Obama budget: $901 billion deficit in 2013

[Auburn85 434]

http://money.cnn.com/2012/02/10/news/economy/obama_budget/

President Obama will propose a budget on Monday that forecasts a $901 billion deficit in 2013, and includes plans to make targeted investments in areas like infrastructure while hiking taxes on the rich.

The White House bills the document as a "blueprint for how we can rebuild an economy where hard work pays off and responsibility is rewarded."

But given the intense acrimony in Washington, especially on budget issues, few provisions in the document are likely to ever become law.

The budget will project that the deficit for fiscal year 2012 will top $1.3 trillion, before falling in 2013 to $901 billion, or 5.5% of gross domestic product.

By 2022, the deficit is forecast to fall to $704 billion, or 2.8% of GDP, according to the White House.

Senior administration officials discussed details of the budget with reporters on Friday night. The full budget will be released Monday morning.

The administration officials said the budget is very much a continuation of two previous Obama keystones.

This first is a speech delivered last year in Kansas where he presented Americans with a choice: a "fair shot" with him, or a return to "you're on your own economics."

The second is last month's State of the Union address, which focused on the broad themes of income inequality.

The 2013 budget is somewhat limited in scope because the White House had to fit spending on discretionary accounts below the limits set in the Budget Control Act approved by Congress last summer.

Over a decade, the cuts enshrined in the Budget Control Act total in the neighborhood of $1 trillion in discretionary spending.

That means it's no easy feat to find room for additional spending on infrastructure, research and development and education -- investments Obama says are critical.

The White House said that in order to fit under the caps, it had to lower spending in certain areas. To that end, discretionary spending is projected to fall from 8.7% of GDP in 2011 to 5.0% in 2022.

The details on specific program cuts were not immediately available.

A few areas of reduction are known: Military spending will be reduced. The Pentagon plans to spend $487 billion less over ten years, a course that Secretary of Defense Leon Panetta has already laid out in some detail.

For example, Panetta has said the Army will save money by pulling two of its four brigades out of permanent bases in Europe to bases in the United States.

And the Navy will be getting rid of older ships that don't have the latest ballistic missile defense.

Of course, the budget doesn't just cut spending -- it also raises taxes.

The White House included $1.5 trillion in tax hikes, including a provision that will allow the Bush tax cuts to expire for high-income earners, a long-held Obama position.

The budget also incorporates the Buffett Rule, a guideline to ensure that the wealthiest do not pay a lower overall tax rate than those who earn substantially less money.

Specifically, no household making more than $1 million will be a allowed to pay less than 30% of its income in taxes.

In addition, the White House wants to reform the individual tax code in a way that "eliminates inefficient and unfair tax breaks for millionaires while making all tax breaks at least as good for the middle class as for the wealthy."

Later this month, the president will unveil a plan to reform corporate taxes, including lowering rates, administration officials said.

The budget to be released Monday will include many of the job creation provisions laid out in the American Jobs Act, a piece of legislation Obama delivered last year with great fanfare but was almost totally ignored by Congress.

The administration is also proposing a series of investments focused on infrastructure, education and domestic manufacturing, including old favorites like $30 billion to modernize schools and an additional $30 billion to retain and hire teachers and first responders.

The budget will also offer details on what the White House calls a Financial Crisis Responsibility Fee. The tax will raise $61 billion over 10 years from large financial institutions to help offset the cost of the TARP bailout and Obama's mortgage refinance programs.

The release of Obama's budget comes just as both political parties are ramping up efforts to fundraise and compete in both the presidential contest and crucial down-ballot races that will shape the next Congress.

That spells dysfunction on Capitol Hill.

Congressional Republicans have displayed no willingness to consider most of the president's proposals and are not likely to start now.

[AUloggerhead 2,356]

Hey, it's under $1T this year -- that's some progress, right?

[Tigermike 3,425]

Obama Budget Again Skips Making Hard Choices

By SEN. JOHN BARRASSO Posted 02/10/2012 06:33 PM ET

On Monday, President Obama is scheduled to release his proposed budget for the coming year. If his past three budgets are any indication, it is unlikely anyone outside of the White House will take this budget seriously.

That's because past Obama budgets have been long on empty promises and short on real solutions. This president has consistently ignored Washington's crushing debt and passed the real costs on to future generations.

The administration has already signaled that this year's spending plan will offer more of the same: a budget that spends too much, borrows too much and taxes too much.

For starters, this budget will not be balanced. Despite his frequent rhetoric about spending restraint and the dangers of debt, Obama has never submitted a balanced budget in his life.

In last year's budget, he wrote: "The fiscal realities we face require hard choices." That was true. His budget, however, failed to make any hard choices.

At a time when Washington needed to cut spending, the president actually proposed broad spending increases and a deficit of more than $1.1 trillion. He tried to increase spending for the next 10 years by a massive 55%. How exactly does a 55% increase in spending equal "hard choices?"

Even the Democratic co-chair of his own fiscal commission, Erskine Bowles, said the president's budget last year went "nowhere near where they will have to go to resolve our fiscal nightmare."

The president's plan was so tone deaf that not a single Democrat (or Republican) in the Senate would support it. It was rejected 97 to 0.

When it became clear that people found his budget inadequate, the president gave a speech in which he called vaguely for tweaking spending and increasing taxes. His new plan had so few details that the nonpartisan Congressional Budget Office was unable even to guess at whether it would save money or cost more.

Now the administration intends to ask again for tax increases on American families and small businesses. It also plans to keep up its deficit spending and out-of-control borrowing.

On top of that, Obama's budget will continue his steadfast refusal to propose serious entitlement reforms. Spending on entitlements is unsustainable, accounting for 57% of Washington's budget. By failing to act, Obama is making it worse.

The president's failure will be compounded by the do-nothing Senate Democrats. Majority Leader Harry Reid has not passed a regular budget in three years. And he has already said he has no intention of doing anything with the budget this year either. That is no way to run a lemonade stand, let alone a government.

It's time Washington learned something about fiscal responsibility by looking outside the Beltway.

In my home state of Wyoming, Monday is the day our legislature opens its session to set a two-year budget for 2013 and 2014. That session will last only 20 days, and at the end of it we will have a balanced budget.

Like most states, Wyoming first calculates how much money it expects to take in, then sets its spending to match its income — not the other way around.

That's the way families across America do it. They look at how much money they've got coming in and decide whether they can afford a new car, a vacation or even a trip to the movies. They don't schedule a vacation and then tell their boss they need a raise to pay for it.

When a new forecast predicted Wyoming would get less revenue in the future because of lower natural gas prices, the governor did not look for ways to raise taxes. He did not ignore the forecast and hope for the best. He looked for ways to rein in the spending to fit the new revenue prediction. Then he worked out a backup plan in case things get worse.

Our prudent budgeting, along with low taxes and reasonable regulations, has earned Wyoming a reputation as one of the best states for business. It is rooted in the simple truth understood by responsible states and families everywhere — you don't spend money you don't have. This philosophy should be a model for Washington.

With this budget, President Obama has the opportunity to submit a plan that controls Washington's spending. He could take this moment to finally embrace common-sense fiscal policies that will help our economy grow and give our children and grandchildren a chance for prosperity.

The record shows that Obama has never been serious about responsible budgeting in the past. American voters will have an opportunity in November to replace him with someone committed to getting our fiscal house in order.

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