President Obama’s 2012 budget request to be released on Monday will reduce budget deficits over the next decade by only a quarter of the amount proposed by the presidential debt commission in December, a senior administration official confirmed Sunday.
Whereas the debt commission’s mix of spending cuts and tax increases reduced deficits by $4 trillion over 10 years, the Obama budget will reduce the combined deficits by $1.1 trillion.
Those deficits would otherwise total about $12 trillion when added together.
The budget also does not propose long-term solutions to Medicare and Social Security spending either, although it does propose paying for a two-year extension of the so-called Medicare “Doc fix” by new cost control measures. Congress regularly blocks the reduction in payments to doctors under Medicare reform and the cost of doing so has not been offset.
The deficit reduction by 2021 is made up of two-thirds
spending cuts and one-third tax increases.The tax increases will likely be opposed by congressional Republicans.
The largest spending cut is achieved by a five-year freeze in domestic non-security spending. As previewed by President Obama in the State of the Union address, the freeze is to save $400 billion over five years.
The tax cuts include new taxes on multinational corporations and the wealthy. A three year fix of the alternative minimum tax (AMT), so that it doesn't hit middle-income individuals, is paid for by limiting tax deductions for the wealthy.
Large cuts next year include $1 billion in airport grants and $1 billion in water treatment grants. The low-income energy program Liheap and community service block grants will be cut in half, a senior administration official confirmed.
As anticipated, the Obama budget will include $78 billion in savings proposed by Defense Secretary Robert Gates.
The plan does not reduce deficits to 3 percent of GDP in 2015, something Obama had charged the debt commission to try to do, but does so in 2016.