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President's plan for health care

President Barack Obama laid out his first budget plan yesterday, predicting a stunning federal deficit of $1.75 trillion this year - nearly four times last year's record - and asking Congress to raise taxes on the wealthy to stem the flood of red ink while moving the country toward guaranteed health care for all.

Denouncing what he called the "dishonest accounting" of recent federal budgets, Obama unveiled his own $3.6 trillion blueprint for next year, a bold proposal that would transfer wealth from rich taxpayers to the middle class and the poor.

Congressional approval without major change is far from guaranteed. The plan is filled with political land mines, including an initiative to combat global warming that would hit consumers with higher utility bills. Other proposals would take on entrenched interests such as big farming, insurance companies and drugmakers.

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Obama blamed the expected federal deficit explosion on a "deep and destructive" recession and recent efforts to battle it, including the Wall Street bailout and the just-passed $787-billion stimulus plan. The $1.75 trillion deficit estimate for this year is $250 billion more than projected just days ago because of proposed new spending for a fresh bailout for banks and other financial institutions.

As the nation digs out of the economic crisis, Obama said, "We will, each and every one of us, have to compromise on certain things we care about but which we simply cannot afford right now."

Signaling budget battles to come, Republicans were skeptical. "We can't tax and spend our way to prosperity," said House GOP leader John Boehner of Ohio. "The era of big government is back, and Democrats are asking you to pay for it."


Obama is budgeting for a $750-billion bank bailout this year, raising the prospect of a dramatic increase in the stake taxpayers already hold in the beleaguered financial sector. The budget includes a $250-billion contingency fund for 2009, the projected cost to the government of purchasing $750 billion in assets from banks in need of capital infusions. The inclusion of the money is a sign that Obama's economic team is not certain that the $700-billion Troubled Asset Relief Program that Congress approved last fall has done enough to make credit more available.


Obama wants a modest increase in military spending. His proposal of at least $533.7 billion is a 4 percent increase from estimated 2009 spending. Such a sizable sum shows the new administration plans to take a moderately conservative approach to the nation's defense. Obama's senior defense advisers have warned that extraneous military spending would be cut, but said a detailed plan won't be released until April.


Obama proposes a huge expansion of the government's role in making college more affordable and putting it within reach of more students. He seeks to link growth of the Pell Grant program to inflation for the first time since the program began. He also seeks to overhaul the student loan system by ending a massive program of government-subsidized loans made by private lenders. Instead, he would boost direct lending by the government.


Obama's budget moves aggressively to tackle climate change and shift the nation from reliance on foreign oil to green energy. The budget would rely on $15 billion a year, beginning in 2012, from auctioning carbon pollution permits to help develop clean-energy technologies, such as solar. There's also more money at NASA for monitoring of greenhouse gases and expanded support at the Energy Department for finding ways to economically capture carbon emissions from coal-burning power plants.


The environment would get a lot more green under Obama's budget. It would nearly triple funding for infrastructure projects that protect waterways and drinking water. He is requesting $10.5 billion for the Environmental Protection Agency. The total includes $3.9 billion for improving sewage treatment plants and drinking water systems.


Obama's prescription for the nation's ailing health care system comes with Medicare cuts and tax hikes. Obama is asking Congress: If you're going to cover 48 million uninsured Americans in the world's costliest medical system, how do you pay for it? His plan would set aside $634 billion over 10 years in a major effort to cover all Americans - a goal that could cost more than $1 trillion. Half would come from tax increases on upper-income earners, half from cuts to Medicare and Medicaid.


Obama proposes increasing the Department of Homeland Security's budget by 1 percent to $42.7 billion, funding programs to boost computer security and remove illegal immigrants convicted of crimes. He would spend $110 million to expand E-Verify, a program that allows employers to electronically check the immigration status of new workers.


Obama would extend tax cuts for most working families while raising those on Americans making more than $250,000 a year. Oil and gas companies would face new taxes for offshore drilling. The proposal would make permanent the $400 tax credit for workers; couples could get up to $800 a year. The budget also would make permanent the expanded $2,500 tax credit for college expenses and an expansion of the $1,000 child tax credit to more low-income families. Couples making more than $250,000 would face new limits on the amount of deductions they could take on taxable income, including for mortgage interest and state and local taxes.


A plan to build a national network of high-speed passenger trains receives a $5-billion installment under Obama's budget. The money would be spread out over five years. Obama's $72.5-billion transportation budget proposal includes a $55-million increase in subsidies for commercial air service to rural communities.


Obama proposes war spending that nears $11 billion a month for the next year and a half despite the planned drawdown of U.S. forces in Iraq. He wants to spend about $75 billion on the wars in Iraq and Afghanistan through next fall, costs largely set by the Bush administration. On top of that the budget proposal asks Congress for $130 billion for next year.

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