The budget battle on Capitol Hill heated up Wednesday as President Barack Obama released his budget for fiscal 2014 that aims to find middle ground to progress long-stalled budget negations.

The president's budget includes 215 proposals to cut spending, will raise $680 billion in new tax revenues and reduce future deficits by $600 billion over 10 years. The White House says the president's plan includes $1.8 trillion in deficit reduction, replacing the $1.2 trillion in automatic spending cuts poised to take effect over the next 10 years.

The budget aims to find middle ground between the dueling parties by including reductions to popular entitlements, which doesn’t sit well with Democrats, as well as Republican-loathed tax increases.

"My budget will reduce our deficits by nearly another 2-trillion dollars so that, all told, we will have surpassed the goal of 4-trillion dollars in deficit reduction that independent economists believe we need to stabilize our finances," the president said in the Rose Garden on Wednesday.

Read the president's budget here

Medicare and Social Security face cuts under the president’s budget, which has drawn criticism from members of his own party. The budget outlines a reduction in cost-of-living increases for Social Security beneficiaries and $305 billion in cuts to Medicare over a decade. However, the president has made it clear he will only agree to the measures if Republicans agree to tax increases.

The savings in this year’s budget proposals are less than the $28.6 billion in cuts the president identified in last year’s budget, and the document is not expected to pass Congress.  Even the president doesn’t seem entirely sold on the plan with White House Press Secretary John Carney saying last week, “What I will say is that this is not the president’s idealized budget. It is not what he would do if he were king, or if only people who supported his proposals were in Congress.”

If all the president’s cuts were passed in their entirety, they would hardly make a dent in the country’s deficit, which is nearing $800 billion this year. The budget also includes increases for programs outlined in his State of the Union speech, including creating a universal preschool program and $50 billion for infrastructure projects.

"My budget also replaces the foolish  across-the-board spending cuts that are already hurting our economy," the president said Wednesday. "And I have to point out that many of the same members of Congress who supported deep cuts are now the ones complaining about them the loudest, as they hit their own communities."

On Tuesday, the non-partisan Government Accountability Office released a report detailing 31 instances of waste and duplication within the federal government. Specifically, the watchdog highlighted a savings of $82 million just by having military departments agree on one or two types of camouflage for their uniforms instead of the current seven patterns. 

Lawmakers have been chasing a “grand bargain” on the nation’s budget for several years. The president's budget, which is two months late, comes after Congress narrowly averted the fiscal cliff at the start of the year.  Then in March both parties failed to reach an agreement on a budget which triggered automatic spending cuts, known as sequestration.

Social Security

The president’s plan reduces the rate of increase for entitlement programs and alters how inflation is measured for Social Security payments, changing to the Chained Consumer Price Index method.  This method would lower the annual payment increases for Social Security beneficiaries, bringing nearly $230 billion in savings.

The reductions would mean $136 less a year for the average middle-income 65-year-old, according to reports.

Medicare

In a move similar to what he offered House Speaker John Boehner at the end of 2012, the president has proposed cuts to Medicare that will save $400 billion over 10 years. It also contains $156 billion in lower Medicare payments to drug companies and higher premiums or co-pays from higher-income recipients.

Boehner wants more from the president including increasing the age of eligibility for Medicare recipients and cuts to the Medicaid health plans.

"And while the president has backtracked on some of his entitlement reforms that were in conversations that we had a year and a half ago, he does deserve some credit for some incremental entitlement reforms that he has outlined in his budget.  But I would hope that he would not hold hostage these modest reforms for his demand for bigger tax hikes," the speaker said in a statement Wednesday.

Taxes, Retirement

Obama’s budget calls for more tax revenue through a 28% cap on tax deductions and other write offs, which would largely hit high-income earners.  The president is also proposing the so-called “Buffett Rule” that would require households with incomes more than $1 million a year pay at least 30% of their income (after charitable giving) in taxes.  

Private equity, venture capital and other financial managers would have to pay regular, earned income tax on carried interest.  Currently, carried interest is considered capital gains and is taxed at a lower rate.

The budget also has a proposed cap on IRA and other tax-deferred retirement savings deductions of more than $3 million for an individual contributor

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