President Obama Issues $3.8-Trillion Spending Plan, Adds $580 Billion in Tax Increases and ‘Buffet Rule’

President Obama’s published his new budget plan Wednesday, proposing higher taxes on upper-income households as well as changes to the Social Security and Medicare programs. Republicans in Congress immediately pronounced the plan “dead on arrival” on Capitol Hill, but there was also sharp criticism of the budget from many of the president’s own political allies.

Obama’s plan would increase taxes by limiting deductions for the top 2 percent of family incomes, a measure the White House said would raise federal revenues by $580 billion. In addition, the president’s plan would include the so-called “Buffett Rule” - an idea made famous by billionaire investor Warren Buffett — requiring at least 30 percent income tax on households earning over $1 million a year, in effect eliminating all but charitable deductions for millionaires.

In a speech on the South Lawn of the White House announcing the new budget, the president called his plan “a fiscally responsible blueprint for middle-class jobs and growth.”

Jackie Calmes of the New York Times reported:

The main new element of the budget is his proposal, offered previously in private negotiations with Speaker John A. Boehner, for a new cost-of-living formula that would reduce future Social Security benefits. On the spending side, Mr. Obama wants to help states make prekindergarten available universally, paid for by higher taxes on tobacco products.
For fiscal year 2014, which begins Oct. 1, the federal deficit would be $744 billion, according to administration officials. …
The 10-year budget plan would cut spending by about $1.2 billion over that time to replace the indiscriminate across-the-board cuts, known as sequestration, that took effect March 1 when Mr. Obama and Republican leaders failed to agree on alternative deficit-reduction measures.

Even before the president’s budget plan was published, some Democrats and liberal groups were protesting that the changes proposed to entitlement programs were unacceptable.

“The White House tells us they want to defend the middle class — that’s their mantra,” Vermont Sen. Bernard Sanders, an independent who calls himself a socialist, said at a Tuesday protest in Washington that included the AFL-CIO, the National Organization for Women,, Campaign for America’s Future and other left-leaning organizations. “If you want to defend the middle class you don’t cut Social Security, you don’t cut Medicare, and you don’t cut benefits for disabled vets,” Sanders said.

The president’s new federal budget for fiscal year 2014, which begins in October, was published more than two months after the February deadline required by law. An analysis by David Martosko, Washington correspondent for the London Daily Mail, said the Obama plan is ”based on bad math, phantom revenues, imagined spending cuts and a middle-class tax hike.”

In a Tuesday conference call with reporters, a senior Obama administration official said that Republicans in Congress must agree to the president’s proposed tax increases in order to reach a budget deal that would include an estimated $230 billion reduction cost-of-living adjustments for federal entitlement programs: “If they refuse to include revenues in any deal, then there will be no deal. It’s that simple.” That inspired criticism from Ed Morrissey at the popular conservative Hot Air blog:

In other words, Obama wants Republicans to agree to tax hikes today for down-the-road cost savings in entitlement programs that are necessary whether we hike taxes or not.  In exchange, he wants to increase spending in most or all other categories.

In an e-mail published by the Daily Caller, House Speaker John Boehner’s press secretary Brendan Buck asked: “So where are the net spending cuts? I guess they don’t exist. The president’s budget will — at best — be flat on spending — or potentially even be a net spending increase [and] any deficit reduction will come exclusively from tax hikes.”

Liberals were particularly critical of Obama’s plan to limit cost-of-living increases — known as “chained CPI,” a reference to the Consumer Price Index -  for Social Security. Liberal blogger Taylor Marsh wrote:

President Obama is daring the right to blow this chance [to reach a deficit[-reduction deal]. Unfortunately, the game of chicken the President is playing with people’s only avenue to stay out of poverty in advanced age, which hurts women more than any other group, is actually what he believes should be done.
It’s certain that progressives and their allies will never forget that Barack Obama was the first Democratic president to suggest carving away F.D.R.’s New Deal. That chained CPI cuts are a shadow war on women, from none other than the first African American president in history, who certainly should know what this means.

The Obama budget proposal also drew sharp criticism by the Democratic candidate in a high-profile special election for a congressional seat in South Carolina.

“Not only does President Obama’s plan fail to put our finances back in order, it would cut benefits for our seniors, which is wrong,” said Elizabeth Colbert-Busch, who faces former Republican Gov. Mark Sanford in a May 7 election to fill the 1st District House seat vacated by Tim Scott’s appointment to the Senate.

“The fact is, we have to balance our budget, cut our spending and lower taxes for small businesses to create jobs,”  Colbert-Busch, sister of cable-TV comedian Stephen Colbert, said in a statement. “Unfortunately, this budget takes the opposite approach; it raises taxes, doesn’t balance and doesn’t cut enough - when we should be laser-focused on slashing wasteful and duplicative spending.”


(This article was originally published at 11:15 a.m. ET as a three-paragraph bulletin and was revised and extended in a series of updates.)