Obama sends Congress $4T budget replete with new spending, taxes

NEWYou can now listen to Fox News articles!

President Obama on Monday opened his campaign for a $4 trillion budget despite it being given little chance of passing, as Republicans blast the fresh-off-the-presses proposal as a bundle of new spending, new taxes -- and new borrowing.

The plan includes a half-trillion-dollar public works program and an array of tax increases meant to fund a host of other agenda items. The document hinges on what Obama calls "middle-class economics," seeking tax breaks for many Americans while imposing increases on top earners, corporations and particularly the financial sector.

Referring to proposed spending on everything from roads to education initiatives, Obama said, "We can afford to make these investments while remaining fiscally responsible."

"We would be making a critical error if we avoided making these investments," he added. "We can't afford not to."

But even as Obama claims the plan is "fully paid for," the total budget shows a $474 billion deficit for fiscal 2016. Obama's budget plan never reaches balance over the next decade and projects the deficit would rise to $687 billion in 2025. Administration officials say their goal is to hold the deficit to a small percentage of the total U.S. economy -- but not necessarily to eliminate it.

More On This...

    "It may be Groundhog Day, but the American people can't afford a repeat of the same old top-down policies of the past," House Speaker John Boehner said in a statement after the budget was released. "Like the president's previous budgets, this plan never balances -- ever."

    House Ways and Means Committee Chairman Paul Ryan has accused the president of exploiting "envy economics" as part of his tax proposals.

    "It seems to be more of the same policies that have resulted in the lowest, slowest economic recovery out of an economic downturn in the history of the country -- more taxes, more spending, more borrowing," House Budget Committee Chairman Tom Price, R-Ga., told Fox News on Sunday.

    As part of his budget, Obama is proposing a six-year, $478 billion public-works program for highway, bridge and transit upgrades, with half of it to be financed with a one-time, 14 percent tax on U.S. companies' overseas profits.

    The tax would be due immediately. Under current law, those profits are subject only to federal taxes if they are returned, or repatriated, to the U.S., where they face a top rate of 35 percent. Many companies avoid U.S. taxes on those earnings by simply leaving them overseas.

    The tax is part of a broader administration plan to cut corporate tax breaks and increase taxes on the country's highest wage-earners to pay for projects to help the middle class. Members of the GOP-controlled Congress and other fiscal conservatives have dismissed the overall plan since elements of it were announced several weeks ago.

    The administration contends that various spending cuts and tax increases would trim the deficits by about $1.8 trillion over the next decade, leaving the red ink at manageable levels.

    Congressional Republicans say the budgets they produce will achieve balance and will attack costly benefit program like Social Security, Medicare and Medicaid.

    Interviewed on NBC's "Meet the Press," Ryan said, "This top down redistribution doesn't work."

    The president, as expected, vowed Monday to "end" the steep budget cuts known as the sequester -- while also demanding that Congress vote to fund the Department of Homeland Security, whose money runs out at the end of the month under current law. "I'm calling on Congress to get this done," Obama said, speaking at the Department of Homeland Security.

    Obama, interviewed by NBC before the start of Sunday's Super Bowl game, said he believed there were areas where he can work with Republicans, who for the first time in his presidency control both houses of Congress.

    "My job is not to trim my sails and not tell the American people what we should be doing, pretending somehow we don't need better roads, that we don't need more affordable college," Obama said.

    Obama's budget emphasizes the same themes as his State of the Union address last month, when he challenged Congress to work with him on narrowing the income gap between the very wealthy and everyone else.

    Higher taxes on top earners and on fees paid by the largest financial institutions would help raise $320 billion over 10 years which Obama would use to provide low- and middle-class tax breaks.

    His proposals: a credit of up to $500 for two-income families, a boost in the child care tax credit to up to $3,000 per child under age 5, and overhauling breaks that help pay for college.

    Obama also is calling for a $60 billion program for free community college for an estimated 9 million students if all states participate. It also proposes expanding child care to more than 1.1 million additional children under the age of 4 by 2025 and seeks to implement universal pre-school.

    Obama's budget also proposes easing painful, automatic "sequester" cuts to the Pentagon and domestic agencies with a 7 percent increase in annual appropriations, providing an additional $74 billion in 2016, divided between the military and domestic programs.

    Many Republicans support the extra military spending but oppose increased domestic spending.

    Another centerpiece of the president's tax proposal is an increase in the capital gains rate on couples making more than $500,000 per year. The rate would climb from 23.8 percent to 28 percent.

    Obama wants to require estates to pay capital gains taxes on securities at the time they are inherited. He also is trying to impose a 0.07 percent fee on the roughly 100 U.S. financial companies with assets of more than $50 billion.

    The Associated Press contributed to this report.