(Photo: REUTERS/Larry Downing)
President Barack Obama submitted his annual budget blueprint to Congress Monday. The 10-year plan anticipates a budget deficit of over $1.3 trillion dollars for the current fiscal year and $901 billion for FY 2013. The Concord Coalition argues the budget falls short of what is required for fiscal stability.
Overall government spending increases almost $200 billion dollars in 2012, then ticks up only slightly, $7 billion, in 2013. By 2022, Obama's budget would anticipate government spending to be 22.8 percent of GDP and the deficit, at $704 billion, to be 2.8 percent of GDP. In 2011, the deficit was $1.3 trillion and 8.7 percent of GDP.
"This plan appears to be something of a Rorschach test, with even non-partisan analysts emphasizing different elements and drawing different conclusions. Interpreting Obama's budget depends a lot on which proposals and projections you emphasize," Robert Bixby, executive director of The Concord Coalition, said in a Monday statement.
The Concord Coalition is a non-partisan advocacy organization dedicated to fiscal responsibility in the federal budget.
Among the positive elements in Obama's budget, The Concord Coalition praises Obama for calling for substantial changes in the tax code by doing away with certain tax privileges.
"These 'tax expenditures' function much like spending programs and require additional government borrowing. And there is a bonus to doing away with many of them: This would simplify the tax code and reduce the frustration and costs of preparing tax returns."
Diane Lim Rogers, chief economist for The Concord Coalition, also likes Obama's proposal, also known as the "Buffett Rule" after billionaire investor Warren Buffett, to limit the tax benefit of itemized deductions to 28 percent.
"It's a great idea," she said, "because it would reduce a large tax subsidy for those who need it least, improve the economic efficiency of the tax code, and raise revenue that could be used to reduce deficits."
There are also some gimmicks in the budget, according to The Concord Coalition. The budget counts $267 billion in cuts to Medicare providers as new savings, even though those cuts had already been passed in the 2010 health care reform bill. Also, it counts $850 billion in "war savings" from the withdrawal of troops from Iraq and Afghanistan, even though the administration had never planned to spend that money.
"The administration, for example, is assuming nearly $850 billion in 'war savings' that were never going to be spent anyway. Worse yet, a portion of this phantom savings is designated for new spending. And while the President plans to save some money by letting certain tax cuts expire for the wealthy this December, those 'savings' would be more than wiped out by his proposal to extend the tax cuts for everyone else," Bixby said.
Overall, The Concord Coalition believes the president's budget does not do enough to address the nation's long term fiscal health.
"Obama's budget calls for some positive changes in entitlement spending but they fall short of the sweeping reforms that will be needed to deal with the growing pressures on the federal government as the population ages and health costs continue to rise. His fiscal commission's long list of thoughtful proposals in this area deserves another look in the White House and on Capitol Hill."
Bixby also stressed that, to deal with the nation's current fiscal challenges, it is important for both political parties to work together on solutions.
"Conventional wisdom suggests that we're not really going to make much progress on fiscal reform in an election year. But given Washington's disappointing performance on the budget last year, we really can't afford to put everything on hold for another year. Progress will require bipartisan cooperation and compromise, and we urge elected officials in both parties to keep that in mind even as the campaign rhetoric heats up."