May 17 (Bloomberg) -- President Barack Obama’s 2014 budget proposes cutting projected deficits by $1.15 trillion over the next decade with the savings overwhelmingly coming from tax increases, according to a new report.
The nonpartisan Congressional Budget Office said today the administration’s plan would increase revenues by a net $974 billion through 2023, with about half of that coming from a proposal to limit the ability of the wealthy to take advantage of tax breaks.
His plan would cut spending by a net $172 billion, according the report, though, that figure includes reduced interest payments on the debt that would result from cutting the deficit through tax increases. It also includes savings in war-and disaster-related spending critics contend the government was never going to spend anyway.
The result would be a $675 billion deficit next year that would continue to shrink to as little as $399 billion in 2017, according to the report. The gap between taxes and spending would begin growing again in subsequent years, CBO said.
The analysis may help fuel the political battles over the deficit because it shows the degree to which the administration’s plan relies on tax increases to reduce government red ink. It also contradicts the White House’s assessment of its fiscal plans. In April, its budget office said the plan would cut deficits by $1.8 trillion and “represents more than $2 in spending cuts for every $1 of new revenue.”
The administration’s budget includes spending cuts such as less generous cost-of-living increases for Social Security beneficiaries and $364 billion in cuts to Medicare. The CBO report shows those are offset by various spending increases such as plans to provide an additional $106 billion for education and job training and an additional $141 billion for transportation programs.
Among the tax increases in the administration’s budget are a proposed “fair share tax” on millionaires, higher levies on those with large estates, a “financial crisis responsibility fee” on some financial institutions and a 94-cent increase in the price of a pack of cigarettes.
The CBO estimates came in the agency’s annual review of the president’s budget, an analysis designed to give Congress an independent assessment of what the administration’s proposals would mean for federal coffers. Lawmakers usually refer to the CBO report as they consider their own fiscal blueprints.
Today’s survey though comes after the House and Senate have already approved their respective budgets for the fiscal year that begins Oct. 1 because the administration’s budget request was delayed by two months.
House Budget Committee Chairman Paul Ryan said the report “shows that the president’s budget doesn’t come close to solving the problem” and that “the government is taking more from hardworking taxpayers only to spend more in Washington.”
In an e-mail, White House Budget Office Spokesman Steven Poser said the analysis shows “we are making significant progress in bringing down the deficit.” He said, “the administration is committed to continuing to work with Congress to create jobs, cut the deficit further, and replace the sequester in a balanced manner.”
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