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Jan 29, 5:17 PM EST

Obama calls for spending surge, buoyed by rising economy


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WASHINGTON (AP) -- Declaring an end to "mindless austerity," President Barack Obama called for a surge in government spending Thursday, and asked Congress to throw out the sweeping budget cuts both parties agreed to four years ago when deficits were spiraling out of control.

Obama's proposed $74 billion in added spending - about 7 percent - would be split about evenly between defense programs and the domestic side of the budget. Although he's sought before to reverse the "sequester" `'spending cuts, Obama's pitch in this year's budget comes with the added oomph of an improving economy and big recent declines in federal deficits.

"If Congress rejects my plan and refuses to undo these arbitrary cuts, it will threaten our economy and our military," Obama warned in an op-ed article Thursday in The Huffington Post. He said the nation's debt still would decline as a share of the overall economy under his plan.

The figures represent Obama's opening offer as he gears up for an inevitable budget battle with the new Republican-run Congress. He was to brief House Democrats on the plan Thursday evening in Philadelphia at their annual retreat.

The Republicans promise to produce a balanced budget blueprint this spring even as they worry about Pentagon spending.

The Senate's No. 2 Republican, John Cornyn of Texas, dismissed the Obama proposals as "happy talk." And Sen. Pat Toomey of Pennsylvania said, "We can't be abandoning spending discipline. That's what the president wants to do."

GOP lawmakers are focused primarily on reversing restraints on military spending, while Democrats and Obama are seeking new domestic dollars for education, research, health care and infrastructure. Republicans argue that spending more in so many areas would undo the hard-fought reductions in the country's annual deficit.

They also oppose many of the tax hikes Obama has proposed to pay for the increased spending.

Neither party has tender feelings for the sequester, which cuts bluntly across the entire federal budget and was originally designed more as a threat than as an actual spending plan. With the economy gaining steam while deficits decline, both parties have signaled they want to roll some of the cuts back. A bipartisan deal struck previously softened the blow by about a third for the 2014 and 2015 budget years.

Both parties are generally inclined to boost spending for the military, which is wrestling with threats from terrorism and extremist groups and has been strained by budget limits and two long wars.

"At what point do we, the institution and our nation, lose our soldiers' trust?" asked Gen. Raymond Odierno, the Army chief of staff, at a Senate hearing on Wednesday.

Yet among congressional Republicans, there's no unanimity about where more Pentagon funds should come from - a division within the GOP that Obama appeared eager to exploit.

Some House Republicans want to cut domestic agency budgets to free money for the military - an approach that failed badly when they tried it two years ago. Some are eying cuts to so-called mandatory programs such as Social Security and Medicare, while others want to ignore the spending restraints altogether.

"Whatever it takes within reason to get this problem fixed is what I'm willing to do," said Sen. Lindsey Graham, R-S.C., adding that he would be willing to consider more tax revenue "just to get the damn thing done."

The budget constraints stem from the hard-fought budget and debt bill of August 2011 that both parties negotiated and Obama signed into law. The threat of across-the-board cuts to virtually every federal agency was supposed to force Democrats and Republicans to compromise on smarter, less onerous spending cuts, but the measure kicked in when a supercommittee failed to reach an overall fiscal deal.

The White House said Obama's budget would be "fully paid for" by cutting inefficient programs and closing tax loopholes - particularly a trust fund provision the White House has been eyeing. Spokesman Josh Earnest said that and a few other tax tweaks would not only pay for Obama's increased spending but also offset middle-class tax cuts the president wants to create or expand.

Obama is proposing "what he believes is the best way for us to move forward," Earnest said. But he was quick to concede, "No president has ever put forward a budget with the expectation that Congress is going to pass it in its current form."

At the Pentagon, Obama's increases would help pay for next-generation F-35 fighter jets, for ships and submarines and for long-range Air Force tankers. Military leaders have also said the earlier cuts forced reductions in pilots' flying hours, training and equipment maintenance.

On the domestic side, Obama has proposed two free years of community college and new or expanded tax credits for child care and spouses who both work. He's called for raising the top capital gains rate on some wealthy couples and consolidating education tax breaks, although some of those ideas have already faced intense opposition.

In his meeting Thursday with House Democrats, Obama was also to insist that Republicans must not be allowed to use a funding bill for the Homeland Security Department to try to quash his executive actions on immigration. The White House called that GOP approach a "dangerous view" that would risk the country's national security.

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Associated Press writers Jim Kuhnhenn and Nedra Pickler contributed to this report.

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Reach Josh Lederman on Twitter at http://twitter.com/joshledermanAP and Andrew Taylor at http://twitter.com/apandrewtaylor

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