957 wrote:
But he could.
on April 10,2013 | 12:09PM
EightOEight wrote:
In your world of make-believe anything's possible. And so the BS on the right never ends.
on April 10,2013 | 12:41PM
Goodmedivice wrote:
This comment has been deleted.
on April 10,2013 | 02:02PM
EightOEight wrote:
Wrong. The FCC expanded the program in 2005 to include cell phones. Who was President then?
on April 10,2013 | 02:46PM
Wazdat wrote:
on April 10,2013 | 12:39PM
palani wrote:
There is NO deficit reduction in this budget! The President merely suggests spending less that he might have spent under different circumstances.

In fairness, neither the House nor the Senate budget includes any actual spending cuts. A pox on all their houses.

on April 10,2013 | 05:31AM
Kahu Matu wrote:
The President already got many of his tax increases, NOW is time for him to SUGGEST CUTS, NOT MORE TAXES!!!
on April 10,2013 | 05:56AM
soundofreason wrote:
"The president also is proposing establishment of program to offer preschool to all 4-year-olds from low- and moderate-income families">>> HERE'S and idea. Let's STOP softening the blow to people who CHOOSE to have kids they can't afford.
on April 10,2013 | 06:36AM
realist3463 wrote:
It is part of dumbing down the gene pool. By paying for child care for 4 year olds, and that is what pre-school is, for low and moderate income kids (likely only one parent around and not families) gives the mother freedom to make another welfare kid with a deminished IQ. As an example, although very sad, look at the recent murder on Molokai. Mother dead, father in Jail and the four kids left to be raised by the folks who raised the mother and father. These kids have NO chance.
on April 10,2013 | 08:41AM
HD36 wrote:
Don't let Obama steal your social security to buy another missle.
on April 10,2013 | 06:39AM
bekwell wrote:
Obama already stated that older people are a burden on the government.
on April 10,2013 | 06:51AM
NITRO08 wrote:
When did he say that? He's trying to compromise with the idiot repub's.
on April 10,2013 | 07:13AM
Anonymous wrote:
It's not just SS, but every program that is currently adjusted by a COLA increase.
on April 10,2013 | 08:45AM
soundofreason wrote:
Just not welfare......food stamps..........govt housing.
on April 10,2013 | 08:12PM
soundofreason wrote:
"But instead of moving Congress nearer a grand bargain, Obama's proposals so far have managed to anger both Republicans, who are upset by higher taxes, and Democrats upset with cuts to Social Security benefits.">>> And THAT is his MASTER plan. No more complicated than that.
on April 10,2013 | 07:00AM
Hawaiianhaole wrote:
Why is he so head strong about taking from the hard working American, not once have I heard about cutting back the billions of dollars going to foreign countries. Hey Obama lets take care of our own first.
on April 10,2013 | 07:15AM
saveparadise wrote:
Let's not forget that he legalized a lot of illegal immigrants. Funds and programs should be provided to Americans that pay or have paid taxes. We abandon born citizens and send money to foreign countries while encouraging illegals to cross the border and endanger residents that live nearby. I don't see how this strengthens our economy or provides security.
on April 10,2013 | 09:06AM
NITRO08 wrote:
It's all about compromise wake up all you crying fools if no one compromise nothing will get done.
on April 10,2013 | 07:15AM
soundofreason wrote:
There's been too much compromise far too long and now we all have a "diluted" NOTHING.
on April 10,2013 | 07:36AM
NITRO08 wrote:
What compromise from the repub's!
on April 10,2013 | 05:22PM
Paulh808 wrote:
Your brain is compromised!
on April 10,2013 | 07:10PM
soundofreason wrote:
Ummmm the last tax increase a few months ago they let pass. Selective memory. Flip away from MTV once in a while.
on April 10,2013 | 08:13PM
Maneki_Neko wrote:
Cut Grand Ma's social security check but let the guys on Wall Street keep up with the same stuff that sank the economy.
on April 10,2013 | 07:43AM
saveparadise wrote:
lol, too true Maneki. The foxes are still in the hen house.
on April 10,2013 | 09:08AM
Maneki_Neko wrote:
Oh well I guess we have so much money that Schatz can give it to Filipino veterans' descendants. His grandma would be so proud. The neighbor eats cat food....that's my boy.
on April 10,2013 | 12:52PM
Anonymous wrote:
Well, at least the last two republican house budgets didn't touch Social Security (at all) or Medicare (for those older than 55). This Obama proposal seems to do both in a way that severely impacts those in or near retirement at a point which individuals have no time to adjust savings plans or work longer to prepare. --- I had no idea Obama was this uncaring of the elderly.
on April 10,2013 | 08:51AM
typroctor wrote:
And 40 per cent of that udget is borrowed from other countries or printed by the Fed. Someday it's going to hit the fan.
on April 10,2013 | 09:14AM
pcman wrote:
President Obama will go into history as being the harshest president on senior citizens, ove age 65. Obama care already cut over $400 billion from MEDICARE to help pay for health care for younger people. Ben Bernanke,to help Obama create jobs, has imposed the lowest interest rates on personal savings, which is a major way senior citizens survive into old age, as a supplement to Social Security. Now, in his proposed budget, he wants to steal more from seniors in their Social Security cost of living increases in the future. I wonder if he would have done the same if his parents and/or grandparents were still living?
on April 10,2013 | 09:47AM
Pacej001 wrote:
Correct. However, the cuts he proposes to Medicare will never happen, and he knows it. They'll be "fixed" by a politically sensitive congress just like the annual "Doc fix" which prevents legislated Medicare reimbursement reductions from taking place.
on April 10,2013 | 10:02AM
soundofreason wrote:
Yeah, THAT'S a piece of work that burns my soul out of principle.
on April 10,2013 | 08:15PM
W_Williams wrote:
Why is this man so popular?
on April 10,2013 | 10:50AM
iwanaknow wrote:
Because the 47% support him.
on April 10,2013 | 10:55AM
NanakuliBoss wrote:
Because Rmoney came in second.
on April 10,2013 | 02:45PM
Paulh808 wrote:
And America came in third!
on April 10,2013 | 07:12PM
soundofreason wrote:
on April 10,2013 | 08:15PM
MakaniKai wrote:
Amazing isn't it? Aloha
on April 10,2013 | 10:59AM
Kawipoo wrote:
The only way American will want to cut spending is if they have to pay for all the government programs. Right now the government borrows, prints money, and raises taxes on the rich. If they raise taxes it should be on everybody. Only then will people complain and spending cuts will be seriously considered.
on April 10,2013 | 11:55AM
entrkn wrote:
Tax breaks and tax loopholes are not entitlements...ALL tax breaks and tax loopholes that primarily benefit wealthier Americans and corporations must be terminated now... that is not "raising taxes", that is eliminating tax evasion. After making these corrections, and if America still needs more revenue, an actual tax increase should be considered. Medicare and Social Security are Entitlements and are off limits in any budget negotiation. The Republicans are well aware of that and President Obama and the Hawaii congressional delegation has to be really clear on this. In one of their sleaziest moments, Republicans reduced Social Security payroll tax by 1%. That 1% deduction must be restored now, and most of the monies that were lost, now must be recovered, with interest from those who benefited most from what amounted to robbery. The President and the Hawaii congressional delegation must remember who their constituents are and the allegiance they demand.
on April 10,2013 | 07:28PM
konag43 wrote:
we all have to tighten our belts but social scurity is not one of the belts that need to be tightened. if we are soooo poor why are we helping other countries financially. if we keep giving our money away soon we won't have any money for ourselves. its time the us wakes up and stop providing aid to other countries. we stand on our own they need to stand on their own as well.
on April 11,2013 | 04:55PM
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