According to White House estimates, the new framework would require $6.6 trillion in fresh government borrowing over the next decade. That’s only slightly less borrowing than projected in the budget outline Obama proposed in April.
Both parties, in their budget talks this summer, set an even earlier White House budget proposal submitted in February as the benchmark for measuring deficit savings. Against that standard, the new debt-reduction plan would save $3 trillion over the next decade — well short of the $4 trillion target.
The latest Obama plan “doesn’t produce any more in realistic savings than the plan they offered in April,” said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget. “They’ve filled in details, repackaged it and replaced one gimmick with another. They don't even stabilize the debt. This is just not enough.”
The most disheartening development, MacGuineas and others said, is Obama’s decision to count $1.1 trillion in savings from the drawdown of troops in Iraq and Afghanistan toward his debt-reduction total. Because Obama has no intention of continuing war spending at last year’s elevated levels, that $1.1 trillion would never have been spent.
Congressional Republicans are resisting the move to count war savings toward deficit reduction. But congressional Democrats are preparing a major push to count such savings in the budget blueprint under development by a bipartisan joint committee on Capitol Hill.
The “supercommittee” is under orders to produce a 10-year plan to save at least $1.2 trillion by Thanksgiving. If the panel counts war savings, “then it’s over,” MacGuineas said. “The committee will have done nothing real.”
Obama’s proposals to overhaul the tax code, which were included in the deficit-reduction plan, drew criticism. In his previous budgets, he has measured his policies against a baseline that assumes a continuation of tax cuts for the middle class enacted under President George W. Bush; those cuts are scheduled to expire next year. Because Obama wants to extend the middle-class tax cuts, the assumption permits him to do so without appearing to make annual budget deficits worse.
This month, however, the White House began using a new baseline that assumes continuation of all the Bush-era tax cuts, including those for high earners as well as for the middle class. This approach, as one senior GOP aide put it, allows Obama to claim “fictitious savings” of $866 billion over the next decade by letting the tax cuts expire for high earners.