Obama defends his new budget of 'tough choices'

By BEN FELLER, AP White House Correspondent

WASHINGTON (AP) - Defending his new budget as one of "tough choices," President Barack Obama said Tuesday that more difficult decisions about the nation's biggest expenses - Medicare, Medicaid and Social Security - will have to be tackled by Democrats and Republicans acting together, not by White House dictates.

"This is not a matter of, 'you go first, I go first,"' he said. "It's a matter of everybody having a serious conversation about where we want to go and then ultimately getting in that boat at the same time so it doesn't tip over."

The president pitched his $3.73 trillion budget as a balance of spending on needed programs and significant reductions that would reduce the deficit by $1.1 trillion over 10 years. The budget includes a mix of spending freezes on domestic programs, pay hike suspensions for federal civilian workers and new revenues from increased taxes on the wealthy and on oil and gas producers.

But Obama's deficit relief is far more modest than that detailed by his fiscal commission, which in December proposed measures that would mop up four times as much red ink. Unlike his blue-ribbon group, the administration's budget does not address structural changes in Social Security or Medicare, the two largest items in the federal budget.

"Look at the history of how these deals get done," Obama said Tuesday. "Typically it's not because there's an Obama plan out there. It's because Democrats and Republicans are committed to tackling this in a serious way."

The commission's bipartisan report included politically difficult recommendation such as increasing the Social Security retirement age and reducing future increases in benefits. And while Obama has promised to overhaul the corporate tax system, he stops short of commission recommendations that would lower rates but generate additional revenue at the same. Obama has called for "revenue neutral" fixes to corporate taxes, meaning they would neither cost more money nor add money to the treasury.

"I'm not suggesting we don't have to do more," the president said.

Obama said he also wants to work with Republicans to find common ground on government spending for the remainder of this fiscal year and to avoid a government shutdown. Stopping the basic functions of government could damage the economic recovery, he said.

"I think it is important to make sure that we don't try to make a series of symbolic cuts this year that could endanger the recovery," he said. Obama said cutting too deeply in Washington could prompt thousands of layoffs in state and local governments, which would hurt the economy.

Stopping the basic functions of government would mean, for example, the Social Security payments don't go out, he said.

"This is not an abstraction," he said. "The key here is for people to be practical and not score political points. That's true for all of us."

Over the long term, Obama conceded that entitlement and tax changes are necessary and said Democrats and Republicans set a model for cooperation during the December lame duck congressional session when they negotiated a tax-cutting plan.

"My suspicion is that we're going to be able to do the same thing if we have the same attitude about entitlements," he said.

Following his party's sweeping defeats in the November elections, Obama pledged to refocus his agenda on the economy and creating jobs. He used last month's State of the Union address to lay out an agenda that he said would spur job growth in the short-term and increase U.S. competitiveness in the future.

Obama's budget aims to cut the deficit in part with tax increases, including eliminating tax breaks for oil and gas producers, that have failed to win support before under a Democratic control Congress. The measures face an even tougher challenge now that Republicans control the House of Representatives.

"I continue to believe I'm right," he said, when asked why he relied on previously defeated proposals. "so we're going to try again."

His new budget would cut spending on popular energy assistance programs and community development projects. Obama took note of the harsh impact that cuts can have on individual Americans.

"I definitely feel folks' pain," he said, mentioning the gripping stories recounted in the 10 letters a day that he reads from among the thousands received at the White House.

"You want to help every single one individually," he said. But Obama said the most important thing he can do as president is focus on the long-term stability of the economy to help the largest number of people.

(Copyright 2011 by The Associated Press. All Rights Reserved.)

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