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Obama vows bold budgetary strokes $3.55 trillion agenda puts high priority on health care, energy, cities, environment President aims for change voters want by 'cutting what we don't need to pay for what we do'

WASHINGTON -- Vacant houses throughout Buffalo could be renovated.

Work could begin on the long-promised cleanup of the Great Lakes' toxic hot spots, such as the Buffalo River, Niagara River and Eighteen Mile Creek.

The wealthy in Western New York and elsewhere would pay higher taxes, while lower- and middle-income taxpayers would get a break.

More Americans could get health care coverage, and senior citizens could see changes in their benefits, thanks to a crackdown on government payments to Medicare providers.

Those are just a few of the highlights of the $3.55 trillion budget that President Obama proposed Thursday.

While short on line-by-line details, the spending plan paints the broad strokes not just for Obama's proposed budget for fiscal 2010, but for virtually reinventing the federal government.

Obama's plan would mean more money for cities, for the environment, for "green" energy projects and for health care -- and less for health care providers and the wealthy.

"I work for the American people, and I'm determined to bring the change that the people voted for last November," Obama said as he unveiled his spending plan. "And that means cutting what we don't need to pay for what we do."

Republicans countered by saying Obama's plan was bloated with unnecessary spending and tax increases and were outraged that it included a record $1.75 trillion deficit.

"We can't work with the other side if they insist on dramatically growing government, on dramatically increasing taxes and dramatically borrowing more money," said Rep. Paul D. Ryan Jr., R-Wis., the ranking Republican on the Budget Committee.

Democratic lawmakers from New York were ecstatic about the budget proposal.

"President Obama has laid the groundwork to make our economy strong for years to come," said Rep. Louise M. Slaughter, D-Fairport.

"This administration, in both rhetoric and substance, realizes that older urban areas like Buffalo are critical to the country," said Rep. Brian Higgins, D-Buffalo, who added that Obama's plan includes several proposals likely to benefit Western New York.

For example, the Obama plan would create a $1 billion trust fund to repair homes for poor families. In addition, the plan would expand funding for community development block grants, the main federal urban aid program, from $3.9 billion to a record $4.5 billion.

Both could be used to renovate properties in Buffalo and across the country left empty because of the foreclosure crisis, said Sen. Charles E. Schumer, D-N.Y.

"President Obama's budget will provide new resources for communities to tackle the problem head-on," said Schumer, who recently joined with Higgins to propose a pilot program to address the issue in Buffalo.

And that's just one of the boosts Buffalo would be likely to get from Obama's budget plan.

His Justice Department spending plan includes money for 50,000 new police officers nationwide. And while the administration didn't offer any city-by-city details, Buffalo received 66 new officers when the Clinton administration added 100,000 of them in the mid-1990s, meaning that the city could be in line for more than 30 this time.

In addition, the Low Income Home Energy Assistance Program -- which aids 70,000 in Erie County -- would receive $3.2 billion. That's more than in any year except the most recent, when funding was raised temporarily to account for last year's spike in energy prices.

Energy independence is a top priority of the Obama spending plan, which would devote $15 billion per year for 10 years to wind and solar energy and an effort to build more fuel-efficient automobiles.

Closely tied to that is a major investment in the environment -- including an unprecedented $475 million initiative to address invasive species, polluted runoff and contaminated sediment in the Great Lakes.

Environmentalists expect that this would result in a cleanup that could lead to reopened beaches and fishing spots throughout the region.

Obama promised during his campaign to create a $5 billion Great Lakes restoration fund, "and this seems to be a down payment on that," said Chris Grubb, senior coordinator for the National Wildlife Federation's Great Lakes office.

Another of Obama's key environmental proposals would be a huge revenue producer for the federal government. The plan would cap emissions of carbon, which is linked to global warming, while raising hundreds of billions of dollars by auctioning off permits to exceed those caps.

Critics see that as a carbon "tax."

The Obama budget would preserve the middle-class tax cuts included in his recent economic-stimulus package -- including Schumer's tax credit for families with children in college.

But the spending plan also would increase taxes on individuals making more than $200,000 a year and families making more than $250,000.

By reducing deductions for those taxpayers, Obama hopes to raise $318 billion over 10 years to help pay for his $634 billion "down payment" on health care reform. His plan, while not yet fully detailed, would vastly increase the number of Americans with health insurance.

The rest of that down payment would come from trimming Medicaid payments to drug companies and Medicare reimbursements to hospitals and insurance companies -- in particular, those that offer "Medicare Advantage" plans.

The Obama administration contends that those Medicare HMOs -- which serve about 2 in every 5 senior citizens in Western New York -- are grossly oversubsidized.

While the scope of Obama's Medicare cuts are yet to be announced, Dr. Michael W. Cropp, president of Independent Health in the Buffalo area, said they can only mean one thing.

"The net impact will be less benefits to those who have enrolled in these value-added benefit plans," Cropp said.

Insurance companies and hospitals are likely to lobby Congress to stop Obama's proposed Medicare reimbursement cuts, and that's just one of many battles the new president can expect as he tries to get lawmakers to adopt his budget.

While few in Congress will quibble with the proposed 10 percent increase in funding for veterans, defense spending would rise by only 4 percent, with most of that coming from an increase in the number of troops and their compensation. Defense acquisition would be cut, no doubt prompting a fierce lobbying effort from defense contractors.

Republicans seemed mostly focused on fighting Obama's proposed tax increases.

"There are tax increases across the board, and I'm not sure it's the right time to be increasing taxes, in a recession," said Rep. Chris Lee, R-Clarence.

Even some Democrats expressed concern that the Obama plan included so much new spending while projecting a record deficit. Obama plans to cut the deficit in half over the next five years, but that would not be enough for some lawmakers.

"I would give him good marks as a beginning," said Senate Budget Committee Chairman Kent Conrad, D-N.D., "but we have to do a lot more to take on this long-term debt buildup."

Jon Sham of The News Washington Bureau and News wire services contributed to this report.


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