Obama proposes $3.7 trillion budget for 2012 

President Obama on Monday sent Congress a $3.7 trillion budget reliant on a host of cuts to programs championed by his liberal base, a shift in funding that would be used to pay off historically high government investments in education, public transportation and energy.

However, the president's professed "down payment" on the towering national debt did little to appease deficit hawks, who said Obama was sidestepping his obligation to tackle soaring entitlement costs.

Relying on a combination of tax increases for high-income residents and freezes in federal spending, Obama's budget blueprint would save $1.1 trillion over the next decade. But the federal budget deficit is already projected to hit a record $1.6 trillion this year and Obama's proposal would add to that debt over 10 years even as voters and politicians alike bemoan the sea of red ink.

Obama's plan would impose new limits on the itemized tax deductions for mortgage interest and charitable donations by households earning more than $250,000 annually and would end the Bush-era tax cuts for those wage earners in 2013, a prospect congressional Republicans are certain to fight.

"The only way to truly tackle our deficit is to cut excessive spending wherever we find it -- in domestic spending, defense spending, health care spending, and spending through tax breaks and loopholes," Obama said while outlining his education priorities at a Baltimore-area middle school on Monday. "So what we've done here is make a down payment, but there's going to be more work that needs to be done."

Obama proposes cutting $2.5 billion from a program that helps low-income families pay heating bills, $300 million from the Community Development Block Grant program and eliminating Pell Grants for summer college classes.

White House officials portrayed their plan as a reasonable mix of cuts -- including a series of reductions that will anger those on the left -- and investments needed to bolster the economy.

"We'll, in short, be paying for what we spend every year," said Office of Management and Budget Director Jack Lew.

But Obama's opening salvo was not enough for Republicans, who have pledged to take a meat cleaver to the federal budget and are likely to pile billions of dollars in additional cuts on top of what the president is proposing.

"It is a patronizing plan that says to the American people that their concerns are not his concerns," said Senate Minority Leader Mitch McConnell, R-Ky. "It's a plan that says fulfilling the president's vision of a future of trains and windmills is more important than a balanced checkbook."

Obama proposed a nearly 70 percent increase in Transportation Department spending, chiefly to fund a network of high-speed trains, while he cuts $78 billion from the defense budget.

The government is still operating under a stopgap measure that expires March 4 and must be renewed to avoid a government shutdown.

Some analysts say Obama ultimately will lose political capital for not implementing more recommendations from his own deficit commission, which included raising the Social Security retirement age and reforming Medicare.

"There is virtually no spending restraint in this budget at all," said Brian Riedl, lead budget analyst at the conservative Heritage Foundation. "The president's job is to lead, not wait for Congress. He's gone silent on the most important budget issue of our time."


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