Obama unveils budget plan for 2014

WASHINGTON - US President Barack Obama on Wednesday unveiled his budget plan, proposing $3.78 trillion in spending for the 2014 fiscal year and $1.8 trillion in deficit reduction over the next decade.

"Nothing shrinks the deficits faster than a growing economy," Obama said at the White House as he introduced his plan.

In the new budget outlined on Wednesday for the fiscal year starting Oct 1, Obama stuck to his balanced approach to reducing the red ink, and put forward a fiscal mix of new investments in infrastructure and education along with deficit reduction through tax increases and spending cuts.

According to the budget plan coming two months late to the Capitol Hill, the federal deficit would be 744 billion dollars for fiscal year 2014, which equals to 4.4 percent of the gross domestic product (GDP). By 2023, the deficit would be further reduced to 1.7 percent of the GDP.

In the blueprint, Obama proposed a total of $1.8 trillion in deficit reduction over 10 years, mainly through new tax revenues and spending cuts.

A 28-percent cap would be applied to itemized deductions for top earners, and the so-called Buffett Rule, or the idea of requiring millionaires to pay no less than 30 percent of their income, was once again incorporated.

Obama also sought to replace the across-the-board "sequestration cuts" that kicked in on March 1.

As an attempted compromise to draw Republicans to the table, Obama for the first time offered to change the way the cost of living is calculated for social security benefits. By switching to the less generous "chained CPI," the federal government will reduce its payment to future social security beneficiaries and in this way cut deficits by about 230 billion dollars over the next 10 years, according to the budget.

The president's budget came after the Democrat-controlled Senate and the Republican-led House of Representatives have each passed separate and starkly different budget resolutions. Neither of the plans may get approval in the deeply polarized Congress. And the version Obama outlined just added a third bid for a possible grand bargain.

"Growing our economy, creating jobs, shrinking our deficits, keeping our promise to the generation that made us great, but also investing in the next generation, the next generation that will make us greater. These are not conflicting goals. We can do them in concert. That's what my budget does," said Obama.