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The budget proposal will project that the deficit for fiscal year 2012 will top $1.3 trillion. (CNN) |
NEW YORK -- President Obama unveiled a $3.8 trillion budget request Monday that hikes taxes on the rich, spends new money on infrastructure and education, but does little to reform the entitlement programs that pose the biggest long-term threat to the federal budget.
"We built this budget around the idea that our country has always done best when everyone gets a fair shot, everyone does their fair share and everyone plays by the same rules," Obama said in his budget message.
But the budget forecasts a deficit for fiscal year 2012 that will top $1.3 trillion, before falling in 2013 to $901 billion, or 5.5% of gross domestic product.
The deficit projections, which have hovered near $1 trillion for each year of the Obama presidency, mean that Obama will not satisfy his 2009 promise to half the deficit by the end of his first term.
White House officials described the budget as a continuation of two major speeches given recently by the president -- one in Kansas where he promised Americans a "fair shot," and last month's State of the Union.
The budget also offers fresh insight into how the White House plans to comply with last year's Budget Control Act, which allowed Congress to raise the debt ceiling in exchange for caps on discretionary spending accounts.
Many of the high profile recommendations made in the budget were first floated by the administration last year as part of a deficit reduction plan rolled out in September.
Spending
The administration is proposing a series of investments focused on infrastructure, education and domestic manufacturing, including old favorites like $30 billion to modernize schools and an additional $30 billion to retain and hire teachers and first responders.
At the same time, the White House had to comply with the spending caps enshrined in the Budget Control Act, which total in the neighborhood of $1 trillion in discretionary spending over a decade.
That means many programs will see their funding cut.
"Every department will feel the impact of these reductions as they cut programs or tighten their belts to free up more resources for areas critical to economic growth," Obama wrote.
Discretionary spending is projected to fall from 8.7% of GDP in 2011 to 5.0% in 2022.
The budget details 210 places where programs will be cut or eliminated, for savings of $24 billion in 2013 and $520 billion over a decade.
For example, the budget eliminates an Air Force satellite system that is "no longer needed to meet mission requirements."
And the budget proposes consolidating the Bureau of Public Debt and the Treasury's Financial Management Service.
The president would also like to cut some mandatory spending, including select farm subsidies and federal employee retirement and health benefits, for savings of $217 billion over a decade.
Military spending will be reduced. The Pentagon plans to spend $487 billion less over 10 years, a course that Secretary of Defense Leon Panetta has already laid out in some detail.
But even with some cuts, annual deficits are still projected to be more than $500 billion every year for the next decade, and the budget would add $7 trillion to the debt held by the public between 2013 and 2022.
"We built this budget around the idea that our country has always done best when everyone gets a fair shot, everyone does their fair share and everyone plays by the same rules," Obama said in his budget message.
But the budget forecasts a deficit for fiscal year 2012 that will top $1.3 trillion, before falling in 2013 to $901 billion, or 5.5% of gross domestic product.
The deficit projections, which have hovered near $1 trillion for each year of the Obama presidency, mean that Obama will not satisfy his 2009 promise to half the deficit by the end of his first term.
White House officials described the budget as a continuation of two major speeches given recently by the president -- one in Kansas where he promised Americans a "fair shot," and last month's State of the Union.
The budget also offers fresh insight into how the White House plans to comply with last year's Budget Control Act, which allowed Congress to raise the debt ceiling in exchange for caps on discretionary spending accounts.
Many of the high profile recommendations made in the budget were first floated by the administration last year as part of a deficit reduction plan rolled out in September.
Spending
The administration is proposing a series of investments focused on infrastructure, education and domestic manufacturing, including old favorites like $30 billion to modernize schools and an additional $30 billion to retain and hire teachers and first responders.
At the same time, the White House had to comply with the spending caps enshrined in the Budget Control Act, which total in the neighborhood of $1 trillion in discretionary spending over a decade.
That means many programs will see their funding cut.
"Every department will feel the impact of these reductions as they cut programs or tighten their belts to free up more resources for areas critical to economic growth," Obama wrote.
Discretionary spending is projected to fall from 8.7% of GDP in 2011 to 5.0% in 2022.
The budget details 210 places where programs will be cut or eliminated, for savings of $24 billion in 2013 and $520 billion over a decade.
For example, the budget eliminates an Air Force satellite system that is "no longer needed to meet mission requirements."
And the budget proposes consolidating the Bureau of Public Debt and the Treasury's Financial Management Service.
The president would also like to cut some mandatory spending, including select farm subsidies and federal employee retirement and health benefits, for savings of $217 billion over a decade.
Military spending will be reduced. The Pentagon plans to spend $487 billion less over 10 years, a course that Secretary of Defense Leon Panetta has already laid out in some detail.
But even with some cuts, annual deficits are still projected to be more than $500 billion every year for the next decade, and the budget would add $7 trillion to the debt held by the public between 2013 and 2022.
