President Obama’s most recent budget request would reduce borrowing by $1.1 trillion over the next decade compared with current law — almost entirely through higher taxes on the rich, large estates and smokers, congressional budget analysts said Friday.
In addition to raising nearly $1 trillion in new taxes, the president’s blueprint would also cut spending modestly, according to the analysis by the nonpartisan Congressional Budget Office.
However, those savings include money the government never intended to spend anyway, such as a contingency fund for the wars in Iraq and Afghanistan and nearly $300 billion in unneeded disaster relief.
Obama also proposes to make changes to Medicare worth nearly $360 billion over the next decade and to apply a less-generous measure of inflation to Social Security benefits. But those savings would be swamped by proposed increases for Medicare doctors’ fees, transportation projects, tax credits for the poor, education and job training, the CBO said.
All told, if the savings from military operations and disaster relief were discounted, Obama’s budget blueprint would actually increase spending over the next decade by roughly $700 billion, according to CBO figures. And while Obama’s budget would still reduce projected borrowing by that measure, the 10-year total would shrink to around $255 billion.
On Friday, Democrats ignored the messy details and focused on the report’s bottom line: Obama’s budget request would cancel harsh automatic cuts to agency budgets known as the sequester while shrinking the national debt even more than White House projections, pushing it below 70 percent of the economy by 2023.
“CBO’s report shows the President’s policies bringing the deficit down to just 2.1 percent of GDP by 2023 and putting Federal debt on a downward trajectory,” Steven Posner, a spokesman for the White House budget office, said in a written statement. The report “makes clear that under the President’s plan we can put our fiscal house in order while making the critical investments in education, energy and manufacturing that are needed to create jobs, grow the economy and strengthen the middle class.”
Republicans, meanwhile, noted that the president’s budget proposes significant new tax hikes on top of the increases that took effect in January, while never approaching balance.
“This new report shows that the President’s budget doesn’t come close to solving the problem,” House Budget Committee Chairman Paul Ryan (R-Wis.) said in a written statement. “The federal government will take in a record haul over the next ten years. And the President wants yet another massive tax hike.... The government is taking more from hardworking taxpayers only to spend more in Washington.”
Every year, the CBO prepares an analysis of the president’s budget request using its own economic forecasts and cost estimates. The results often differ significantly from White House estimates, but this year’s analysis was made more complicated by the unusual format of the president budget.
For months, Obama has been trying to cut a big budget deal with Republicans that would cancel the sequester and replace its roughly $1 .2 trillion in 10-year savings with $1.8 trillion in alternative policies, including cuts to Medicare and Social Security and $600 billion in new taxes on the wealthy.
When Obama released his budget in April, White House officials focused attention almost exclusively on that offer, arguing that the president was proposing $1.8 trillion in new deficit reduction — or $600 billion more than the sequester savings.
The proposal, however, is much broader than that offer. It contains many additional policies, such as a new 94-cents-a-pack tax on cigarettes to fund an expansion of preschool education, a new “financial crisis responsibility fee” to be imposed on U.S. financial institutions and higher taxes on inherited estates. It also contains hundreds of billions of dollars in new spending.
In its report, the CBO analyzed the White House budget as a whole, painting a strikingly different picture of the president’s agenda. The CBO found that the White House budget contains significantly more deficit reduction, counting war savings and unneeded disaster relief — but also a much bigger tax bill.
“Even by Democrat standards, this is not a ‘balanced’ budget,” said Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell (R-Ky.).