President Barack Obama's budget would trim projected federal deficits by $1.1 trillion over the coming decade, using nearly $6 in higher revenues for every $1 in reduced spending to achieve it, Congress' nonpartisan budget analyst said Friday.
After four straight years of annual shortfalls exceeding $1 trillion, the Congressional Budget Office report said Obama's budget would push this year's deficit down to $669 billion. Annual shortfalls would shrink slowly to $399 billion in 2017 before rising again, the report said.
The report did little to resolve the budget impasse between Obama and congressional Republicans. The White House wants to reduce deficits further with a mix of tax increases and spending cuts, while Republicans have said they won't consider higher taxes.
Chiefly because of spending increases his budget proposes, Obama's fiscal plan would make next year's deficit $115 billion higher than the $560 billion shortfall that the budget office estimates for 2014 without the president's policies. Republicans criticized that and contrasted the $542 billion deficit Obama's budget would leave in 2023 with the spending plan approved by the GOP-run House, which relies on deep spending cuts to achieve balance by that year.
"This new report shows that the president's budget doesn't come close to solving the problem" despite proposing tax increases, House Budget Committee Chairman Paul Ryan, R-Wis., said in a statement.
Rep. Chris Van Hollen of Maryland, top Democrat on the House budget panel, said the report shows Obama's budget achieves "exactly what is called for right now, meaning we focus on jobs now and making sure we try to accelerate economic growth now, combined with long-term deficit-reduction."
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said it was "encouraging" to see Obama's proposals would reduce deficits. But she said changes in huge, fast-growing programs like Medicare and Social Security are still needed to keep the budget picture from worsening.
"CBO's analysis serves as a fresh reminder of the work ahead, which will require a commitment from both sides to bridge their differences and come together on a debt reduction plan over the next few months," MacGuineas said.
The congressional report said to achieve his $1.1 trillion in savings over the next decade, Obama relies on $974 billion in higher revenue and $172 billion in spending cuts. That is nearly a 6-1 ratio.
Obama's major revenue-raising proposals include limiting some deductions and exclusions for some higher-earning taxpayers, raising $493 billion over the decade; boosting tobacco taxes by $83 billion; and raising estate and gift taxes by $77 billion, the budget office said.
On the spending side, the budget office credits Obama with 10-year savings of $601 billion from winding down the war in Afghanistan and $364 billion from cutting some Medicare payments to providers and raising costs for some beneficiaries. Much of those savings would be offset by spending boosts Obama wants for transportation, education and other areas.
He would save another $233 billion by having the government use a less generous method of calculating inflation, which would result in people getting smaller increases in Social Security benefits and moving more quickly into higher tax brackets.
The $1.1 trillion in deficit cuts over the coming decade was lower than the $1.8 trillion the White House said its budget would save. That discrepancy was chiefly due to differences in how the Congressional Budget Office and the White House calculated what deficits would be if no action was taken, congressional budget analysts said.
Overall, the budget office says Obama's budget would produce $5.2 trillion in red ink through 2023. That is $1.1 trillion less than the deficits that would be generated over that time if no tax or spending laws are changed.