US President Barack Obama is to unveil a budget proposal on Wednesday that is sure to anger both opposition Republicans and members of his own Democratic Party as he seeks to revive efforts to forge a deficit reduction deal with Congress.
Obama has said his 2014 budget proposal would present “a fiscally responsible blueprint for middle-class jobs and growth” and reduce the federal budget deficit by a further 1.8 trillion dollars over 10 years.
That deficit reduction would come through cuts to Government programmes for pensioners and the poor as well as from tax increases on the wealthy.
The proposal mirrors the one Obama offered to Republicans in December in a failed bid to craft a broader deficit reduction deal to replace an existing package of tax hikes and spending cuts. Obama and Republicans later agreed to a smaller deal that raised taxes on the wealthy, but failed to agree on the spending cuts, which went into effect last month.
Obama’s deficit reduction proposal would replace those across-the-board cuts, known as the sequester, which amount to 1.2 trillion dollars over the next decade.
The plan has already faced protests from the political left for the reductions in social programmes, including a move that would reduce cost of living increases for pensioners.
“While it’s not my ideal plan to further reduce the deficit, it’s a compromise I’m willing to accept in order to move beyond a cycle of short-term, crisis-driven decision-making, and focus on growing our economy and our middle-class for the long run,” Obama said in his weekly radio address Saturday.
Some Republicans have indicated they are encouraged by Obama’s willingness to discuss reining in spending on the so-called entitlement programmes, but a further increase in taxes is likely to prove a bitter pill to swallow for the centre-right party.
“There are nuggets of his budget that I think are optimistic,” Republican Senator Lindsey Graham said Sunday, even as he rejected the plan overall as bad for the economy.
“The President is showing a little bit of leg here. This is somewhat encouraging,” he said. “His overall budget is not going to make it, but he has sort of made a step forward in the entitlement reform process that would allow a guy like me to begin to talk about flattening the tax code and generating more revenue.” Mitch McConnell, leader of the minority Republicans in the Senate, said Tuesday he was not sure that Obama’s proposal was “a serious exercise,” but he remained hopeful for real action on deficits.
The White House maintains that the budget proposal is a “good-faith attempt” to boost the economy and job creation with investments in infrastructure, education and elsewhere. The proposal is sure to dominate discussions when Obama dines with a group of Republican senators Wednesday evening.
Spokesman Jay Carney has rejected a separate budget proposal put forward by Republicans in control of the House of Representatives that would slash spending and balance the budget within a decade.
Obama’s budget proposal should have been released in February under US law, but has been delayed as the White House and Republicans squabbled over the related tax and budget matters.
The proposal covers the 2014 fiscal year that begins October 1.
Congress must iron out competing budget proposals, including the House Republican plan and one put forward by Democrats in the Senate, in the meantime and agree on a measure it can pass — something it has failed to do for years amid political stalemate in the Senate.