Obama wants end of sequester, seeks 7% spending hike

WASHINGTON — Heralding a new budget battle with congressional Republicans, President Obama called Thursday for an end to the automatic budget cuts known as sequestration and proposed a 7% hike in spending above those limits.

"Let's make sure that we're funding the things that we know help American families succeed," Obama told a meeting of House Democrats as his staff disclosed parts of a proposed budget to be unveiled Monday.

The president wants to "reverse harmful sequestration cuts," and focus instead on "middle-class economics" that includes new programs for child care, paid leave and community college, said White House spokesman Josh Earnest.

All told, the new federal budget proposal will include about $74 billion more in "discretionary investments" than would be allowed under sequestration in 2016, about a 7% increase over those caps, the White House said in a statement.

The plan includes $530 billion on the non-defense discretionary side, an increase of $37 billion over current limits, the White House said. The budget also proposes $561 billion in defense spending above sequester restrictions, an increase of some $38 billion.

Speaking to House Democrats, Obama said the government can raise the tax revenue to pay for his proposals by "fixing a tax code that is riddled with loopholes for special interests."

Sequestration, meanwhile, threatens the nation's economy and military because it "doesn't differentiate between smart government spending and dumb government spending," Obama said.

Obama's budget is simply a proposal, and won't get through the Republican-run House and Senate. Earnest described Monday's release as "the beginning of a negotiation" with GOP lawmakers.

Many of those Republicans say they too want to eliminate the sequester, but the Obama budget includes too many tax hikes and too much spending.

"Republicans believe there are smarter ways to cut spending than the sequester and have passed legislation to replace it multiple times, only to see the president continue to demand tax hikes," said Cory Fritz, a spokesman for House Speaker John Boehner, R-Ohio. "Until he gets serious about solving our long-term spending problem it's hard to take him seriously."

GOP members note that the White House signed off on the 2011 budget plan that called for automatic across-the-board budget cuts if the parties couldn't agree on a separate package of cuts.

Don Stewart, deputy chief of staff to Senate Majority Leader Mitch McConnell, R-Ky., said that "previous budgets submitted by the president have purported to reverse the bipartisan spending limits through tax increases that the Congress — even under Democrats — could never accept."

The armed services' top officers warned the Senate Wednesday that another round of sequestration would have dire consequences, including the ability to win a ground war.

"Essentially, for ground forces, sequestration even puts into question our ability to conduct even one long, prolonged, multi-phase combined arms campaign against a determined enemy," Gen. Raymond Odierno, the Army chief of staff, told the Armed Services Committee.

The last round of cuts prompted the services to slash training for ground troops, flight hours for pilots and sailing for the Navy. That affects their readiness to fight, Odierno and other top officers say.

Budget battles — how much to spend, who and how much to tax — have been a Washington mainstay for decades. Republican President Ronald Reagan fought with Democratic lawmakers, while Democratic President Bill Clinton faced a Republican Congress.

In the Obama era, budget standoffs with congressional Republicans led to a government shutdown in 2013 and a near default on the nation's credit in 2011.

The coming budget battles follow November elections that gave Republicans control of the U.S. Senate and a bigger majority in the House. Obama, meanwhile, feels emboldened by signs of a recovering economy and higher approval ratings in political polls.

Obama discussed his budget plans late Thursday at a meeting or the House Democratic Issues Conference in Philadelphia.

While there, Obama demanded full funding of the Department of Homeland Security. Under a Republican plan, the department is financed only to the end of February as GOP lawmakers protest Obama's executive actions on immigration and are trying to pressure him into making changes.

The homeland security department has responsibilities for counter-terrorism and other national security duties, Obama said, and shouldn't be subject to "political games in Washington."

In statement on its budget plans, the White House said "the president believes we should end the era of manufactured crises and mindless austerity."

The statement noted that a 2013 agreement "helped us end some of these arbitrary budget cuts," and allowed the government to "invest in key national priorities while helping to cut our deficits to their lowest level since 2007."

The proposed budget to be issued Monday will include calls for "new advanced manufacturing hubs," road and bridge construction programs, and "a new age of precision medicine" that emphasizes the fights against diabetes and cancer," according to Obama and the White House.

The budget plan — some of which Obama discussed in his State of the Union address Jan. 20 — also features proposals on tax credits for child care, paid sick leave and two years of community college financing for qualified students.

In an op-ed for The Huffington Post, Obama wrote that these programs could be financed by higher levies on the wealthy by ending certain tax breaks. He singled out what he calls "the trust fund loophole" that "allows the wealthiest Americans to avoid paying taxes on their unearned income."

Saying his program will bring "middle class economics into the 21st Century," Obama wrote that "we need to do more to make working families' paychecks go farther, give Americans of every age the chance to upgrade their skills so they earn higher wages, and build the world's most competitive economy for our businesses."