President Barack Obama placed his first stamp on the federal budget today, announcing a $3.55-trillion-dollar priority list that would cut taxes for the middle class, raise taxes for the wealthy, reform health care and bolster several programs that touch the lives of older Americans.

It also projects a deficit of $1.75 trillion for the current fiscal year—the highest as a percentage of gross domestic product since World War II.

But first the measure must pass Congress, where Republicans are leery of Obama’s emphasis on tax increases instead of spending cuts. The new fiscal year begins Oct. 1.

“I agree with the president that we need to make some tough decisions regarding how we spend taxpayer dollars,” says Sen. Republican Leader Mitch McConnell of Kentucky.

“Unfortunately, at this juncture, while the American people are tightening their belts, Washington seems to be taking its belt off.”

Obama defended his budget as an honest accounting free from past tricks used to hide the full costs of the federal government.

“We need to be honest with ourselves about what costs are being racked up—because that’s how we’ll come to grips with the hard choices that lie ahead,” Obama said Thursday. “And there are some hard choices that lie ahead."

Obama laid out a gloomy list of economic realities in his budget statement: Manufacturing jobs are at a 60-year low, 3.5 million Americans have lost jobs in the past 13 months and the stock market slide has wiped out nearly $3 trillion in retirement savings.

The ultimate test for Obama’s financial initiatives is whether the national economy recovers and the nation’s housing and financial markets revive—and individuals’ retirement savings with them.

Here are the budget highlights: … Back to Article