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Feb 9, 4:35 PM EST

Obama unveils record $4.1 trillion election-year budget


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WASHINGTON (AP) -- President Barack Obama on Tuesday unveiled a record $4.1 trillion, election-year budget that finances Democratic priorities like education, health care and climate change with new taxes on crude oil, the wealthy and big banks.

The progressive wish list, which comes as the nation's long-term fiscal outlook is deteriorating, underscores the initiatives pushed by Democratic candidates, Hillary Clinton and Bernie Sanders, who hope to succeed Obama. Republicans dismissed the proposal as a tax-and-spend exercise.

Obama called the budget - his eighth and final one - "a roadmap to a future that embodies America's values and aspirations: a future of opportunity and security for all of our families; a rising standard of living; and a sustainable, peaceful planet for our kids."

The budget was unveiled on the same day as the New Hampshire presidential primary, with much of the focus on the political fight over Obama's successor.

The budget calls for a major new tax on crude oil that would raise the price of gasoline, currently averaging about $1.80 a gallon nationwide, by about 24 cents. All told, its tax hikes would average more than a quarter-trillion dollars a year to cover deficits made worse by a softening economic picture. The $2.8 trillion net tax hike package would almost double the tax increases Obama sought - and was denied - last year.

"This isn't even a budget so much as it is a progressive manual for growing the federal government at the expense of hardworking Americans," said House Speaker Paul Ryan, R-Wis.

As in past years, Obama's budget largely leaves alone huge benefit programs like Medicare, Social Security, Medicaid and food stamps, whose spiraling growth is the main driver of budget deficits that economists say could drag down the economy unless policymakers step in.

The Obama plan sees the deficit rising from $438 billion last year to more than $500 billion for the 2017 budget year that starts Oct. 1. Deficits over the coming decade would total $6 trillion.

Obama and his GOP rivals long ago gave up on efforts to find sweeping bipartisan solutions to the government's eroding fiscal picture. An Obama proposal to curb the inflation increases for Social Security beneficiaries, seen as an overture to Republicans, was shelved years ago.

Washington's nonpartisan budget scolds were unimpressed.

"The president once promised not to leave our fiscal problems for future generations to solve, but in this budget, that is exactly what he does," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

While virtually no one in Washington is predicting a major budget pact this year between Obama and Republicans, administration officials saw bipartisan hope for proposals to combat heroin and opioid addiction, fund a "moonshot" effort to find cancer cures, and expanded tax credits for the working poor.

The budget arrived the day after Obama requested an immediate $1.8 billion infusion to combat the Zika virus, which can cause horrific birth defects and is spreading in Latin America.

"It's tempting to adopt the conventional wisdom that a president's final budget isn't relevant, but I think the conventional wisdom is wrong," said Shaun Donovan, director of the White House budget office.

The submission caps a combative few years in Obama's dealings with Republicans. A major deficit reduction effort in 2011 fell apart, though after his re-election in 2012 Obama won a higher income tax rate on couples earning more than $450,000 per year and individuals earning more than $400,000.

A budget pact last year set overall spending levels for this year's round of agency spending bills.

The budget proposes a 10-year, $400 billion initiative for "clean" transportation projects and other infrastructure; a $19 billion, 35 percent increase for cybersecurity, and additional funding for a summertime food program for children who receive free lunches during the school year.

It also calls for a $4 billion plan to teach computer science; and $6 billion in training funds to help young people land their first job.

Other tax increases include a .07 percent fee on larger banks that would raise about $10 billion a year; reducing the value of itemized deductions taken by wealthier taxpayers to raise a whopping $646 billion over a decade; almost doubling the approximately $1 per pack federal cigarette tax; and a new proposal to require a greater number of wealthier people pay a 3.8 percent Obamacare tax surcharge.

The so-called "Buffett Rule" would require a minimum 30 percent tax rate for upper-income earners.

Some of those tax increases would offset new tax cuts such as an expansion of tuition tax credits, giving the earned income tax credit for the working poor to those without children, and broadening a tax credit for child care expenses.

Among the health care provisions in Obama's budget, several address the rising cost of prescription drugs. One new proposal would gradually shift most of the burden of paying for drugs in the "catastrophic" portion of Medicare's prescription program to insurers who deliver the benefit, as opposed to taxpayers.

Another idea, estimated to save $5.8 billion over 10 years, would allow the federal government to join forces with states to negotiate Medicaid rebates from drug companies.

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Associated Press writer Ricardo Alonso-Zaldivar contributed to this report.

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