President Obama’s 2013 budget due out Monday will estimate the deficit for 2012 to be $1.33 trillion, higher than the $1.29 trillion deficit in 2011, according to senior administration officials.
The increase happens largely because the budget assumes enactment of a $350 billion stimulus package, including extension of the payroll tax cut. That package is a scaled-down version of the $447 billion American Jobs Act that Obama proposed in the fall.
Last year’s budget had a rosy prediction that the deficit would decline to $768 billion in 2013, about half the $1.4 trillion deficit of his first year.
To get to the $901 billion target, Obama’s budget assumes that the Bush era tax rates for the wealthy will expire next year, something that is by no means certain.
Officials highlighted that by the end of 2022, the deficit would be $704 billion, 2.8 percent of the economy. They said that this would "stabilize" the growth of the national debt.
Overall the budget, as expected, will call for a mixture of tax increases and spending cuts to achieve $3 trillion in deficit reduction over ten years.
Senior officials said that elements of the budget on tax reform will contain some details but a more complete corporate tax overhaul will be presented by the end of February. The budget includes a "Buffet rule" mandating that millionaires pay no less than 30 percent of their incomes in taxes and caps deductions for those making more than $250,000.
Senior administration officials said $1.5 trillion will be in new revenues, $278 billion in mandatory spending cuts such as to farm subsidies and $360 billion in healthcare reforms including to Medicare.