Obama Unveils $3.7 Trillion Budget For 2012

President Obama presented a $3.73 trillion budget plan on Monday that aims to cut the deficit by more than $1 trillion over the next decade, but Republicans said it doesn't go far enough.

During a news conference at a Maryland middle school, Obama spoke of the sacrifices that are needed for the government to "live within its means" but defended spending increases in areas such as education, infrastructure and energy.

The president proposed trimming the deficits by $1.1 trillion over a decade, although his changes would actually add to the deficits this year and next. Obama is projecting the deficit will hit an all-time high of $1.65 trillion this year and then drop sharply to $1.1 trillion next year.

About two-thirds of the savings would come from spending cuts and one-third from revenue increases.

Obama's budget would eliminate or cut spending for more than 200 federal programs, which the White House estimates will save $33 billion in fiscal 2012. A five-year freeze on discretionary spending will reduce the deficit by a projected $400 billion over the next decade.

The savings would bring the share of discretionary spending to its lowest level since Dwight Eisenhower was president, Obama said.

The remaining third of the budget savings comes from resurrecting a series of tax increases, including limiting tax deductions for high-income taxpayers — a proposal Obama put forward last year only to have it rejected in Congress. Republicans, who now control the House, are unlikely to be receptive.

Obama said the 2012 budget was a "down payment" that requires Democrats and Republicans coming together to make it happen. But Republicans called Obama's efforts too timid.

"This is a punt," House Budget Committee Chairman Paul Ryan (R-WI) said at an afternoon news conference where Republicans responded to the president's proposal. "You cannot borrow, tax and spend your way to fiscal responsibility, but that's exactly what the president is trying to do."

Ryan, who was a member of the White House deficit-reduction commission, said the panel had once given lawmakers hope that "we were finally going to have an adult conversation on the budget."

The proposed budget includes cuts to programs that Obama cares deeply about, including block grants to community organizers and heating assistance for low-income families. "If we're going to walk the walk when it comes to fiscal discipline, these kinds of cuts will be necessary," the president said.

Nevertheless, Obama said, it is important that the nation not "sacrifice our future in the process." He said that was especially true when it comes to education, innovation and improvements in infrastructure — investments to "win the future."

The 2012 budget projects deficits totaling $7.21 trillion over the next decade with the imbalances never falling below $607 billion. That would exceed the deficit record of $458.6 billion in 2008, President George W. Bush's last year in office.

Jacob Lew, director of the Office of Management and Budget, called the current levels of deficit spending "unsustainable."

Some of the red ink was the result of the economic downturn, and some was the "result of making a number of policy decisions — like cutting taxes and increasing spending without paying for it," he said in a new white board explainer released Monday.

Senate Majority Leader Mitch McConnell said in a statement early Monday that Americans "want cuts, dramatic cuts," not a spending freeze at unsustainable levels.

"The president talks like someone who recognizes that spending is out of control, but so far, it hasn't been matched with action," McConnell said.

Administration officials project that the deficits will be trimmed to 3.2 percent of GDP by 2015 — one-third of the projected 2011 imbalance and a level they said was sustainable.

Republicans have scheduled debate on Tuesday for their own proposal to trim spending by $61 billion for the seven months left in the current budget year, which ends Sept. 30. They also have vowed to push for tougher cuts in 2012 and future years.

The budget unveiled Monday falls far short of the $4 trillion in deficit cuts recommended in a December report by his blue-ribbon deficit commission. The panel said real progress on the deficit cannot be made without tackling defense and entitlements spending.

The proposal largely spares the Pentagon, allowing the defense budget to expand at the rate of inflation, though it does include $78 billion worth of cuts in projected spending over five years — for example, delaying the Joint Strike Fighter aircraft and discontinuing the Marine expeditionary vehicle.

The budget does nothing to address the biggest source of red ink in federal spending: entitlement programs such as Medicare, Medicaid and Social Security.

It also includes spending increases in education, biomedical research, energy efficiency, high-speed rail and other areas the White House has judged to be important to the country's future competitiveness in a global economy.

In the energy area, the budget would support Obama's goal of putting 1 million electric vehicles on the road by 2015 and doubling the nation's share of electricity from clean energy sources by 2035.

NPR's Scott Horsley contributed to this report, which contains material from The Associated Press