President Obama’s proposed 2011 budget would reduce the federal deficit by about $1.3 trillion over the next decade, according to an analysis from the Center on Budget and Policy Priorities. Under current law, projected federal deficits would total more than $11 trillion from 2011 to 2020, but the President’s budget cuts that down to $9.8 trillion. The savings are generated by implementing the new health care reform legislation and by adopting several tax measures, including letting tax breaks for families earning more than $250,000 a year expire.
The Center’s analysis notes that projected deficits “overwhelmingly reflect the policies that Obama inherited, not new policies that he is proposing.” Some of the big-ticket items contributing to these deficits include the 2001 and 2003 Bush tax cuts, annual legislation by Congress to adjust the Alternative Minimum Tax (AMT) so that it doesn’t encompass the middle class, and preventing deep cuts in Medicare physicians’ fees.
The Center, citing the nonpartisan Congressional Budget Office (CBO), notes that the President’s proposals would shrink the deficit to 4.1 percent of gross domestic product (GDP) by 2014. But unless further action is taken after 2014, the gap between spending and revenues would grow to 5.6 percent of GDP in 2020.
The Center on Budget and Policy Priorities argues that reducing federal deficits to a reasonable percentage of the gross domestic product (GDP) must be an important priority, and suggests that getting the deficit to 3 percent of GDP in the years ahead is an ambitious but also achievable goal. A balanced approach is needed; one that includes appropriate reductions in unnecessary spending as well as increased revenues. While reasonable people may differ about how to achieve this goal, one point is clear: simply rejecting the President’s proposed budget and maintaining current policies will not reduce budget deficits over the next decade but will, in fact, increase them.
- Steve Francisco
