Inside Track
Obama’s Budget: A “Down Payment” With No Money Down
President Obama labeled his 2012 budget proposal “a down payment toward a permanent fix” for the expected record deficit, but his fiscal 2012 budget proposal actually leaves deficits higher than his previous budget proposals.
The New York Times noted on February 14: “For the current fiscal year, which ends Sept. 30, the Obama budget projects a deficit of more than $1.6 trillion, the equivalent of nearly 11 percent of the gross domestic product; in those terms it would be the largest shortfall since World War II ended.” President Obama has promised a falling deficit in the future, however. “If the projections are correct,” the New York Times explained, “2012 will be the fourth and final year with a deficit over $1 trillion.” But that’s a big “if.” Obama’s first budget proposal called for a $912 billion deficit this year, compared with the $1.6 trillion he now projects, and a $581 billion deficit in 2012, compared with a $1.1 trillion currently projected.
Much of the deficit reduction within Obama’s budget is based upon a huge tax increase: the expiration of the Bush-era tax cuts. The New York Times explained, “The deficit for the next fiscal year, 2012, is expected to be smaller by more than $500 billion, largely because of the expiration of those tax cuts and the two-year stimulus package that Mr. Obama signed into law soon after taking office.”
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