Obama's Proposal: Increase Debt Extra $26B This Year, $83B Next Year, $2.7T Over Decade
Additionally, although annual budget deficits would decline somewhat between 2013 and 2015 under Obama's proposal, according to the CBO, after that they would start increasing again, going up every year from 2016 to 2021, the last year estimated by the CBO.
In short, the only budget proposal Obama has put forward this year for the public to review and analyze puts the federal government on a path to eventual bankruptcy.
In the latest Congressional Budget Office's analysis of the president's budget--published in April--the CBO compared its "baseline" estimates for the coming decade to what it estimates would be the fiscal results of Obama's budget plan. (The CBO's baseline largely assumes current law will be maintained.)
"According to CBO's projections, if all of President Obama's budgetary proposals were enacted, they would add $26 billion to the baseline deficit for 2011," said the CBO analysis. "As a result, the 2011 deficit would total $1.43 trillion or 9.5 percent of Gross Domestic Product." Under the baseline projection, as of April, CBO estimated the deficit this year would reach $1.399 trillion.
"In 2012, the deficit under the President's budget would decline to $1.2 trillion, or 7.4 percent of GDP, CBO estimates. That shortfall is $83 billion greater than the deficit that CBO projects under the current baseline," said the CBO report. "Deficits in succeeding years under the President's proposal would be smaller than the deficit in 2012, although they would still add significantly to the federal debt."
"In all, deficits would total $9.5 trillion between 2012 and 2021 under the President's budget (or 4.8 percent of total GDP projected for that period)--$2.7 trillion more than the cumulative deficit in the CBO baseline," said CBO.
Under Obama's budget proposal, according to the CBO, after 2012 the year-to-year annual deficits would only decline until 2015, when the deficit would be $748 billion. After that, the deficits would begin increasing again--year after year. By 2021, the last year in the CBO projections, the deficit under Obama's plan would be $1.158 trillion. That would be marginally less than the $1.2 trillion deficit CBO estimates will occur in 2012 under Obama's plan, but it also would be $429 billion higher the $729 billion deficit the CBO estimates would occur in 2021 if current law were simply maintained as assumed by CBO's baseline estimate.
Although CBO does not estimate the effect of the Obama budget past 2021, it does show that from 2016 to 2021 the Obama budget proposal would see increasing deficits every year. In other words, if Obama's budget were enacted, according to the CBO, Obama not only would increase the deficit by $2.7 trillion over current law over the next decade, but also, when he left office in 2016, he would be leaving the government with the prospect of ever increasing annual budget deficits.
By contrast, the House of Representatives voted on April 15 to approve the budget proposed by House Budget Chairman Paul Ryan (R.-Wis.). While the Ryan proposal would not balance the budget within the next ten years, it would gradually reduce anticipated government spending resulting in a federal surplus by 2040.
"The resulting budget deficits under the proposal would be around 2 percent of GDP in the 2020s and would decline during the 2030s," says the CBO's analysis of Ryan's proposal. "The budget would be in surplus by 2040 and show growing surpluses in the following decade. Federal debt would equal about 48 percent of GDP by 2040 and 10 percent by 2050."
On Friday, the House Republican leadership announced that next week the House will hold a vote on a "Cut, Cap and Balance" proposal to cut federal spending while passing a Balanced Budget Amendment to send to the states for ratification that would make capping federal spending at 18 percent of GDP constitutional obligation. Under the Balanced Budget Amendment backed by the Republican leadership, Congress would need supermajority votes in both houses to run a deficit, raise the debt limit, increase taxes or spend more than 18 percent of GDP.
Meanwhile, House Speaker John Boehner (R.-Ohio) this week implored President Obama to put his own proposal for dealing with the debt on the table.
“But the fact is that House Republicans have a plan," said Boehner. "We passed our budget back in the spring, outlined our priorities. Where is the president’s plan? When’s he going to lay his cards on the table? This debt limit increase is his problem and I think it’s time for him to lead by putting his plan on the table--something that the Congress can pass.”