WASHINGTON — A new analysis of President Barack Obama‘s budget for next year says the deficit scenario for next year isn’t as rosy as the White House figured last month.
Friday’s Congressional Budget Office report said Obama’s budget would produce a $977 billion deficit next year – $75 billion more than predicted by the White House.
Over the coming decade, CBO says Obama’s policies would result in deficits totaling $6.4 trillion. Deficits would be even higher were it not for Obama’s proposals to raise taxes on higher-income people.
The White House seized on the figures as validation of its claims that Obama’s budget brings the deficit under control – at least when measured against the economy, the measure used by most economists in evaluating the deficit.
“CBO found that by 2016 deficits as a share of the economy would be below 3 percent – a key milestone of fiscal sustainability,” said White House budget office acting director Jeffrey Zients. “Debt held by the public will decrease and then stabilize as a share of the economy, also a key indicator of improving fiscal health.”
The nonpartisan CBO said Obama’s budget office consistently overestimates tax revenues over the coming decade. CBO predicts revenues on average that are about $120 billion less each year than predicted by the White House.
Still, CBO said Obama’s budget would generate somewhat lower deficits over the coming decade than the White House predicts. Much of that is due to lower interest costs and less generous cost-of-living adjustments in Social Security benefits.
The forecasting differences for 2013 aren’t unusual and generally are caused by CBO’s less optimistic view of the economy over the next couple of years. The White House forecasts higher income and corporate profits.
For the current budget year, CBO says Obama’s policies, if enacted, would generate a $1.25 trillion deficit. That’s $74 billion better than the White House forecast but still represents the fourth consecutive year of trillion dollar-plus deficits.
The report is a precursor to the annual budget debate in Congress. House Budget Committee Chairman Paul Ryan, R-Wis., plans to unveil his budget plan next week, which will call for sharply lower spending on federal health care programs, lower taxes than called for by Obama and less money for the day-to-day budgets of federal agencies than called for in last year’s budget and debt pact.
“The president will not fulfill his promise to cut the deficit in half by the end of his first term – after four straight deficits in excess of $1 trillion, CBO estimates next year’s deficit will be even higher than the president claims,” Ryan said in a statement.
The House GOP measure won’t get anywhere with Obama or Democrats controlling the Senate, however. Expectations are low for any election-year progress on the deficit as Obama and his GOP rivals continue to differ on raising taxes and curbing the explosive growth of popular benefit programs like Medicare.
Senate Democrats plan on using spending “caps” set by last year’s budget pact for an upcoming round of spending bills and don’t anticipate scheduling a debate on a broader budget blueprint.