Barack Obama unveils $3.77 trillion budget plan including Social Security and healthcare cuts

President Barack Obama has unveiled a $3.77 trillion budget plan that includes new taxes on the wealthy along with cuts to benefit programmes.

The White House is offering to cut pensions and healthcare costs, but only in return for $700 billion in new revenue.

However, Barack Obama’s plan is viewed as having no chance of being fully enacted by the deadlocked Congress.

Republican Senate leader Mitch McConnell branded the budget a “left-wing wish list”.

The Democratic president will host a dinner for senior Republicans on Wednesday evening to sell his proposals.

Conservatives have refused to agree to new revenue after passing tax rises on earnings over $400,000 in January.

Congressional Democrats, meanwhile, have balked at Barack Obama’s compromise offer to cut Social Security pension payments.

The Obama budget aims to reduce the US deficit by an additional $1.8 trillion over 10 years, bringing total potential reductions to $4.3 trillion, according to administration estimates.

Cuts in the plan include about $400 billion to government health spending, and about $130 billion from Social Security, by changing the way cost-of-living adjustments are calculated.

Elderly and disabled recipients with the lowest incomes would be shielded from the changes.

The cost-of-living adjustments would also raise $100 billion in revenue over 10 years through changes to tax brackets.

Additional cuts would include $100 billion each from military and domestic programmes as well as reductions in farm subsidies and federal employee pension programmes.

President Barack Obama proposes raising revenue by eliminating income deductions for the top 2% of earnings and includes the president’s oft-repeated Buffett Rule, requiring households with incomes of more than $1 million to pay at least 30% in taxes.

The plan also includes some new spending aimed at improving the US economy, including $50 billion in infrastructure and $1 billion for 15 manufacturing institutes across the country.

Barack Obama has previously cited infrastructure spending as the best possible investment to propel an economic recovery.

The president’s blueprint would replace automatic, across-the-board cuts – known as sequestration – to both military and domestic programmes that began on March 1st.

Those cuts took effect after Democrats and Republicans failed to agree to another plan to cut spending and reduce the US budget deficit.

Negotiations over the next US budget are expected to run into the summer, but the White House says the document released on Wednesday is not an opening offer.

“I have already met Republicans more than half way,” Barack Obama said in the White House Rose Garden.

“So in the coming days and weeks I hope that Republicans will come forward and demonstrate that they’re really as serious about the deficit and debt as they claim to be.”

But House of Representatives budget committee Chairman Paul Ryan argued that Republicans had made enough concessions.

“It goes over old ground. It takes more from families to spend more in Washington,” said the Wisconsin congressman, who was the Republican vice-presidential candidate last year.

Paul Ryan’s budget proposal, already passed in the Republican-controlled House, sets out $4.6 trillion in deficit reduction.

Most of the savings would be realized through reductions in healthcare spending and other domestic programmes, without additional tax revenue.