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Obama unveils 10-year budget plan

WASHINGTON -- President Barack Obama unveiled a 10-year budget blueprint Wednesday that calls for nearly $300 billion in new spending on jobs, public works and expanded preschool education and nearly $800 billion in new taxes, including an extra 94 cents a pack on cigarettes.

But the president's spending plan would also cut more than $1 trillion from programs across the federal government -- for the first time targeting Social Security benefits -- in an effort to persuade congressional Republicans to join him in finishing the job of debt reduction they started two years ago.

"Our economy is poised for progress, as long as Washington doesn't get in the way," Obama said in the White House Rose Garden. He said his budget represents "a fiscally responsible blueprint for middle-class jobs and growth."

The budget proposes to spend $3.78 trillion in the fiscal year that starts in October, and projects a 2014 deficit of $744 billion, or 4.4 percent of the nation's gross domestic product. The budget gap would narrow steadily over the coming decade, shrinking to $439 billion in 2023, or 1.7 percent of GDP.

Obama said his fiscal 2014 budget replaces "the foolish across-the-board spending cuts" known as the sequester that are "already hurting our economy." The plan reduces the deficit and makes necessary investments "because we can do both," he said. "We can grow our economy, and shrink our deficits." He added: "There's not a lot of smoke and mirrors in here."

Obama challenged Republicans to show they are serious about deficit reduction by reforming the tax code to eliminate loopholes that benefit the wealthiest Americans and biggest corporations. "When it comes to deficit reduction, I've already met Republicans more than halfway," he said.

Congressional Republicans promptly attacked the plan. "We don't need an extreme, unbalanced budget that won't balance in your lifetime or mine," Senate Minority Leader Mitch McConnell (R-Ky.) said in a floor speech before Obama's announcement. "It looks like there's less than $600 billion worth of reduction in there -- and that's over a decade -- all of it coming from tax increases. In other words, it's not a serious plan. For the most part, just another left-wing wish list."

The budget continues Obama's outreach to Republicans by converting the private debt-reduction offer he has been making for months to GOP leaders into a formal proposal. That package proposes to replace the sequester -- $1.2 trillion in deep, automatic spending cuts that took effect March 1 -- with $1.8 trillion in alternative policies.

Nearly $600 billion would come from higher taxes on the wealthy, primarily through new limits on itemized deductions for families in the top tax brackets. The budget also would impose a new, minimum tax rate of 30 percent on households earning more than $1 million a year, with exemptions for large charitable contributions.

Highlights of Obama's fiscal 2014 spending plan

The president on Wednesday unveiled a $3.8 trillion spending plan for 2013-2014:

DEFICIT. Calls for additional $1.8 trillion over next decade.

DEFENSE. Would trim defense spending by an additional $100 billion and domestic programs by an extra $100 billion over the next decade.

TAXES. Would raise an additional $580 billion, largely by restricting deductions for the top 2 percent of family incomes.

SOCIAL SECURITY. Would slow the growth in benefits by applying a less-generous measure of inflation to federal programs. The change would trim cost-of-living increases by roughly 0.3 percent a year, saving about $130 billion over the next decade.

MEDICARE. Would cut $400 billion from health care programs over a decade. Include negotiating better prescription drug prices and asking wealthy seniors to pay more.

ROADS & TRANSIT. Would add an additional $50 billion to fund infrastructure investments, including $40 billion in a "Fix It First" effort to provide immediate investments to repair highways, bridges, transit systems and airports nationwide.

OTHER SPENDING. Would provide $1 billion to launch 15 manufacturing innovation institutes across the country. Also earmarks funding to support high-speed rail projects.

-- The Associated Press

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