Obama unveils fiscal 2013 budget proposal

Unveiling a $3.8 trillion election-year federal budget loaded with deficits, tax increases and hundreds of billions of dollars in new stimulus spending, President Obama said Monday that his plan will “restore an economy where everybody gets a fair shot.”

“The economy is growing stronger, the recovery is speeding up,” Mr. Obama said at Northern Virginia Community College in Annandale, Va., where he also proposed a new job-training program. “We can’t cut back on those things that are important for us to grow.”

Drawing a number of battle lines for the fall campaign, Mr. Obama is inviting another clash with congressional Republicans by calling for short-term spending to create jobs with proposals that GOP lawmakers already have rejected. He would spend $50 billion immediately on transportation infrastructure, $30 billion to modernize schools and $30 billion to hire teachers and emergency workers.

The president said one of the first budget proposals Congress must enact is an extension of the payroll-tax holiday for about 160 million workers, which is set to expire at the end of this month. House Republicans on Monday signaled that they were ready to do that.

“The last thing we need is for Washington to stand in the way of America’s comeback,” Mr. Obama said. “Preventing a tax hike on the middle class is only the beginning.”

His budget — which calls for a total of $350 billion in short-term stimulus spending, a $475 billion highway program and $1.5 trillion in tax increases on wealthier Americans — has virtually no chance of passing as is, but is intended to highlight the differences between the two parties as Mr. Obama seeks re-election. It would impose a 30 percent minimum tax on those earning $1 million or more.

Mr. Obama also proposes to raise taxes on investment income for families earning more than $250,000. He would tax dividends as ordinary income, raising the top tax rate from 15 percent to 39.6 percent. Taxes on capital gains for the top income bracket would rise from 15 percent to 20 percent.

The president said families earning more than $250,000 per year don’t need more tax breaks, but the country needs the money from tax hikes to pay for essential programs for the middle class.

“The budget we’re releasing today is a reflection of shared responsibility,” Mr. Obama said. “We don’t need to be providing additional tax cuts for folks who are doing really, really, really well. Do we want to keep these tax cuts for the wealthiest Americans? Or do we want to keep investing in everything else: education, clean energy, a strong military, care for our veterans? We can’t do both — we can’t afford it.”

Acknowledging GOP charges he is promoting “class warfare,” Mr. Obama added, “We don’t envy the wealthy, but we do expect everybody to do their fair share. We look out for each other. We pull each other up. That’s who we are.”

Republicans immediately attacked the president for loading his budget with what they called fiscal gimmicks and for failing to address the nation’s $15.3 trillion debt.

“The president offered a partisan, election-year budget that ratchets up spending while ignoring the biggest drivers of our debt and calls for massive tax increases on hardworking families and small businesses,” said House Majority Leader Eric Cantor, Virginia Republican. “The president’s budget will make our economy worse today and result in debt, doubt and decline in the coming years.”

House Budget Committee Chairman Paul Ryan, Wisconsin Republican, said the president has “punted again” on deficit reduction and that House Republicans won’t go along.

“This is a plan for America drowning in debt,” Mr. Ryan said. “It’s a political plan for the president’s re-election.”

Mitt Romney, seeking the Republican presidential nomination, said the budget proposal “won’t take any meaningful steps toward solving our entitlement crisis.”

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