NBC News and news services
updated 2/15/2011 7:20:28 PM ET 2011-02-16T00:20:28

Defending his new budget as one of "tough choices," President Barack Obama said Tuesday that more difficult decisions about the nation's biggest expenses — Medicare, Medicaid and Social Security — will have to be tackled by Democrats and Republicans acting together, not by White House dictates.

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"This is not a matter of, 'you go first, I go first,'" he said. "It's a matter of everybody having a serious conversation about where we want to go and then ultimately getting in that boat at the same time so it doesn't tip over."

Read the full budget (.pdf)

The president pitched his $3.73 trillion budget as a balance of spending on needed programs and significant reductions that would reduce the deficit by $1.1 trillion over 10 years.

Obama tries to hit the reset button on budget message

The budget includes a mix of spending freezes on domestic programs, pay hike suspensions for federal civilian workers and new revenues from increased taxes on the wealthy and on oil and gas producers.

But Obama's deficit relief is far more modest than that detailed by his fiscal commission, which in December proposed measures that would mop up four times as much red ink. Unlike his blue-ribbon group, the administration's budget does not address structural changes in Social Security or Medicare, the two largest items in the federal budget.

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"Look at the history of how these deals get done," Obama said Tuesday. "Typically it's not because there's an Obama plan out there. It's because Democrats and Republicans are committed to tackling this in a serious way."

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The commission's bipartisan report included politically difficult recommendation such as increasing the Social Security retirement age and reducing future increases in benefits. And while Obama has promised to overhaul the corporate tax system, he stops short of commission recommendations that would lower rates but generate additional revenue at the same.

Obama has called for "revenue neutral" fixes to corporate taxes, meaning they would neither cost more money nor add money to the treasury.

"I'm not suggesting we don't have to do more," the president said.

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Avoiding a government shutdown
Obama said he also wants to work with Republicans to find common ground on government spending for the remainder of this fiscal year and to avoid a government shutdown. Stopping the basic functions of government could damage the economic recovery, he said.

"I think it is important to make sure that we don't try to make a series of symbolic cuts this year that could endanger the recovery," he said. Obama said cutting too deeply in Washington could prompt thousands of layoffs in state and local governments, which would hurt the economy.

Stopping the basic functions of government would mean, for example, the Social Security payments don't go out, he said.

"This is not an abstraction," he said. "The key here is for people to be practical and not score political points. That's true for all of us."

President defends entitlements, tax changes
Over the long term, Obama conceded that entitlement and tax changes are necessary and said Democrats and Republicans set a model for cooperation during the December lame duck congressional session when they negotiated a tax-cutting plan.

"My suspicion is that we're going to be able to do the same thing if we have the same attitude about entitlements," he said.

Following his party's sweeping defeats in the November elections, Obama pledged to refocus his agenda on the economy and creating jobs. He used last month's State of the Union address to lay out an agenda that he said would spur job growth in the short-term and increase U.S. competitiveness in the future.

Obama's budget aims to cut the deficit in part with tax increases, including eliminating tax breaks for oil and gas producers, that have failed to win support before under a Democratic control Congress. The measures face an even tougher challenge now that Republicans control the House of Representatives.

Obama to critics: Budget leadership requires cooperation

"I continue to believe I'm right," he said, when asked why he relied on previously defeated proposals. "so we're going to try again."

'I definitely feel folks' pain'
His new budget would cut spending on popular energy assistance programs and community development projects. Obama took note of the harsh impact that cuts can have on individual Americans.

"I definitely feel folks' pain," he said, mentioning the gripping stories recounted in the 10 letters a day that he reads from among the thousands received at the White House.

"You want to help every single one individually," he said. But Obama said the most important thing he can do as president is focus on the long-term stability of the economy to help the largest number of people.

$3.73 trillion budget
On Monday, the president offered a budget plan that holds out the prospect of eventually bringing deficits under control through spending cuts and tax increases.

Obama called his new budget one of "tough choices and sacrifices," but most of those cuts would be held off until after the end of his first term. It was harshly criticized by Republicans, who said it was far too timid.

Overall, Obama proposed trimming the deficits by $1.1 trillion over a decade. The administration is projecting that the deficit will hit an all-time high of $1.65 trillion this year and then drop sharply to $1.1 trillion in 2012, with an expected improvement in the economy and as reductions in Social Security withholding and business taxes expire.

Obama's 2012 budget would actually add $8 billion to the projected deficit for that year because the bulk of the savings he would achieve through a freeze in many domestic programs would be devoted to increased spending in areas Obama considers priorities, such as education, clean energy and high-speed rail.

"We have more work to do to live up to our promise by repairing the damage this brutal recession has inflicted on our people," Obama said.

The president went to a middle school outside of Baltimore to highlight the education initiatives in his budget and told the crowd, "We can't sacrifice our future."

GOP, some Dems call Obama's plan too timid
Republicans, who took control of the House in the November elections and picked up seats in the Senate in part because of voter anger over the soaring deficits, called Obama's efforts half-hearted. Lawmakers are set to begin debating on Tuesday $61 billion in cuts for the remaining seven months of fiscal 2011.

"Presidents are elected to lead and address big challenges," said Republican House Budget Committee Chairman Paul Ryan of Wisconsin. "The big challenge facing our economy today and our country tomorrow is the debt crisis. He's making it worse, not better."

Senate Republican Leader Mitch McConnell said the president's investment plans missed the simple point that "we don't have the money" to finance Obama's vision of "trains and windmills" in the future.

"After two years of failed stimulus programs and Democrats in Washington competing to outspend each other, we just can't afford to do all the things the administration wants," McConnell said.

NBC's Savannah Guthrie, the Associated Press and Reuters contributed to this report.

Video: Obama defends budget

  1. Closed captioning of: Obama defends budget

    >>> president obama took questions from reporters today one day after he released his budget plan which came under fire from some republicans and some democrats. our white house correspondent savannah guthrie with us from there tonight. savannah, good evening.

    >> aides say the president wanted to make the case for his budget which he says is a serious first step to get spending under control. he had to fend off accusations that he hadn't taken on the biggest issue, entitlement spending for social security , medicare and medicaid which is the majority of the federal budget .

    >> let's face it, you guys are pretty impatient. if something doesn't happen today, then the assumption is, it's not going to happen. this is not a matter of you go first or i go first, this is a matter of, everybody having a serious conversation about where we want to go and then ultimately getting in that boat at the same time, so it doesn't tipover.

    >> reporter: republicans are trying to get $60 billion worth of cuts through the house for this year's budget. the president says if the cuts are too deep, he will veto that measure.

    >> savannah guthrie from the white

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