The budget: Obama’s ten-year plan

The White House released a 10-year, 134-page budget plan yesterday, projecting a record $1.75 trillion deficit by September 30, and pledging to cut that in half by the end of his term. According to NPR:

The deficit would remain near $1 trillion over the next two years before dropping to $581 billion in 2012 and $533 billion in 2013, the year that Obama has pledged to cut in half the deficit he inherited.

The budget, says David Rogers at Politico, relies heavily on $1.5 trillion defense savings over the next decade and on new taxes on upper-income households and oil and gas interests. It also proposes big increases for environmental and energy programs, including high speed rail, and a doubling of State Department and foreign aid budgets by 2014.

For the first time, the budget includes the costs of wars in Iraq and Afghanistan, rather than keeping these to off-budget special appropriations. Former Congressional Budget Office director, Robert Reischauer, told Politico, “I give the [Obama] administration a gold star — at least if we’re grading on a curve,” the veteran budgetwatcher said. “The Bush administration engaged in every juvenile gimmick known to budgeteers.”

Income tax increases would come mainly from ending tax cuts that the Bush administration gave to families earning more than $250,000 per year. The budget calls for making the $400 annual tax cut for middle-income families permanent. NPR reports that much of the money from tax increases is slated to go into a $634 billion dedicated health care reserve fund. However, the health budget calls for significant cuts in payments to health insurers, hospitals and doctors. One target: private health insurers who offer managed care plans to Medicare beneficiaries, at a cost 14% higher than the regular fee-for-service Medicare program.