Health Care Tops Obama's Budget Plan

President Barack Obama released his first budget Thursday, a 10-year spending plan that sets aside hundreds of billions of dollars for health care reform, partially paid for by raising taxes on the wealthy. The president also put energy and education atop his priority list.

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MICHELE NORRIS, host:

From NPR News this is ALL THINGS CONSIDERED. I'm Michele Norris.

MELISSA BLOCK, host:

And I'm Michele Block. President Obama delivered his first budget proposal to Congress today, and it's big. The 10-year spending plan outlines an ambitious agenda with hundreds of billions of dollars in new spending on clean energy, education, and health care.

President BARACK OBAMA: These must be the priorities reflected in our budget. For in the end the budget is more than simply numbers on a page. It is a measure of how well we are living up to our obligations to ourselves and one another.

BLOCK: The president wants to pay for these new programs partly by raising taxes on the wealthiest Americans, an idea that's already drawing criticism from congressional Republicans.

NPR's Scott Horsley reports.

SCOTT HORSLEY: The president's budget puts some real dollar signs behind the ideas he campaigned on. Mr. Obama said he's determined to bring about the change that people voted for in November, even if that means making some tough decisions.

Pres. OBAMA: Just as a family has to make hard choices about where to spend and where to save, so do we as a government. You know, there are times where you can afford to redecorate your house. And there are times where you need to focus on rebuilding its foundation. Today we have to focus on foundations.

HORSLEY: The foundation of Mr. Obama's budget is new investments in energy, education, and especially health care. On the energy front he is calling for a cap and trade system in which the government would charge a fee for excess carbon emissions that contribute to global warming. He'd use some of the proceeds to extend a tax cut for working families while investing the rest in cleaner alternative energy.

Pres. OBAMA: Because our future depends on our ability to break free from oil that's controlled by foreign dictators, we need to make clean, renewable energy the profitable kind of energy. That's why we'll be working with Congress on legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy.

HORSLEY: The budget also devotes more money to early childhood education and expanded Pell grants for college students. And it sets aside another $250 billion to prop up the banking system. Although the administration says that's just a place holder and that it hopes the money won't be needed. The most striking investment in the budget is in health care, where Mr. Obama wants to set aside more than $600 billion as a down-payment on nearly universal coverage.

Pres. OBAMA: We must make it a priority to give every single American quality affordable health care. That's why this budget builds on what we have already done over the last month to expand coverage for millions more children, to computerize health records to cut waste and reduce medical errors, which saves, by the way, not only tax dollars but lives. With this budget we are making a historic commitment to comprehensive health care reform.

HORSLEY: About half the money for that commitment would be reallocated from existing health care programs such as Medicare and Medicaid. The balance would come from raising taxes on wealthy Americans. White House Budget Director Peter Orszag explains the plan would limit the tax deduction that top moneymakers can take when they make mortgage interest payments or charitable contributions.

Mr. PETER ORSZAG (White House Budget Director): When a middle income family makes a $1,000 contribution to a charity, they save a $150 in their taxes. When Bill Gates makes that same contribution to that same charity, he saves $3,500 in his taxes. All we're saying is we think Bill Gates should get a $2800 tax break, still a lot larger than the middle income family, rather than the $3,500 one.

HORSLEY: The president's budget also allows the Bush administration's tax cuts to expire next year for individuals making more than $200,000 a year or couples making more than a quarter million dollars. That plan alarms Republicans, as it did during the presidential campaign. House Republican Leader John Boehner said the country cannot tax and spend its way to prosperity.

Representative JOHN BOEHNER (Republican, Ohio): Everyone agrees that all Americans ought to have access to affordable health insurance. But increasing taxes in the middle of an economic recession, especially on small businesses, is not the way to accomplish that goal.

HORSLEY: The administration counters that the tax increases in its budget would not take effect until 2011, by which time the White House assumes the recovery will be underway.

Scott Horsley, NPR News, the White House.

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