The White House budget claims $580 billion in tax increases on the wealthy over 10 years, including a 28 percent cap on itemized deductions that's never gotten anywhere on Capitol Hill.
The total climbs closer to $1 trillion in tax increases after adding in ideas like a 94 cents-per-pack increase in taxes on cigarettes, changes for corporate foreign earnings, slower inflation adjustments to income tax brackets, elimination of oil and gas production subsidies, an increase in the estate tax, a new "financial crisis responsibility" fee on banks and new taxes on trading of exotic financial instruments known as derivatives.
Republicans predictably slammed Obama's plan for its tax increases while his Democratic allies generally held their tongues over cuts to Social Security benefits.
"It's not the budget I would write on my own, and it includes several policies that I don't think are the best ways to tackle the deficit and debt," said Senate Budget Committee Chairman Patty Murray, D-Wash.
The Social Security cuts would come from a slightly stingier inflation adjustment known as "chained CPI" that would reduce annual cost-of-living increases for a variety of programs by about 0.3 percentage points a year. It would reduce federal spending on government programs over 10 years by $130 billion and promises to save far more in subsequent decades.
Once the change was fully phased in, Social Security benefits for a typical middle-income 65-year-old would be about $136 less a year, according to an analysis of Social Security data. At age 75, annual benefits under the new index would be $560 less. But after age 75, Social Security recipients would receive larger-than-scheduled benefit increases by 0.5 percentage points a year through age 85.
Obama promises to ease the burden of the proposal on the poor and the very elderly by not applying it to programs meant for low-income Americans. That means annual increases in assistance programs such as Social Security Supplemental Security Income and Pell Grants for student aid would not be calculated by using the lower inflation formula.
Despite Obama's vows not to raise taxes on the middle class, the chained CPI proposal also would result in higher taxes because tax brackets would be adjusted for inflation more slowly, with much of the effect felt by middle class taxpayers. The provision would raise about $100 billion over 10 years. At the same time, raising the cigarette tax from $1.01 to 1.95 per pack would be disproportionally felt by the poor. That tax increase would raise $78 billion over 10 years.
Obama's plan generally tracks a nonbinding budget measure that passed the Senate last month, though Democrats controlling the chamber left out the chained CPI proposal.
House Republicans, by contrast, muscled through a far more austere plan in March that contains big cuts to Medicaid and would reduce domestic agency budgets by about 20 percent below levels contemplated in a hard-fought 2011 budget pact that set tight "caps" on spending passed by Congress each year.
"I don't think we should be talking about grand bargains because that implies the president and Senate Democrats are ready to embrace fundamental entitlement reform, which they have shown absolutely no indication of doing," said House Budget Chairman Ryan, his party's vice presidential nominee last year.
Such pessimism is also felt by Democrats. Asked this week about the prospects for a broad budget deal, Murray said: "I think we're a long ways from there right now."
Associated Press writers Martin Crutsinger, Donna Cassata and Julie Pace contributed to this report.
- Man seeks video of 1995 Oklahoma City...
- 'Deseret News National Edition': Hobby Lobby,...
- Plan to simplify 2015 health renewals may...
- Bills aim to bring marriage, family law into...
- A new initiative from the Obama...
- Obama maintains busy fundraising schedule,...
- The Great War: 100 photos marking 100 years...
- Taiwan plane crash survivor crawls out of...
- Hamas calls for end to blockade of Gaza... 25
- Federal land managers criticized over... 24
- Obama fundraises for Dems; demands GOP... 21
- Feds cap fines for not buying health... 21
- Obama maintains busy fundraising... 18
- Ted Cruz demands answers on FAA flight... 16
- After government topples crosses in... 14
- Varying health premium subsidy amounts... 13