By Jeff Mason and Mark Felsenthal
WASHINGTON (Reuters) - President Barack Obama will propose an expansion of popular tax credits for middle class and working poor Americans on Tuesday in a fiscal 2015 budget designed to serve as a blueprint for Democrats in this year's congressional elections.
The budget, which would also create automatic retirement accounts known as IRAs for some 13 million workers, has little chance of getting enacted.
But it codifies the president's policy priorities ahead of the November race, in which Democrats hope to keep control of the U.S. Senate and Republicans hope to expand their majority in the House of Representatives.
The budget signals a shift away from last year's emphasis on deficit cutting to a more pronounced focus on poverty reduction, a legacy-oriented goal the president is highlighting as he faces less than three years left in office.
Obama will unveil the document during a visit to a local elementary school at 11:30 a.m. EST.
His proposal would expand the Earned Income Tax Credit, a government anti-poverty measure that is meant to encourage low-income Americans to work. The expansion would cover some 13.5 million people who do not have children.
It would also make the program available to younger workers who are not currently eligible, the White House said.
The expansion, which would cost $60 billion, would be funded by closing loopholes such as the tax break for "carried interest," profits earned by wealthy investors who run private equity and other funds.
The budget also puts an emphasis on saving for retirement. It proposes to create automatic Individual Retirement Accounts (IRA) for those who do not have access to savings plans sponsored by employers.
"About 13 million workers would begin contributing to retirement savings through auto-IRAs as a result of this proposal," the White House said.
The White House signaled last month that its new budget would not extend the olive branch to Republicans that was offered in its proposal a year ago.
Officials said the president would drop a suggestion to change how the government calculates inflation for Social Security and other federal benefits that could have led to income drops for older Americans.
The change, which was unpopular with Obama's base, was meant to show Republicans the president was serious about deficit reduction. But the White House did not feel Republicans responded with a similar concession and dropped the idea.
Instead, the 2015 document will include proposals to boost spending on infrastructure projects, job training, and preschool education programs - all Democratic priorities.
It expands a tax credit to help parents pay for childcare, benefiting 1.7 million families, and makes permanent a tax credit related to paying for college educations.
"The president's budget will show in real terms the choices we can make to expand economic opportunity and strengthen the middle class," the White House said.
The budget outlines how some $1.014 trillion will be spent on government agencies' discretionary programs ranging from the military to national parks. That level, roughly in line with this year's cap of $1.012 trillion, was set by a recent budget deal hammered out by lawmakers.
That figure is less than a third of the approximately $3.5 trillion the government is likely to spend next year. The rest will be paid out automatically through federal benefits programs that mostly care for the elderly and poor, including Social Security, Medicare and Medicaid.
(Reporting by Jeff Mason and Mark Felsenthal; Editing by Lisa Shumaker)