WASHINGTON – President Barack Obama’s most recent budget request will 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 will cut spending modestly, according to the analysis by the nonpartisan Congressional Budget Office (CBO).
However, those savings include money the government never intended to spend, 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 will be swamped by proposed increases for Medicare doctors’ fees, transportation projects, tax credits for the poor, education and job training, the CBO said.
If savings from military operations and disaster relief are discounted, Obama’s budget blueprint will actually increase spending over the next decade by roughly $700 billion, according to CBO figures. And while Obama’s budget will still reduce projected borrowing by that measure, the 10-year total will shrink to around $255 billion.
On Friday, Democrats ignored the messy details and focused on the report’s bottom line: Obama’s budget request will 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 White House budget office spokesman, 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 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 said in a written statement. “The federal government will take in a record haul over the next 10 years. And the president wants yet another massive tax hike.”
Every year, the CBO prepares an analysis of the president’s budget request using its own forecasts and cost estimates. The results often differ significantly from White House estimates.