(CNSNews.com) – According to the Congressional Budget Office (CBO), a sequester replacement plan offered by Senate Democrats would add $41.5 billion to the deficit in 2013, even though it would utilize the so-called “balanced approach” favored by President Barack Obama.
Over 10 years, the bill would add another $7.2 billion to the deficit.
Known as the American Family Economic Protection Act, the bill was introduced by Senate Majority Leader Harry Reid (D-Nev.) on Wednesday.
“CBO estimates that S. 388 would increase direct spending by $62.4 billion and revenues by $55.1 billion over the 2013-2023 period. Thus, the cumulative deficit would increase by $7.2 billion from those changes,” the CBO said in its report on Wednesday.
The bill would add $41.5 billion to the deficit in 2013, $15.9 billion in 2014, and $5.2 billion in 2015 before its tax increases are scheduled to begin lowering yearly deficits. However, because it raises spending more than it raises taxes, it would still add a total of $7.2 billion to the deficit, according to the CBO’s calculations.
The spending increases come, unsurprisingly, from replacing the sequestration cuts scheduled to go into effect on Friday. The bill raises taxes by implementing the so-called Buffett Rule – imposing a 30 percent minimum tax on anyone making more than $5 million per year, as well as extending a $0.08-per-barrel tax on oil to cover oil produced from tar sands.
Combined, the CBO estimates that the Buffett Rule tax would raise $53 billion over 10 years and the oil tax would raise just $2 billion. A third provision blocking companies from taking tax deductions if they move production facilities overseas would raise just $200 million.
The bill was formally filed on Tuesday, but has yet to come up for a vote.
President Obama praised the measure as an example of what he termed a “balanced” approach.
“Congress should pass a smaller package of spending cuts and tax reforms that would prevent these harmful cuts [sequestration] -- not to kick the can down the road, but to give them time to work together on a plan that finishes the job of deficit reduction in a sensible way,” Obama said in a speech on February 19.
“I know Democrats in the House and in the Senate have proposed such a plan -- a balanced plan, one that pairs more spending cuts with tax reform that closes special interest loopholes and makes sure that billionaires can’t pay a lower tax rate than their salary -- their secretaries,” said Obama.
The automatic sequester cuts scheduled to start on Friday will trim $44 billion from increased federal spending in 2013, about 1.2 percent of the federal budget, which is $3.6 trillion.