Obama set for showdown with US Congress after unveiling US$4 trillion budget proposal

US President Barack Obama delivers remarks on the United States FY2016 budget at the Department of Homeland Security in Washington, DC on Monday. -- PHOTO: EPA
US President Barack Obama delivers remarks on the United States FY2016 budget at the Department of Homeland Security in Washington, DC on Monday. -- PHOTO: EPA

WASHINGTON: US president Barack Obama has laid out an ambitious US$4 trillion (S$5.4 million) budget in Washington DC, that sets the stage for tough negotiations with Congress.

With the US economy finally showing signs that it is finally recovering from the global financial crisis, Mr Obama put forward a proposal yesterday that pushes spending back to pre-crisis levels and lifts the automatic spending caps known as "sequestration".

The budget includes a US$38 billion boost in defence spending, US$2.2 billion for a grant to encourage states to adopt paid leave for employees, and US$60 billion over 10 years for a programme that would grant two years of community college education free to qualified students. There was also US$478 billion set aside for infrastructure like roads, bridges and transit systems.

Many of the policies included were outlined in the president's contentious State of the Union address last month and has led many pundits to label the budget as "dead in the water".

Republicans will likely take umbrage at the raft of tax increases proposed including an increase in capital gains tax and a new tax on inherited wealth.

Adding that his term as president coincided with the largest deficit reduction since World War II, he emphasised that the US needs to start balancing defence and economic priorities.

"I will not accept a budget that severs the link between our national security and our economic security… If we don't have a vital infrastructure, if we don't have broad band lines across the country, if we don't have a smart grid, all that makes us more vulnerable. American can't afford being shortsighted," he said during a speech at the Department of Homeland Security, a setting likely chosen for its political symbolism.

Funding for the department is expected to play a key part in budget negotiations as its funding will run out some time next month.

Republicans have chosen to exclude the department, which oversees functions like customs, immigration and several others, as a mark of protest against the president's executive actions on immigration reform.

In his speech, Mr Obama said that the employees of the department should not have to suffer because of political disagreements.

He said: "If they have other ideas on how to keep America safe, I welcome their ideas. But their numbers have to add up. What we can't do is play politics with economic or national security…

"I understand they may have disagreements with me on that. But if they don't agree with me, that's fine. That's how democracy works; you may have noticed they usually don't agree with me. But don't jeopardise our national security because of our disagreement."

The White House has acknowledged that while the budget is unlikely to make it past Congress, it should serve as the opening bid in talks.

At the moment, however, it is clear there is very little overlap between Republican ideas and the president's plan.

Speaker John Boehner released a statement shortly after Mr Obama laid out his plans, rebutting the budget: "Today President Obama laid out a plan for more taxes, more spending, and more of the Washington gridlock that has failed middle-class families…

"Like the president's previous budgets, this plan never balances - ever. It contains no solutions to address the drivers of our debt, and no plan to fix our entire tax code to help foster growth and create jobs," he said.

"Worse yet, President Obama would impose new taxes and more spending without a responsible plan to honestly address the big challenges facing our country."