In their preliminary report, the Congressional Budget Office (CBO) stated, "In all, deficits would total $9.5 trillion between 2012 and 2021 under the president's budget." The Obama budget projected $7.2 trillion deficits over the same period, understating deficits by $2.3 trillion dollars.
Even more alarming, the CBO estimates that the "federal debt held by the public would double under the president's budget, growing from $10.4 trillion (69 percent of GDP) at the end of 2011 to $20.8 trillion (87 percent of GDP) at the end of 2021."
The biggest hole in Obama's budget, according to the nonpartisan congressional number crunchers, was created by the two-year extension of tax cuts for all income brackets first passed under President Bush, as well as a costly permanent fix for the Alternative Minimum Tax (AMT) to keep it from hitting more middle-income Americans. Congress has never been able to do this, however.
And Obama also assumes higher tax rates for estates and gifts, though many in Congress, including all of the newly elected Tea Party members, oppose that plan. In all, revenue projections in Obama's budget, when compared with the new CBO projections, are far rosier.
"Compared with the Obama administration's estimates, CBO's estimates of the deficit under the Obama budget are lower for 2011 by $220 billion, but higher for each year thereafter, by a total of $2.3 trillion over the 2012-2021 period."
Congress has been grappling for months with the budget, living on the precipice of a government shutdown, as a result. Republicans and some Democrats have pushed for major reductions in spending, but Democratic leaders have made it clear that they have hit a wall when it comes to pulling out more money from the discretionary side of the budget. After all, we can't allow draconian cuts proposed by the Republicans to cut essential programs like the Cowboy Poetry Festival in Harry Reid's home state. Can we? Congress has, so far, approved $10 billion in reductions. Really $10 billion dollars? Out of $3,600,000,000,000 is spending. That's 2/10 of 1% of the total budget. Way to save our money Democrats.
Senate Majority Leader Harry Reid (Democrat, Nevada), said that bipartisan negotiations with the White House over a longer-term government funding bill to last through the current fiscal year, which ends September 30, include cuts to "mandatory programs," but it is not clear if that would include entitlement programs. Reid mentioned some cuts in the area of mandatory agriculture payments to farmers, as an example.
Bitter, partisan rhetoric has permeated the debate, at times, with GOP and Democratic leaders engaging in a blame game of which the country is growing weary. To that end, 64 rank and file members, both Republican and Democrat, fed up with two and three week stopgap spending measures to fund the government, sent a letter to the president last week urging him to engage in budget negotiations.
A bipartisan group of six of those senators has been working overtime to craft a compromise deficit reduction package that the rest of their 58 colleagues can support, using recommendations from Obama's own fiscal commission which proposed $4 trillion in cuts to every corner of the budget, both mandatory and discretionary. You may recall, Obama appointed a special Presidential Debt Commission to analyze spending and revenue, and make recommendations to cut the deficit and reduce national debt. Obama ignored all of the commission's recommendations to cut deficits and cut the debt. In fact, Obama's budget actually increases spending.
The CBO goes on to say, "Beyond FY2011 funding decisions, we urge you to engage in a broader discussion about a comprehensive deficit reduction package. Specifically, we hope that the discussion will include discretionary spending cuts, entitlement changes and tax reform. By approaching these negotiations comprehensively, with a strong signal of support from you, we believe that we can achieve consensus on these important fiscal issues. This would send a powerful message to Americans that Washington can work together to tackle this critical issue." This, of course, won't happen, because it is contrary to Obama's progressive agenda.
Thankfully, some politicians are living up to their campaign promises. Republican Senator Rand Paul has proposed a balanced budget alternative. Read more about it here.