Obama Budget Includes Tax Increases, Entitlement Cuts

Apr 10, 2013
Originally published on April 10, 2013 6:19 pm
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And I'm Melissa Block.

President Obama released his long overdue budget today, and with it came this message: The country doesn't have to choose between cutting the deficit and investing in future growth. The president's proposal includes hundreds of billions of dollars in new taxes, as well as long-term savings in Medicare and Social Security. As NPR's Scott Horsley reports, the White House also tried to send a message to congressional Republicans that they can't cherry-pick entitlement reforms without also taking on tax increases.

SCOTT HORSLEY, BYLINE: President Obama says nothing shrinks deficits like a growing economy. He told an audience in the Rose Garden today the U.S. economy is poised for growth, but only if Washington policymakers get beyond their crisis-driven decision-making.

PRESIDENT BARACK OBAMA: If we want to keep rebuilding our economy on a stronger, more stable foundation, then we've got to get smarter about our priorities as a nation. And that's what the budget I'm sending to Congress today represents.

HORSLEY: In crafting his budget, the president assumed the U.S. economy would grow more than two-and-a-half percent this year. But that was before the government's across-the-board spending cuts took effect last month. Forecasters say those cuts will slow economic growth. Obama's budget would reverse them.

OBAMA: There are a lot of folks who are being increasingly impacted all across this country. And that's why my budget replaces these cuts with smarter ones, making long-term reforms, eliminating actual waste and programs we don't need anymore.

HORSLEY: But while the president's plan would cut spending in some areas, it calls for new spending elsewhere. The most ambitious proposal is to make high-quality preschool available to every 4-year-old. The price tag is anything but child-sized: $75 billion. Cecilia Munoz, who heads the president's Domestic Policy Council, suggests covering that with a cigarette tax of nearly a dollar per pack.

CECILIA MUNOZ: So this is a major investment in the future of our economy and the future of our children. And I would say that anybody who's been around a 4-year-old can likely attest that they are a powerful force for the future, and they're more than worth the investment.

HORSLEY: The president's budget also includes the deficit-cutting offer he made to House Speaker John Boehner back in December. It's designed to whittle the deficit down to less than 3 percent of the overall economy within two years and less than 2 percent by the end of the decade.

OBAMA: Our deficits are falling at the fastest pace in years, but we can do more to bring them down in a balanced and responsible way.

HORSLEY: The president says he could hit that deficit-cutting target through a combination of higher taxes on the wealthy - mostly by limiting the value of their deductions - and spending cuts, including savings in Medicare and Social Security. Liberal Democrats have protested the entitlement cuts, but Obama says some savings are necessary to ensure those programs' survival.

OBAMA: If we want to preserve the iron-clad guarantee that Medicare represents, then we're going to have to make some changes. But they don't have to be drastic ones.

HORSLEY: Obama says his health care savings would come from more efficient care. The wealthier seniors would also face higher health care premiums. Congressional Republicans, including Speaker Boehner, have welcomed the entitlement cuts in the president's budget, but not the tax increases. White House economic adviser Gene Sperling, who's a veteran of past budget compromises, says you can't have one without the other.

GENE SPERLING: The offer that is there for Speaker Boehner is not an a la carte menu, and you can't decide to only pick out the concessions the president has made and not include the concessions from the Republican side that need to be part of a bipartisan deal that could pass both houses.

HORSLEY: So far, only a handful of Republicans have said they'd even consider higher tax revenue as part of a broader deficit-cutting deal. Obama, who's dining with a dozen Republican senators tonight, says he'll keep looking for new converts. Scott Horsley, NPR News, the White House. Transcript provided by NPR, Copyright NPR.