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Obama budget to include cuts in entitlement programs

President Barack Obama's budget proposal next week will include more taxes on the wealthy and also new entitlement cuts in hopes of winning Republican support and breaking through the fiscal logjam of the past few years.

NBC News has confirmed a New York Times report published on Friday outlining the administration's forthcoming budget, which includes many elements of the so-called "grand bargain" proposed by Obama in negotiations over the debt limit in the summer of 2011.

"This is a compromise proposal built on common ground and the President felt it was important to make it clear that the offer still stands," said a senior administration official.

The official also said that the budget would seek another $1.8 trillion in deficit reduction over the next decade, adding to savings that have already been enacted. 

Combined with those pre-existing savings, the administration said Obama's budget would bring savings to a total of $4.3 trillion over the next 10 years, bringing the deficit down to 2.8 percent of gross domestic product by 2016.

It includes a cut to Social Security benefits — "chained C.P.I.," which would change how benefit increases are indexed such that they would grow more slowly in most circumstances — that is regarded as anathema to Obama's progressive base.

At the same time, Obama's budget calls for many of the same proposals he's advocated in the past, including higher taxes on wealthy Americans, and some new spending on social programs. His budget seeks $600 billion in new revenue, mostly through eliminating deductions and loopholes.

The administration also highlighted a new proposal to expand access to pre-kindergarten education by expanding aid to states. (This program is funded in part by an increase to the tobacco tax.)

Whether Obama is able to win any support for this "compromise" proposal is still an open question, though. GOP leaders have said that the issue of taxes is settled following the New Year's Day deal allowing income taxes to go up on those earning over $450,000. But Obama has made increased overtures to rank-and-file Republicans in hopes of building support for his budget. On the same day he will formally introduce his budget next week, Wednesday, he'll dine with a group of Senate Republicans.