Obama’s Budget Would Cut $1 Trillion From Deficit

Mr. Obama’s budget — one aimed at bringing Republicans to the table to finish a long-term deficit deal, as unlikely as that prospect seems now — includes unpopular cuts to both the Social Security and Medicare programs. His budget would change the calculation used to ensure that Social Security payments keep up with the pace of inflation, for instance, providing less money to retirees over time.

The budget plan also includes almost $1 trillion in tax increases, by further limiting the deductions and exclusions high-income families can claim, increasing taxes on tobacco products and adopting the so-called Buffett Rule, a new minimum tax on income over $1 million.

Compared with the baseline the budget office uses, which assumes no change in current laws, the proposal would widen deficits slightly in the fiscal years 2013 through 2015, but reduce them later on, the budget office said. Starting in 2014, tax increases would bump up revenue by $27 billion to $155 billion a year. Spending would increase by as much as $142 billion a year until 2018, when it would decline beneath the levels indicated by current law.

When it released its budget last month, the Obama White House claimed that it would save $1.8 trillion over 10 years. The difference between its estimate and the Congressional Budget Office’s primarily stems from the fact that the White House assumed the $85 billion in automatic budget cuts known as sequestration — cuts that continue for the next decade — would be repealed or replaced with a new policy. The budget office did not. Other than that, the independent office’s assessment of how the budget proposal would affect spending and revenue mostly differs only marginally from the White House’s.

Article source: http://www.nytimes.com/2013/05/18/business/obamas-budget-would-cut-1-trillion-from-deficit.html?partner=rss&emc=rss