Obama budget includes spending cuts, smokers tax

Associated Press

WASHINGTON

Mixing modest curbs on spending with tax increases reviled by Republicans, President Barack Obama proposed a $3.8 trillion budget Wednesday that would raise taxes on smokers and wealthy Americans and trim Social Security benefits for millions.

Obama’s 2014 blueprint combines a $242 billion infusion of new spending for road and rail projects, early education and jobs initiatives — all favored by Democrats — with longer-term savings from programs including Medicare and the military. It promises at least a start in cutting huge annual federal deficits.

The president pitched his plan as a good-faith offer to his GOP rivals since it incorporates a proposal he made to Republicans in December that wasn’t radically different from a GOP plan drafted by House Speaker John Boehner. But it follows January’s bitterly fought 10-year, $600 billion-plus tax increase that has stiffened GOP resolve against further tax hikes.

“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.

He was having a dozen Senate Republicans to the White House for dinner Wednesday evening in hopes of building a dialogue on the budget and other topics.

After four years of trillion-dollar-plus deficits in his first term, Obama’s plan projects a $973 billion deficit for the current budget year and red ink of $744 billion for the 2014 fiscal year starting in October.

By 2016, the deficit is seen as dropping below 3 percent of the size of the economy, a level that many economists say is manageable.