WHERE THE MONEY GOES WHERE THE MONEY GOES Budget expands tax cuts, military spending Some key areas of President Obama's budget released Thursday: Taxes Obama proposal: The budget would extend the new tax cuts of $400 for individuals and $800 for families for at least the next decade. In 2011, couples earning $250,000 a year or more ($200,000 for individuals) would pay higher income taxes, up to 39.6%; have limited itemized deductions; and pay a 20% tax rate on capital gains and dividends. Context: Obama has made it clear he wants to roll back President Bush's tax cuts, which will expire at the end of next year. The question: when? Republicans, including Rep. Eric Cantor of Virginia, say letting the tax cuts expire amounts to a tax hike at the worst time. House Speaker Nancy Pelosi says she prefers to repeal them sooner. Defense Obama proposal: The budget calls for $205.5 billion in war costs for Iraq and Afghanistan over the next year and a half, including $75.5 billion more this year and $130 billion for fiscal 2010. Those costs are included in the overall budget for the first time. The budget includes a 4% increase to $533.7 billion for the Defense Department. Context: War spending would continue at a rate of roughly $11 billion a month for the next 18 months, even as the administration plans to dramatically reduce troop levels in Iraq. Specifics about spending on weapons and other programs won't be available until the full budget is released in April. Education Obama proposal: Obama says he'll end subsidies to banks that lend to students and make the federal government a major student lender, ending the public-private partnership. He wants to raise the maximum Pell grant to $5,550 and link future grant increases to inflation. He'd create a $2.5 billion fund to help low-income students complete college. Context: Among the 75% of students who finish high school on time, two-thirds graduate from college. Obama says he wants to help put college within reach of more students and make it more affordable. Ending government-guaranteed loans through banks represents perhaps the biggest break from the Bush administration. Health Obama proposal: The most dramatic proposal is the creation of a $634 billion reserve fund to a yet-to-be-defined plan to provide health care to about 48 million people without insurance. It would be financed equally by savings in Medicare and tax increases on those earning more than $250,000 a year. Context: Obama promised during the campaign to expand health care coverage and make it more affordable. The details will be worked out through negotiations with Congress. An immediate conflict: raising taxes. Sen. Judd Gregg, R-N.H., said Obama should look to cut costs before relying on "massive tax increases." Homeland Security Obama proposal: The department plans to add bomb-detection experts and security teams that patrol transit hubs unannounced. It wants to add more border agents and create a pilot program of fingerprinting temporary workers as they leave the USA. A $2.50-per-airline-passenger security fee would increase by $1 each year from 2012 to 2014. Context: Homeland Security is the only department whose budget is slated to shrink every year from 2011 to 2014. That reflects Secretary Janet Napolitano's recent call for a "leaner, smarter and more efficient DHS." Transportation Obama proposal: The government would spend $5 billion over five years on high-speed rail. That's on top of the $8 billion approved in the $787 billion economic stimulus package. The budget provides $800 million to modernize the nation's air-traffic system and increases by $55 million subsidies paid to airlines that fly into smaller airports. Context: The rail proposals fit with Obama's twin goals of stimulating the economy and reducing reliance on foreign oil. The administration expects the rail lines to link regional population centers and create job opportunities. Lawmakers and the aviation industry generally support funding for air-traffic modernization. Veterans Obama proposal: Obama wants to increase the Department of Veterans Affairs budget by 10% to $52.5 billion next year. The budget proposal would increase funding for mental health screening and treatment and services in rural areas. The plan would expand VA health care to an additional 500,000 veterans by lowering income eligibility limits. Context: The president has referred to the government's responsibility for veterans as a "sacred trust." He promised during the campaign to enhance veterans' benefits and improve VA medical care. The budget does not mention increased funding for treating traumatic brain injuries — the signature wound of the Iraq war. Foreign affairs Obama proposal: The president seeks a nearly 10% increase for the State Department. It's a $4.5 billion bump from current projected levels. That's on top of an increase in the 2009 spending bill passed Wednesday by the House that would add 800 foreign service officers. Among new spending: more non-military aid to Afghanistan and Pakistan. Context: Obama promised during the campaign to boost diplomacy and double foreign aid. Secretary of State Hillary Rodham Clinton said during her confirmation hearing that boosting such spending is a tough sell in Congress because there is little constituency for it — unlike defense spending, which creates jobs in lawmakers' districts. Science Obama proposal: The president wants about $10 billion — a 16% increase — for basic research at the National Science Foundation, Energy Department and National Institute of Standards and Technology. That's in addition to $5 billion in the stimulus package. He seeks $6 billion, an 8% bump, for cancer research at the National Institutes of Health. Context: Obama has pledged to "put science at the top of our agenda," but the question remains whether the economic times will allow for it. Congress usually supports science with funding that closely tracks the overall budget. One crucial Republican, Sen. Arlen Specter of Pennsylvania, pushed for increased science funding in the stimulus bill. Environment/energy Obama proposal: The Environmental Protection Agency would get a $10.5 billion increase, 34% over the projected current levels. The budget includes higher fees for companies drilling for oil and gas on federal land and $646 billion from 2012 to 2019 from companies that emit gases linked to global warming. Context: The budget reflects Obama's emphasis on tackling global warming and moving the nation away from fossil fuels. That will require congressional action. Before such large sums can be raised from businesses that emit global-warming gases, lawmakers will have to pass what promises to be a complex and controversial bill. By Traci Watson, Dan Vergano, Ken Dilanian, Chris Buckle, Thomas Frank, Alan Levin, Gregg Toppo, Matt Kelley and Mimi Hall Guidelines: You share in the USA TODAY community, so please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. Use the "Report Abuse" button to make a difference. You share in the USA TODAY community, so please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. 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