Budget to have $3T deficit reduction plan

WASHINGTON, Feb. 7 (UPI) -- President Obama's budget plan calls for a 10-year, $3 trillion deficit reduction plan that includes $1.5 trillion in tax increases for the wealthy, aides said.

Obama's budget, which will be presented next week, will seek spending in targeted areas, tax cuts to spur manufacturing and new investments in education, The Wall Street Journal reported Tuesday.

It also will build on his "America built to last" theme of his State of the Union address, aides said.

About half the $1.5 trillion in tax revenue would come from allowing the George W. Bush tax cuts for families earning more than $250,000 a year to expire, the White House said. The rest would come from additional tax increases on families earning more than $1 million a year achieved by eliminating popular deductions and mandating a minimum 30 percent effective tax rate. Obama also would end some tax breaks for corporations as well as benefits for those who use corporate jets -- two proposals that already have drawn ire in Congress.

Obama also will propose cutting Medicare and Medicaid spending, but not the structural changes experts say are needed to control spending in the long term, the Journal said. The president likely won't propose changes to Social Security, the newspaper said.

Obama is expected to discuss the principles for overhauling the corporate tax code in the coming days, the Journal said.

Obama's spending proposals for discretionary programs will reflect spending caps the White House and Congress agreed to during the summer. The caps are expected to reduce the deficit by about a $1 trillion over the decade.

The Journal said Obama would propose $686 billion for security spending in fiscal year 2013, a slight increase from $684 billion for this fiscal year. He is expected to propose $362 billion for non-security spending, up from $360 billion this year.