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Calling his plan one made up of “tough choices and sacrifices,” President Barack Obama sent Congress a $3.73 trillion budget on Monday that proposed to reduce the deficit by cutting spending and increasing taxes, but seemed to ignore his own deficit commission’s suggestions when it came to slashing entitlement programs like Medicare and Social Security.

“The fiscal realities we face require hard choices,” President Obama said in his remarks to Congress. “A decade of deficits, compounded by the effects of the recession and the steps we had to take to break it, as well as the chronic failure to confront difficult decisions, has put us on an unsustainable course.”

The proposal, which is made up of about two-thirds spending cuts and one-third tax increases, and also includes plans to invest heavily in education and innovation. “Growing the economy and spurring job creation by America’s businesses, large and small, is my top priority,” the 0resident said.

Republicans, who late last week launched a preemptive strike against Obama’s budget plan by releasing their own proposal to trim $64 billion from the current budget, called the President’s Fiscal Year 2012 budget “job-crushing.”

“The president’s budget will destroy jobs by spending too much, taxing too much, and borrowing too much,” Speaker of the House John Boehner said in a statement. “By continuing the spending binge and imposing massive tax hikes on families and small businesses, it will fuel more economic uncertainty and make it harder to create new jobs.” He said that House republicans planned to offer their own budget proposal in the next few weeks.

According to an Associated Press report, “the budget proposal would impose about $730 billion in new taxes on businesses and wealthy individuals over the next decade, while cutting about $400 billion in taxes on middle-income families, the working poor and other businesses, for a net tax increase of about $330 billion.” Obama’s proposal would allow some Bush-era tax cuts to expire at the end of 2012, and would limit certain itemized deductions for very wealthy taxpayers. He also proposes eliminating as many as 12 tax breaks for oil, gas, and coal companies. Half of all government agencies would be affected by the cuts.

“The reason is simple,” Obama said. “In the long run, we will not be able to compete with countries like China if we keep borrowing more and more from countries like China.”

As he mentioned in his State of the Union address, Obama proposes a five-year freeze on all discretionary spending outside of security, while increasing funding in areas that he called “critical for long-term economic growth and job creation.” The freeze is estimated to save more than $400 billion over 10 years, but about $8 billion would actually be added to the deficit in 2012, since much of the savings from the freeze would pay for increases in education spending, clean energy, and high-speed rail development.

The GOP proposal, which would affect current spending, includes the elimination of several programs in the U.S. Department of Education as well as the Corporation for Public Broadcasting and AmeriCorps, and deep cuts in food safety and research, community health services, Pell grants for college students, climate-change grants, and the Environmental Protection Agency, among other things. Debate on the bill is expected to begin in the House on Tuesday, Feb. 15. Since Congress did not pass a budget for Fiscal Year 2011, which started in October of 2010, the government has been operating under a series of “stop-gap” measures that expire on March 4.

Though the President’s own deficit commission has said that major changes are needed in big-budget programs like Medicare, Medicaid, and Social Security, neither the President nor the Republican party has specifically addressed those changes in their budget plans.

So, how do any of the proposed cuts affect you? Since the president’s budget for Fiscal Year 2012 and the GOP-proposed cuts for Fiscal Year 2011 have yet to be passed, you won’t be seeing any changes right away. But in the long term, be on the look out for:

Heating costs: If you rely on government assistance to pay your gas bill during the winter, Obama’s cuts to heat subsidies to the poor will hit home for you. The American Gas Association predicts that 3.2 million households—about 9 million people—would be affected.

Paying for college: The republican proposal would cut Pell grants from the current $5,500 maximum to $4,655. The president’s plan also affects Pell grants, but while the maxiumum given would remain the same, students would not be able to get the grants to cover summer studies. Under Obama’s proposal, interest on student loans would also begin to accrue while the students are in school, instead of starting after graduation as they do now.

Taxes: Obama’s budget plan would make permanent the increases in Earned Income Tax Credit for families with three or more children, and would extend certain tax credits for college expenses. If your family earns more than $250,000 per year ($200,000 for individuals), you may not be able to itemize as much of your mortgage interest, donations to charity, or state and local taxes. Under Obama’s plan, business tax credits for research and development remain, as would other tax breaks for investing in manufacturing and improving energy efficiency in commercial buildings.

Public education: Obama’s plan directs billions of dollars into education, including raising discretionary funding for the Education Department by nearly 21 percent and continuing to fund the Race to the Top program that the president hopes will replace No Child Left Behind. It also calls for $1.4 billion in new education competitions, and consolidates 51 different programs into 11 new projects. The republican proposal for 2011 eliminates several of the departments that Obama’s 2012 plan would keep, including Striving Readers, Mathematics and Science Partnership, The National Writing Project, Even Start, Improving Literacy Through School Libraries, and others. The GOP also proposes eliminating the Corporation for Public Broadcasting, which offers many staple educational programs.

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