Summary The president will propose an extra 56 billion dollars in spending above agreed budget levels.
WASHINGTON (AFP) - President Barack Obama will Tuesday propose a budget for the coming fiscal year that has less to do with managing US finances than with stemming Democratic losses in congressional elections.
Senior White House officials say the document, to be previewed by Obama at a Washington elementary school, is largely aspirational, given that the president s top priorities are routinely blocked by Republicans in Congress.
Broad government spending levels have also already been set by a two year budget agreement reached by top Democratic and Republican negotiators in the Senate and the House of Representatives in December.
Still, Obama will use his budget to add teeth to his current populist political narrative of offering opportunity to all Americans.
The president will propose an extra 56 billion dollars in spending above agreed budget levels, which will be financed by closing tax loopholes which benefit the rich and in mandatory spending reform.
Obama will prioritize new forms of energy, early education and job creating manufacturing programs.
The White House said the budget would include an expansion of the Earned Income Tax credit, which would cut taxes for 13.5 million working Americans and expand tax cuts to the middle class to finance child care and college education.
"These pro-growth and pro-opportunity tax cuts would be fully offset by closing tax loopholes, including ... provisions that let high-income professionals avoid the income and payroll taxes other workers pay," the White House said in a statement.
In effect, the plan would close a loophole that allows wealthy people to treat investment income as capital gains, and avoid the 40 percent top federal tax rate on income.
Obama is also anchoring his campaign for elections in November, in which a third of the Senate and all of the House of Representatives is up for grabs, on a raise to the federal minimum wage from $7.25 to $10.10 -- a proposal that is popular with voters but opposed by Republicans, who say it would squeeze small businesses and cost jobs.
A new poll on Tuesday revealed the challenge facing Democrats in November, as they defend tough Senate seats in conservative districts hampered by a president with a 41 percent approval rating and an unpopular health care law.
The Washington Post/ABC News poll found out that of 34 states with Senate races, 50 percent of voters favor Republicans and 42 percent favor Democrats.
Democrats are seen with almost no chance of winning back the House and are in grave peril of losing the Senate -- a scenario that would guarantee a miserable last two years in office for Obama.
The spending blueprint will also effectively rescind an offer from Obama to Republicans to recalculate inflation in a way that would gradually reduce benefits to senior citizens from social programs that are an increasing drain on the budget.
The offer -- known as chained CPI -- was included in the budget last year as Obama held out hope of concluding a "grand bargain" on taxes, spending and the deficit with Republicans on Capitol Hill.
But amid acrimony in Washington, the negotiations have collapsed, and senior Obama aides say they have returned to normal budgetary procedures and omitted the concession.
In effect, the move means that there is now little chance of a lasting fiscal agreement between Obama and his Republican foes for the rest of his presidency, which ends in January 2017.
The budget will also include the latest government projections for GDP growth, unemployment, and the deficit for the coming years.
The document is likely to chart the quickening reduction in the deficit, currently falling at the fastest rate since World War II.
But the dip may have as much to do with government spending restrictions imposed in an automatic law known as the "sequester" after Obama and Republicans failed to reach a spending deal as solid economic growth.
In its latest budget projections released in February, the non partisan Congressional Budget Office predicted the deficit, which stood at 4.1 percent of GDP in 2013, would fall to 3.0 percent of GDP this year -- at $514 billion -- and 2.6 percent in 2015.
