Obama sending Congress 'hard choices' budget

WASHINGTON - Pledging "a new era of responsibility," President Barack Obama unveiled a multi-trillion-dollar spending plan Thursday that would boost taxes on the wealthy, curtail Medicare, lay the groundwork for universal health care and leave a string of deficits dwarfing any in the nation's history.

In addition to sending Congress his $3.55 trillion budget plan for 2010, Obama proposed more immediate changes that would push spending to $3.94 trillion in the current year. That would result in a record deficit Obama projects will hit $1.75 trillion, reflecting the massive spending being undertaken to battle a severe recession and the worst financial crisis in seven decades.

The new deficit total is roughly equivalent to $12,000 for every taxpayer in the United States, or approximately $6,000 for every man, woman and child in America.

The new budget also plans for additional financial bailouts of up to $750 billion, a senior administration official told NBC News. But the White House believes that as the economy improves it will get roughly $500 billion back, so the expected cost to taxpayers is $250 billion.

In his budget message, Obama sought to draw a clear distinction with the Bush administration, saying "the time has come to usher in a new era — a new era of responsibility" both in government and the private sector.

GOP assails plan
But Republicans contended Obama was avoiding hard choices in favor of exploding the deficit and raising taxes.

"This budget plan is once again a missed opportunity for American taxpayers -- it raises taxes on all Americans, implements massive new spending and fails to make any tough choices to control the deficit," said Sen. Judd Gregg, R-N.H., the top Budget Committee Republican who was nominated by Obama to join his Cabinet as commerce secretary but then withdrew.

The administration called the request for additional bailout resources a "placeholder" in advance of a determination by the Treasury Department of what will actually be needed.

The spending blueprint Obama sent Congress was a 134-page outline with further details to come in mid to late April, when the new administration sends up the massive budget books that will flesh out the plan.

The plan balances efforts to fulfill Obama's campaign pledges to deliver tax cuts to the middle class, expand health care coverage and combat the economic crisis with an effort to keep a soaring deficit from becoming a permanent drag on the economy. However, Republicans assailed the budget for the tax increases, and some Democrats worried that Obama was not doing enough to get the deficit under control.

"I would give him good marks as a beginning, but we have to do a lot more to take on this long-term debt buildup," said Senate Budget Committee Chairman Kent Conrad, D-N.D.

"Everyone agrees that all Americans deserve access to affordable health care, but is increasing taxes during an economic recession, especially on small businesses, the right way to accomplish that goal?" asked House Minority Leader John Boehner, R-Ohio.

The $634 billion down payment on expanding health care coverage would come from a $318 billion increase over 10 years in taxes on the wealthy, defined as couples making more than $250,000 per year and individuals making more than $200,000. The other half of the money for expanding health care — $316 billion — would come from curtailing payments to hospitals and insurance companies under Medicare and drug payments under Medicaid.

Record deficit for this year
To meet his pledge of tax cuts for the middle class, the president wants to make permanent the $400 annual tax cut due to start showing up in workers' paychecks in April as part of the stimulus package just passed by Congress.

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Obama's budget also extends the middle class tax cuts passed by the Bush administration in 2001 and 2003. Those cuts were due to expire at the end of 2010. If Congress approves Obama's recommendations, the Bush tax cuts would expire only for couples making more than $250,000 per year.

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