Instead, Obama will on Monday reprise recommendations he unveiled last fall that seek to reduce borrowing by more than $3 trillion over the next decade while spending more in the short term to bring down persistently high unemployment.
The president’s blueprint calls for reductions in spending on federal health programs and the military, a small raise for federal workers and more than $1.5 trillion in new taxes on corporations, hedge-fund managers and the wealthy, in part through the expiration of the George W. Bush-era tax cuts on annual incomes of more than $250,000.
Obama also has called for changes to the tax code that would require households earning more than $1 million a year to pay at least 30 percent of their income in federal taxes, but senior administration officials said Friday that the blueprint will provide no additional details on how such a levy would be structured.
To achieve his debt-reduction goal, Obama would rely on an accounting maneuver that permits him to claim about $850 billion in savings over the next decade by ending the wars in Iraq and Afghanistan, a move Republicans have rejected as a gimmick. Obama would use a portion of those savings to finance new road and rail projects, rather than dedicating the full sum to lower deficits.
Obama’s budget also calls for new investments in education, manufacturing and federal research and development, and it would devote an additional $350 billion to boosting economic growth. That sum includes extending a temporary payroll tax holiday and emergency unemployment benefits through the end of the year. Both are scheduled to expire at the end of this month and are currently the focus of intense debate in Congress.
The president’s plan would push this year’s deficit above current projections, with the budget gap growing to $1.33 trillion — slightly higher than last year’s $1.3 trillion deficit and $200 billion more than congressional budget analysts recently projected for the fiscal year that ends in September.
The deficit would fall to $900 billion in 2013, and government borrowing would continue to slow through 2022, leaving the debt elevated by historic standards but no longer growing faster than the overall economy.
Senior administration officials said the blueprint offers a balanced approach that would protect the middle class while asking for greater sacrifice from the most fortunate. Every dollar in tax increases would be matched with $2.50 in spending cuts, they said, counting $1 trillion in previously adopted cuts to agency budgets.