Obama Budget Predicts $1.3 Trillion Deficit For 2012

President Barack Obama's new budget predicts a $1.3 trillion deficit for the ongoing fiscal year but that would drop to $575 billion in 2018 if the president gets his wish to raise taxes and if policymakers can live within tight restraints on the Pentagon and other Cabinet agency budgets, the White House said Friday.

After four consecutive years of trillion dollar-plus deficits, next year's budget shortfall would drop to $901 billion under the administration's tax and spending policies.

In his budget submission on Monday, the president will also call for a "Buffett Rule" -- that would guarantee that households making more than $1 million a year pay at least 30 percent of their income in taxes. Billionaire financier Warren Buffett has made headlines proposing the idea, saying that it's unfair for him to pay a lower tax rate than his secretary.

Obama will also call for Congress to enact a tax reform plan that would raise about $1.5 trillion over the coming decade by eliminating numerous tax preferences and assuming revenues from the expiration of Bush-era tax cuts for people in the upper brackets. The president is also going to call for lower corporate tax rates as well as an end to many corporate tax loopholes; details will come later in the month.

The election-year document is sure to get a brushoff from Republicans controlling the House. The White House says that Monday's budget will contain many items from a September submission to a failed congressional deficit "supercommittee," which deadlocked over tax increases and how much to cut popular benefit programs like Medicare.

The Obama budget will also reflect tight "caps" on agency operating budgets forged in last summer's budget and debt limit pact between Obama and House Speaker John Boehner. Those include a $6 billion cut in the budget for core Pentagon operations and cuts to many domestic agencies as well.

But it's commonly assumed that presidential politics will prevent Democrats and Republicans from renewing efforts for a broader budget agreement, though negotiations on Capitol Hill are under way in efforts to renew jobless benefits for the long-term unemployed and a 2 percentage point cut in payroll taxes and prevent a 27 percent cut in Medicare payments to doctors that's the product of an outdated funding formula.

Administration officials briefed reporters and issued a fact sheet after several figures were reported in The Wall St. Journal, which viewed leaked draft budget documents.

White House talking points said the budget will put "the nation on a path to live within our means -- by cutting wasteful spending, asking all Americans to shoulder their fair share and making tough choices on some things we cannot afford, while keeping the investments we need to grow the economy and create jobs."

The president will also propose a six-year, $476 billion highway and surface transportation bill and $360 billion from curbs to federal health care programs like Medicare and Medicaid. There's $278 billion more in savings from non-health benefits programs like farm subsidies and federal civilian worker pensions.

There's also an immediate $350 billion for job-creating measures, about $100 billion less than presented in Obama's September jobs plan because the administration is giving up on increasing the 2 percentage point payroll tax cut to 3.1 percent and giving it to businesses. Ideas like school modernization and road projects haven't gained traction in Congress, however.

The White House warned earlier this week that its economic assumptions -- predictions of the unemployment rate averaging 8.9 percent this year -- now look too pessimistic. They were made in mid-November, before a recent spate of positive news about the economy. If the economy performs better than officially projected, it'll mean a better fiscal performance for the government since greater growth means increased tax revenues.

"The forecast of the unemployment rate that will accompany the budget should be considered stale and out of date," White House economist Alan Krueger said Thursday.

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  • by Anonymous on Feb 12, 2012 at 07:06 AM
    President's do inherit problems from the previous president. Let's not forget that Bush inherited Osama Bin Laden from Clinton. Clinton did not have the guts to take care of him when he had the chance. So I guess we can blame Afghanistan and then Irag on Clinton because they wouldn't have happened if Bin Laden had already been dead. Obama should stopping blaming Bush and start blaming Clinton for this mess.
  • by La Grange Dude on Feb 12, 2012 at 06:20 AM
    I didn't like what Bush was doing and I sure don't like what this idiot is doing either. We need and drastic change from what we have had the last 40 years/
  • by Bev and Obama on Feb 12, 2012 at 03:21 AM
    Lets just make every road a toll! Raise tuition and make people who have jobs pay a lot more taxes so welfare and illegals can get their fair share!!!!
    • reply
      by Juan Gonzales on Feb 12, 2012 at 07:33 AM in reply to Bev and Obama
      Wow, I like your thinkin man!
  • by Shine Location: NE NC on Feb 12, 2012 at 01:21 AM
    He has used that Jet enough since he has supposidly been in office to create a degt. Ha. guess the Jet was a upgrade from the Cadillac.
  • by Anonymous on Feb 11, 2012 at 11:49 PM
    I really wish Obama would grow a set and put these mentally incompetent Republicans in their place. If they're gonna accuse him of being a socialist, Muslim, whatever is on their agenda for the day, he should embrace it. At least then they'd be right.
  • by Wolfgang Location: Chocowinity,NC on Feb 11, 2012 at 08:52 PM
    Obama spent $1.3 Trillion dollars of your money did he get a free tax payer paid pair of Air Jordans? To play B - Ball with? At the White House?
  • by American Location: Greenville on Feb 11, 2012 at 05:46 PM
    You are all idiots.... Seriously, from one president to the next they are still dealing with the issues handed to them from the previous president. We are all Americans first democrats and republican second. This divided America leaves a bad taste in my mouth. No one is right. No one is wrong. If we don't all find away to work together to accomplish these tasks we are going to fail as a society. We are still dealing with financial issues from the 1980's. It is not like this is a new issue. Act like adults. Please for your children's sake.
    • reply
      by Eyes Wide Open on Feb 11, 2012 at 06:37 PM in reply to American
      Our next President is going to be handed over a situation 100 times worse than the one handed to this President. And if no one is right and no one is wrong then how did we end up in this mess? The progressive liberals are completely wrong!
      • reply
        by Anonymous on Feb 11, 2012 at 11:29 PM in reply to Eyes Wide Open
        Funny, I didn't know a better economy, more tolerance, better international relations, more jobs and two less wars were bad things. Learn something everyday I suppose.
        • reply
          by Formerly Pirateman on Feb 12, 2012 at 06:04 AM in reply to
          The economy is not better. After 3 years Huseein Obama has us at the same unemployment rate Obama was left by Bush (after getting much worse in between). International relations is fluid, but why do you think it is so great; Muslims still want to kill us- are we going to lull into a false sense of security? Tolerance- not for Christians, Pentecostals, Fundamentalist Christians and Catholics! If you will look; both Iraq and Afghanistan have war going on! So talk is cheap; please explain beyond your rhetoric.
  • by Fed up on Feb 11, 2012 at 04:19 PM
    Let's clear one thing up: For everyone who thinks this is all Obama's fault you must first realize that discretionary spending makes up less than 1/5 of the budget. With that said, the federal government brings in approximately $2.1 trillion in receipts. The outlays for Medicare/Medicaid, Social Security, and Defense alone amount to $2.3 trillion. If all you Obama haters want to blame him solely, go ahead, but it simply shows your ignorance to simple economics. Everyone wants a piece of the pie but no one wants to help bake it. You want the deficit to go down? Uncap taxable social security, repeal the Bush tax cuts and go back to Clinton levels, and for God sake, (from a veteran) we do not need to be spending $900 billion a year on national defense! Get rid of the stubborn right wing, embrace compromise, stop exciting fringe politics and you'll get your balanced budget and possible surplus'... But alas, it won't happen because radical elements control the GOP and it appears most of you are being sucked into the hate...
    • reply
      by marcy on Feb 12, 2012 at 01:15 PM in reply to Fed up
      Well said Fed Up, but you wont get the radical right to understand this cause they're too busy listening to the Fox News hatred. They have studied people who listen to Fox news and people who dont listen to news channels at all and the no news persons knew the correct answers to world events....
      • reply
        by Eyes Wide Open on Feb 12, 2012 at 05:02 PM in reply to marcy
        Bull!! How about give us a link to read about that study?
      • reply
        by Anonymous on Feb 13, 2012 at 12:13 PM in reply to marcy
        Marcy, it's funny that with over 30 channels of cable news you can single out Fox News. Out of 30 or more news stations, you can't find a single "error" on their part ? This shows your true bias !
  • by Obama Snake Oil Co Location: Washington on Feb 11, 2012 at 02:17 PM
    Barlow, how about defending on of yours as he fits the mold; John Edwards' Lawyer Defends Campaign Spending $800,000 In 2011
  • by Barbara on Feb 11, 2012 at 01:11 PM
    Mr. Warren Buffett needs to go ahead and fork over his check for 30% of his income to the US Treasury--I'm sure that President Obama would accept it. Come on, Mr. Buffett, why don't you go ahead and walk the talk? I am not holding my breath on that one. It is truly horrible to expect someone to hand over 30% of their income to anybody, especially to a wasteful government like ours. I don't care how rich a person is, what is theirs should be theirs, unless they willingly give it away like Mr. Buffett SAYS he wants to. We need to completely do away with income tax and go to a consumption tax. If the government doesn't get enough money to run the country on that, guess what, they might need to cut the budget and do away with some of the freebies.
    • reply
      by Eyes Wide Open on Feb 11, 2012 at 07:05 PM in reply to Barbara
      Right on!! I heard that Buffett's company Berkshire Hathaway is behind on their taxes by $1 Billion. Also, in Buffett's will he is sending a very large portion of his personal wealth to the Bill Gates charity, and he has taken every precaution to make sure that none of that money ends up going to the government in the death tax. He may be the greatest investor of all time but he is without a doubt a total hypocrite. The only reason he allows Obama to use him and his secretary as a political parade has now been shown. Obama shuts down the Keystone pipline because it would take oil shipments away from the railroad that is owned by Buffett. I cannot figure out why the unions are still in this guys pocket.
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