The Committee for a Responsible Federal Budget sets out some useful analysis of the new White House budget numbers. One main finding is that the president’s use of a 12-year budget timescale is a rather significant gimmick. His $4 trillion in savings over 12 years become $2.9 trillion over the standard 10 years; if you then use CBO figures, not White House figures, to reckon the “current policy” baseline, the amount of deficit reduction falls further, to $2.5 trillion. So it’s untrue to say that the White House is proposing deficit reduction on about the same scale as the House budget or the Bowles-Simpson plan. The new framework also falls short of stabilising the debt-to-GDP ratio.
It’s worth noting that, compared with a “current law” baseline, Obama’s new plan actually adds slightly to the 10-year deficit. (His February budget added nearly $3 trillion to it, so he’s moving in the right direction.) How can that be, when he calls for so many spending cuts and tax increases? It’s because the cost of making permanent the Bush tax cuts for the middle class, as Obama proposes, is so high. Remember, current law provides for all the Bush tax cuts to be reversed, not just those for higher-income households.