The CBO, Congress’ nonpartisan budget scorekeeper, projected that if the president’s proposals were to go into effect, federal debt held by the public would rise from $12.8 trillion at the end of fiscal 2014 to $19.9 trillion in 2024, leaving the level of debt as a share of total economic output constant, at roughly 74 percent.
That would be lower than the baseline projection of 78 percent if nothing is done, but would mean that the debt was headed in the wrong direction even in a relatively favorable scenario.
That estimate differs by $1.7 trillion from the White House budget office’s projections. The Office of Management and Budget had the debt peaking in fiscal 2015 and then falling, reaching as low as 69 percent of gross domestic product by the end of the budget window.
The difference is mostly accounted for by CBO’s estimate that the Obama budget will raise significantly less revenue than the OMB projected, partly because the CBO foresees slower economic growth. The president’s budget will raise $1.8 trillion less than the administration thought, in the CBO’s judgment.
Among the major provisions of Obama’s budget that would affect the budget would be savings from a drawdown of military operations in Afghanistan and elsewhere ($659 billion), a cap on tax deductions and exclusions ($498 billion), comprehensive immigration reform (assumed to be $158 billion), and Medicare cuts of $373 billion.
The president’s budget envisions taxes rising by a total of $1.4 trillion. Those tax increases, which would include added estate taxes, increased tobacco taxes, a new minimum tax for high earners and a new “financial crisis responsibility fee” on big banks, would account for all the net deficit reduction in Obama’s budget, relative to the CBO baseline.
That net deficit reduction would save the U.S. on interest payments on the debt. Including lower interest spending, total spending would increase by $338 billion, or 0.7 percent, in Obama’s budget.
The president's budget is a proposal that is not expected to take effect, but rather serves as a statement of his priorities. Earlier in April, House Republicans offered a measure based on Obama's blueprint. That vote failed 413-2, with Democrats saying it did not reflect the actual substance of Obama's plans.
This story was first published at 10:28 a.m. and has been updated since.