March 4 (Bloomberg) -- President Barack Obama sent Congress a$3.9 trillion budget request with increased spending foremployment, education and job-training programs to boost theeconomy, financed partly by trimming tax breaks for upper-incomefamilies and some businesses.

The sixth budget of Obama’s presidency, released eight monthsbefore the November midterm election, would enhance tax- creditprograms for some families and childless workers and pump about$302 billion over four years into infrastructure projects such asroads and bridges. It would allocate $25 billion less for weaponsand research than projected a year ago.

“The budget is not just about numbers, it’s about our values,”Obama said at a Washington elementary school today. “It’s a roadmapfor creating jobs” in part through education, while it “adheres tothe spending levels” agreed to by Congress.

The budget projects a $564 billion deficit this year, down 13percent from a year ago. The budget deficit is projected to fall ineach of the next three years to a low of $413 billion in 2018before rising again.

The deficit-to-gross domestic product ratio is projected at 3.7percent this year, dropping to 3.1 percent next year, a level mosteconomists consider manageable. It measured 9.9 percent when Obamatook office in 2009. The budget shows steady declines in thefollowing years to a low of 1.6 percent in 2024.

The president’s budget projections assume total acceptance ofthe entire package by Congress, which never happens. Suchassumptions allow the White House to be optimistic in its outlook.In addition, the forecast deficits and their share of the economydon’t take into account recessions or wars, which can skew thebudget.

Obama’s spending blueprint for the fiscal year starting Oct. 1is a snapshot of his political priorities that often align withthose of Democrats seeking re-election in November. At the sametime, it underscores the differences with congressionalRepublicans, who will reject the Obama budget and likely soon offerone of their own.

“This budget isn’t a serious document; it’s a campaignbrochure,” House Budget Committee Chairman Paul Ryan, a WisconsinRepublican, said in an e-mailed statement.

Fiscal challenges

Obama’s budget is a “disappointment” that “would demand thatfamilies pay more so Washington can spend more,” Ryan said. “Thepresident has just three years left in his administration, and yethe seems determined to do nothing about our fiscal challenges.”

Obama’s plan touts $56 billion in what the White House calls“additional investments,” split evenly between defense and domesticpriorities and including education, research and development.

The White House emphasized $598 billion in tax increases for thewealthy over 10 years that includes adopting the so- called BuffettRule that imposes a “fair share tax” on upper- income families andwould collect a projected $53 billion over a decade.

As part of a $302 billion plan for transportation and publicworks projects, the budget includes a four-year fix to patch a gapbetween receipts from the 18.4 cents-per-gallon federal gas tax andplanned spending from the Highway Trust Fund, which covers roads,bridges and transit spending.

Highway spending

The Transportation Department projects the Highway Trust Fundwill run out of money before the end of September without newrevenue.

Projects would be funded by a one-time tax repatriation ofoffshore earnings. Republican House Ways and Means CommitteeChairman Dave Camp had a similar proposal in his tax plan unveiledlast week.

It’s not a permanent fix, though, and the budget plan is silenton how it would address a long-term shortfall between gas taxes androad funding that widens as automakers increase the fuel efficiencyof their fleets.

The White House, as it did last year, proposed $66 billion toprovide low- and moderate-income 4-year-old children with access topreschool, to be paid for with increased taxes on tobacco that theadministration said would raise $78 billion over 10 years. Congresstook no action on either plan last year.

Tax credits

The president’s plan calls for automatic enrollment inindividual retirement accounts costing $14.7 billion over a decade,and expansion of child care and dependent tax credits for $9.6billion over 10 years.

The president is proposing a $143 billion package of incentivesfor manufacturing research and clean-energy programs to createjobs. Of that amount, $108 billion would be earmarked for aresearch and experimentation tax credit.

The $56 billion for additional investments would be offset withspending cuts or tax increases. For example, the administrationwould limit crop insurance subsidies to save $14 billion over 10years. It proposes to raise airline security fees by $5 billion,capping tax-preferred savings accounts like IRAs and blocking thosereceiving disability benefits from also collecting unemploymentbenefits.

The budget would increase by 19 percent financing for the LaborDepartment’s Wage and Hour Division, to $269 million, allowing theunit to hire 300 investigators to crack down on overtime abuses.The division that enforces the minimum wage, overtime, child laborand other laws would target “industries and employers most likelyto break the law,” according to a White House statement.

Spending cap

Under an existing agreement passed by Congress, discretionaryspending -- about 29 percent of the 2015 budget -- is capped at$1.014 trillion, excluding war funding. The White House says itsbudget stays below that ceiling, with some specific additions.

Adding funds for repairs and improvements to the nation’shighways and transit systems may be an area that appeals to bothCongress and the White House, Representative Chris Van Hollen, aMaryland Democrat, said in an interview on CNBC today.

“We need to boost our infrastructure investment in this countryin order to remain competitive,” he said. “If we can find a way todo it where we don’t increase the deficit” it may be one area whereRepublicans and Democrats can agree.

The budget plan includes $7 billion for disaster relief andanother $1 billion annually for wildfire suppression, reflecting anincreasing fire risk in the Western U.S.

Childless workers

The plan includes $60 billion over 10 years to expand the earnedincome tax credit for childless workers and $66 billion to supportpreschool programs for all children.

After two years of focusing on deficit reduction, the presidentis taking a detour to pump new money into core Democratic programsthat may help rally the party in the November elections.

“This year, the administration is returning to a moretraditional budget presentation that is focused on achieving thepresident’s vision for the best path to create growth andopportunity for all Americans, and the investments needed to meetthat vision,” the White House said in a statement Feb. 20.

Obama told the Democratic National Committee Feb. 28 that hisbudget will create jobs in manufacturing, energy andinfrastructure, and “we’ll pay for every dime of it by cuttingunnecessary spending, closing wasteful tax loopholes.

Spending limits

Lawmakers, in a budget deal signed into law in January, have setspending limits for 2015, essentially setting a truce in the annualbudget wars. House Republicans plan to write an alternative budget,and the Senate has no plans to do so, according to Senator PattyMurray of Washington, chairman of the budget committee.

Ryan, the House budget chairman, is looking to revamp almost 100anti-poverty programs that he says encourage people to remain onwelfare.

“For too long, we have measured compassion by how much we spendinstead of how many people get out of poverty,” said Ryan, theRepublican vice presidential nominee with Mitt Romney in 2012. “Weneed to take a hard look at what the federal government is doingand ask, ‘Is this working?’”

That stance may be a counterweight to Obama and congressionalDemocrats making the battle against income inequality a centerpieceof the 2014 election, illustrated by proposals to raise the federalminimum wage to $10.10 an hour from $7.25 and extend long-termunemployment benefits.

Unemployment forecast

In economic forecasts that were made in November, the budgetprojected the U.S. economy will probably increase by 3.1 percentthis year and 3.4 percent in 2015, budget figures show. Theunemployment rate may average 6.9 percent this year, falling to anaverage of 6.4 percent next year. The current jobless rate is 6.6percent. An update from the Labor Department is scheduled March7.

Elsewhere, Obama proposes $65.3 billion in discretionary fundingfor the Department of Veterans Affairs, up 3 percent from thisyear. The request includes more than $300 million in funding tohelp speed claims processing as the VA seeks to end a backlog thathas left some veterans waiting more than a year for decisions ondisability benefits.

The National Aeronautics and Space Administration would receive$17.5 billion in budget authority for fiscal 2015, down from $17.6billion this year, including funds to take astronauts to the moonand beyond.

The proposal includes $1.9 billion for the Space Launch System,whose contractors include Chicago-based Boeing Co. and RanchoCordova, California-based GenCorp Inc.’s Aerojet Rocketdyne. TheSLS will carry a manned capsule into space, the Orion, whose primecontractor is Bethesda, Maryland-based Lockheed Martin Corp. Thebudget also includes $1.2 billion for the capsule.

With assistance from Kathleen Miller and Jonathan D. Salantin Washington and Jim Efstathiou Jr. in New York.

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