Obama Unveils Budget; Republicans Want More Cuts

WASHINGTON (AP) - President Barack Obama unveiled his $3.73 trillion spending plan Monday, a budget proposal that is certain to ignite a political battle with Republicans who say it is too timid about reducing the spiraling U.S. debt.

Speaking at a school in Baltimore, Maryland, the president said that his proposed budget will allow him to keep his promise to cut the nation's budget deficit by half at the end of his first term in office, which has two years to run.

Obama said his spending plan for the fiscal year beginning in October will reduce federal outlays - as a percentage of gross domestic product - to their lowest level since since Dwight D. Eisenhower was president in the 1950s.

The budget issue, always contentious, is more so in this spending cycle with the arrival of new Republicans backed by the low-tax, small-government tea party movement in the House of Representatives. Republicans retook control of the House after November elections on the promise of cutting government outlays and reducing Washington's impact on the Americans' lives.

The spending outline that finally is adopted will be a result of heated negotiations between House Republicans and the Democratic White House, but proposals from each side display the great distance separating them as they begin haggling.

White House budget writers contend the budget plan for the year beginning Oct. 1 puts America on course to reduce projected deficits by about $1.1 trillion over the coming 10 years. The Obama plan represents a reduction of 2.4 percent from what the administration projects will be spent in the current budget year.

Resurgent Republicans are sharpening their pencils, meanwhile, on cuts of $100 billion in the current fiscal year that ends Sept. 30.

Regardless of the outcome - which at this point is an argument over spending priorities now as against outlays in the coming fiscal year - neither Republicans nor Obama's Democrats have had the courage to take on an overhaul of the tax code or reductions in defense and domestic spending or Medicare and Social Security, programs that are a social safety net for older Americans.

That spending consumes roughly 80 percent of the total annual government outlay.

Obama's budget reveals no willingness to take the first step in the far-reaching deficit-reduction plan written in December by his fiscal commission. It recommended specific cuts to those politically sacrosanct programs and tax changes that effectively would raise government revenues. The commission plan outlined savings of $4 trillion over a decade.

As a matter of perspective, the 2011 budget deficit is forecast to hit $1.65 trillion, the highest on record. Overall U.S. government indebtedness is now is $14.1 trillion.

Before releasing next year's spending plan, Obama had already promised to freeze the budgets of agencies that oversee domestic programs at 2010 levels and freeze federal salaries. That would normally be seen as an extremely austere measure, but it falls far short of attempts by tea party-backed House Republicans to slash tens of billions of dollars in such programs, returning them to levels when Obama took office two years ago. The Republicans say Obama's freeze plan leaves in place a generous 24 percent increase in public benefits awarded by Democrats over the past two years.

The top Republican lawmaker on budget issues, Rep. Paul Ryan, said Obama was failing to address America's biggest challenge, the debt crisis. "He's making it worse, not better."

Skeptics question Obama's income forecasts that depend on measures such as eliminating tens of billions of dollars in tax breaks for oil companies - even though such ideas went nowhere under Democratic control of Congress and have even less of a chance now.

Obama wants to use such proposals, in conjunction with spending cuts, to shift money to spending on education, infrastructure, science and research that he says is needed to boost U.S. competitiveness.

That seems an overwhelming challenge given the political lineup in Congress.

For example, as Obama seeks $53 billion for high-speed rail over the next few years, House Republicans are trying to pull back $2.5 billion that has already been promised.