Ahead of President Obama’s major speech next week, his administration on Thursday released a gloomy picture of the government’s finances that shows that even with the deficit supercommittee’s action, the government will pile up nearly $10 trillion in deficits over the next decade.
Still, as bad as those numbers are, they mark an improvement over February, when Mr. Obama presented his budget.
The brighter picture comes after Congress cut 2011 spending by $51 billion compared with Mr. Obama’s budget and then both sides agreed last month to a committee process that is designed to cut another $1.5 trillion over 10 years from the deficit. Tax receipts also are running higher than projected.
“We need to get back on a sustainable fiscal path, and we also need to invest in long-term economic growth and job creation,” said Jacob Lew, Mr. Obama’s budget director.
The numbers were part of the administration’s midsession budget review, a document the White House is required to produce — though in this case it was well more than a month past the deadline as the administration waited to see the results of August’s debt deal.
The budget update was peppered with references to the need to balance deficit reduction with more efforts to boost the sluggish economy, which sets the table for Mr. Obama’s speech next week to Congress when the president is expected to call for more tax cuts and spending that he says can foster jobs.
But those efforts will only deepen the deficit in the short term unless they are offset with other spending cuts or tax increases — and finding that extra budget space that could complicate the deficit committee’s job.
Some budget hawks are already calling on the committee to do more than meet the $1.5 trillion target set by the law.
“It is my hope the committee exceeds its $1.5 trillion target. In order to stabilize the federal debt and begin to bring it down as a share of the economy, we need to achieve roughly $4 trillion in total deficit reduction over the next 10 years,” said Senate Budget Committee Chairman Kent Conrad, North Dakota Democrat.
According to the administration’s numbers, assuming the deficit commission finds $1.5 trillion in savings, the deficit will drop from $1.3 trillion this year to $1 trillion in 2012, continue declining until 2014, then rise back up to $1.2 trillion by 2021.
Some changes the administration calls for could reduce those deficits. For example, if some of the 2001 and 2003 tax cuts for higher-income taxpayers are ended, it could result in $1 trillion in lower deficits.
The House passed its version of the budget this year, but the Senate did not, leaving Congress without one. Instead, both sides agreed to a top-line spending number for 2012 and 2013 as part of last month’s debt deal.
Mr. Obama’s own budget, submitted to Congress in February, was panned by both Republicans and Democrats for unrealistic assumptions about economic growth. The Democratic-led Senate rejected it on a 97-0 vote.
In April, the president tried again, laying out broad outlines for lower deficits. But that was overshadowed by the debate on Capitol Hill over raising the debt limit, with Republicans insisting any increase be tied to cuts.
Under Mr. Obama’s projections, the government will spend $46.6 trillion over the next decade, with the bulk of that — $27.4 trillion — coming on formula-driven entitlement programs such as Medicare and Social Security. It will spend another $9.1 trillion on security, $5.9 trillion on interest payments on the debt, and just $4 trillion on other basic domestic needs.
On the revenue side it will collect $37 trillion in taxes and fees — leaving it with a 9.6 trillion deficit.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
Please read our comment policy before commenting.