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Obama's budget plan draws upon his previous proposals

A preview of President Obama's 2013 budget proposal calls for some new spending as well as higher taxes on the wealthy and an estimated $4 trillion in deficit reduction.

February 10, 2012|By Kathleen Hennessey and Christi Parsons, Washington Bureau
  • Employees stack copies of the budget for the 2013 fiscal year Thursday at the U.S. Government Printing Office in Washington.
Employees stack copies of the budget for the 2013 fiscal year Thursday at… (Andrew Harrer / Bloomberg )

Reporting from Washington — President Obama will call for new spending on infrastructure, education and manufacturing research, as well as higher taxes on top earners, in a budget proposal aimed at underlining his top economic priorities as he gears up his reelection campaign.

Senior administration officials Friday offered a preview of the president's 2013 budget proposal, which is due to be formally unveiled Monday.

The blueprint outlined pulls heavily from proposals previously put forward by the president — including his jobs bill, most of which is stalled in Congress, and his deficit reduction plan, which fizzled in the failed congressional "super committee" charged with reducing the deficit.

Officials said the budget would abide by spending caps set by Congress in the August budget deal, keeping discretionary spending levels essentially flat in fiscal 2013.

Over the decade, discretionary spending would drop from 8.7% of gross domestic product to 5%, officials said.

To achieve that, the August agreement mandates steep and unpopular cuts in defense and domestic spending, a result of the super committee's failure to forge a broader deficit reduction plan. The president's budget seeks to head off those cuts by offering up a new version of the deficit reduction package he introduced in September.

The plan claims more than $4 trillion in deficit reduction. It would accomplish this through the expiration of President George W. Bush-era tax cuts on upper-income Americans, closing tax loopholes, winding down the military spending in Iraq and Afghanistan and cutting costs in Medicare and Medicaid.

The plan will reiterate a call for tax reform to be guided by the so-called Buffett rule, the principle advocated by billionaire Warren Buffett that no household making more than $1 million a year should pay less than a 30% tax rate. But officials said the budget would not estimate how much revenue such a rule would generate.

Administration officials said that proposal would cut the deficit to a more stable 3% of GDP by 2018.

The president's budget projects a $1.33-trillion deficit in 2012, 8.5% of GDP. That number would fall to $901 billion — 5.5% of GDP — in 2013.

Republicans are poised to pounce on Obama's plan, which also seeks to cut $360 billion from Medicare and Medicaid over the next decade, but does not call for structural reform of the entitlement programs.

"The president needs to tell the American people what his plan is to get us out of this fiscal mess, and I think it will continue to be a major irresponsibility not to propose changes to the major entitlement programs," said Sen. Jeff Sessions, an Alabama Republican and ranking member of the Senate Budget Committee.

The Obama budget would funnel new spending to areas the president highlighted in his State of the Union speech.

Research and development for advanced manufacturing would see a 19% increase to $2.2 billion. The budget seeks $30 billion to modernize at least 35,000 schools and $30 billion to help states hire teachers, police and firefighters, an element of his American Jobs Act.

The president will call for the creation of a $5-billion program that will challenge school districts and states to better train and recruit teachers. His budget seeks $300 million in new funding to improve child care and school preparation.

A six-year, $476-billion surface transportation bill would be paid for by user fees and by some of the savings from reducing the operations in Iraq and Afghanistan.

The proposal would support plans to put 1 million electric vehicles on the road by 2015 and double the share of electricity from clean energy sources by 2035. Elimination of 12 tax breaks to oil, gas and coal companies would raise $41 billion over the next decade, according to administration projections.

kathleen.hennessey@latimes.com

cparsons@latimes.com

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