Analysis: Obama sets up clash with GOP in budget

(AP) - President Barack Obama's new federal budget showcases the major priorities of his presidency and sets up the top battles that will be waged

WASHINGTON - (AP) - President Barack Obama's new federal budget showcases the major priorities of his presidency and sets up the top battles that will be waged on both sides in the presidential campaign.

In its calls for hundreds of billions of dollars in new spending on job-creating programs and higher taxes on the wealthy, Obama's $3.8 trillion spending outline for the next fiscal year beginning Oct. 1 contrasts sharply with Republicans' opposition to any and all tax increases and proposals for deep spending cuts, including in popular benefit programs like Medicare and Medicaid. Obama's spending blueprint projects a deficit above the $1 trillion mark for the fourth year in a row. But it also seeks to achieve about $4 trillion in deficit-reduction over the next decade, $1.5 trillion of it through tax increases. His budget throws down a clear marker of his priorities. And both parties are sure to point to the document on the campaign trail. The president will point to his tax proposals in trying to rally middle-class support for a second term. Polls show most Americans believe the wealthy should pay more taxes.

With the jobless rate stuck above 8 percent for three years, Obama's proposal to increase spending on short-term measures for job growth and for highway and other construction projects also could prove popular. "We are not out of the woods yet," Obama said in his budget message. "Instead, we are facing a make-or-break moment for the middle class, and for all those who are fighting to get there."

Republicans who want to make deficits and mounting debt the theme of their campaign were quick to denounce what they see as Obama's big government, tax-and-spend ways. The government now borrows about 40 cents for every dollar it spends. Republican presidential contender Mitt Romney called it "an insult to the American taxpayer." House Appropriations Committee Chairman Hal Rogers, R-Ky., said it "falls exceptionally short" in not doing more to cut mandatory benefit programs like Medicare, Medicaid and Social Security.

Against that background, Obama stands virtually no chance of Congress passing his spending plan before the election. Congress hasn't passed a budget resolution since the spring of 2009, more than a thousand days ago, as Republicans continually point out. And the current super-charged political atmosphere in Washington strongly suggests one won't be passed this year either. But it doesn't really matter. While the budget is largely a wish list, it also telegraphs Obama's priorities and lays down a marker of where he wants each federal agency to put its focus. In the meantime, government operations will continue to be paid for by separate appropriations bills.

The president's new budget projects a $1.33 trillion deficit for the current fiscal year, which ends Sept. 30. After that it sees the deficit falling to $901 billion in fiscal 2013. But that would assume congressional adoption of Obama's policies, including $1.5 trillion in new revenue by raising taxes on households earning more than $250,000 a year.

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