By Erik Wasson – The Hill
President Obamaâ€™s 2013 budget would add $3.5 trillion to annual deficits through 2022, according to a new estimate from the Congressional Budget Office (CBO).
It also wouldÂ raise the deficit next year by $365 billion,Â according to the nonpartisan office.
The CBO estimate is in sharp contrast to White House claims last month that the Obama budget would reduce deficits by $3.2 trillion over the next decade.
The differences between the estimates from CBO and the White House budget office are attributable to different baselines and economic assumptions, and a big reason CBO expects the deficit to spike sharply under Obama’s budget is that CBO’s baseline assumes all the Bush-era tax rates will expire at the end of 2012.
Obama wants to continue the middle-class tax cuts, something reflected in his budget.
CBO also compares Obama’s budget to a different baseline in which the budget office assumes Congress and the administration decides to avoid big tax increases and deep spending cuts, something both branches have repeatedly done in the past.
In this scenario, for example, all of the Bush-era tax rates are extended and the Alternative Minimum Tax is “patched” to prevent it from falling on millions of middle-class taxpayers. In this comparison, Obama’s budget wouldÂ actually reduce the deficit by $4.3 trillion through 2022.
White House acting budget director Jeff Zients wrote in a blog post that CBO’s report “confirms that the president has a balanced plan to reduce our budget deficits and put the country on a fiscally sustainable path.”
He notes that CBO said that by 2016 deficits would be below 3 percent as a share of the economy and that debt held by the public will decrease and then stabilize as a share of gross domestic product.
The $365 billion increase to the deficit in 2013 that CBO estimates would be caused by Obama’s budget is due to proposals that increase spending by $137 billion and that decrease revenue by $228 billion.
In total, the Obama budget spends $3.7 trillion next year and proposes generating $1.5 trillion from new taxes over ten years.
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