Obama Budget's Dueling Priorities - Stimulus and Deficit - NYTimes.com WASHINGTON - With the election-year budget he unveils on Monday, President Obama more than ever confronts the challenge of persuading voters that he has a long-term plan to reduce the deficit, even as he highlights the stimulus spending and tax cuts that increase deficits in the short term. On Sunday, the job of making the argument for job-creation measures now and budget austerity later fell to Jacob J. Lew, Mr. Obama's chief of staff and until recently his budget director, who made the rounds of five television talk shows. There's pretty broad agreement that the time for austerity is not today. We need to go on a path where, over the next several years, we bring our deficit under control," Mr. Lew said on the NBC program "Meet the Press." Right now we have a recovery that's taking root, and if we were to put in austerity measures right now, it would take the economy in the wrong way. "The challenge," Mr. Lew added, "is how do you do two things at the same time? How do you put money forward for things like the payroll tax holiday, for things like getting a jump-start on infrastructure, for building schools, and make the decisions for long-term deficit reduction? The president has proposed a plan that would do that. That combination - temporary, immediate stimulus measures, together with spending cuts and tax increases that would take effect only after 2012, when the economy presumably is stronger - is one that many economists and business leaders endorse. But as Mr. Obama starts his fourth year in office, explaining the two-track approach continues to test him and his administration. In his budget Mr. Obama again will commit to $4 trillion in deficit reduction over 10 years, including $1.5 trillion in tax revenue from the wealthy and from closing some corporate tax breaks, and reductions in spending for a range of programs, including the military, Medicare, farm subsidies and federal pensions. But Republicans are sure to criticize the president's proposals as heavy on gimmickry and double-counting, and reject his proposed tax increases. For all the debate over deficits, Mr. Obama on Monday will highlight spending increases and tax cuts that he seeks, which are popular despite their impact on the federal debt. He will start the year's debate by releasing his budget plan outside Washington at Northern Virginia Community College, part of a statewide coalition of community colleges and employers that was among the first winners in September of federal grants to ensure that students are learning skills that businesses need. In his budget, Mr. Obama proposes to make that initiative an $8 billion multiyear effort. The initiative is one of many - both temporary measures and programs intended to be permanent - that serve as a statement of Mr. Obama's priorities in promoting government investment in infrastructure, manufacturing, education and job training, and innovation, even as he calls for considerable deficit reduction to counter the nation's mounting debt. Presidents of both parties typically do much the same, going into great detail about the budget's winners and leaving the losers vague or unspoken. What makes Mr. Obama's effort stand out is the sheer size of the proposed deficit reduction as the nation emerges from the worst economic crisis since the Great Depression, a crisis that resulted in lower revenue for the Treasury and large doses of temporary spending and tax cuts to keep the economy from collapse. In Congress, Democrats and Republicans continue to negotiate over a package that would extend a temporary two-percentage-point cut in workers" payroll taxes through this year, along with unemployment compensation for those out of work for more than six months and a delay in a scheduled deep reduction in Medicare reimbursements to doctors. "I do believe this will be extended," Representative Paul D. Ryan, the Republican chairman of the House Budget Committee, said on the ABC program "This Week." The two sides are split over how to offset the cost of the package, but lawmakers who worked over the weekend reported making progress. The Obama budget request for fiscal year 2013, which begins Oct. 1, reflects the White House agreement with Congress last August to cut nearly $1 trillion over 10 years from annual discretionary spending, which covers most government programs but not the entitlement programs like Medicare, Medicaid and Social Security, whose costs, especially for the health programs, are driving the long-term projections of unsustainable debt. In a summary of the budget released on Friday, the administration said "difficult trade-offs had to be made" to comply with the reduced levels of discretionary spending and still provide increases for the president's priorities. But it did not disclose who got cut, only what was increased or newly created. Congress is not likely to accept much of Mr. Obama's budget, given Republicans" opposition. Its value is more as a political document as he fights for re-election, contrasting his approach to the other party's. Mr. Obama will propose spending $476 billion over six years for transportation projects. Because federal fuel taxes will not cover the cost, he proposes to offset about half the cost with savings projected over 10 years from ending the Iraq and Afghanistan wars. Republicans and some budget groups call that a gimmick, saying much of the money would not be spent anyway. On "Fox News Sunday," Mr. Lew countered, "I think that if we don't lower the caps that permit that spending, there will be a natural process of seeing military spending grow." He added, "I guarantee you that if we don't take the action that's been proposed, there will be leakage, and that money will end up being spent." Mr. Obama will propose $141 billion in spending for research and development over all, increasing nondefense research by 5 percent above the current level and maintaining his commitment to double the budgets of three federal research agencies. Among new initiatives, Mr. Obama seeks a $5 billion competitive program to encourage states, school districts and teachers" unions to coordinate in attracting and training more teachers, a new one-year tax credit for small businesses that increase their payroll, and tax incentives for manufacturers that bring jobs back from overseas or invest in depressed communities.