WASHINGTON – President Barack Obama expects the federal budget deficit to reach $1.33 trillion this year, administration officials said Friday, the fourth straight year of trillion-dollar deficits.
The deficit already was projected to top $1 trillion when Obama took office in January 2009, as tax revenues dropped because of the Great Recession and spending spiked to bail out banks and auto companies. It eventually reached $1.55 trillion for 2009, followed by $1.37 trillion in fiscal 2010 and $1.36 trillion in fiscal 2011.
The tide of red ink, which started under President George W. Bush, has helped define Obama’s entire term and will be a key issue in the fall campaign as he seeks a second term.
With that in mind, Obama on Monday will propose a budget he’ll use to portray himself as a deficit cutter, one who would combine $1.5 trillion in tax increases on the wealthy with $1.5 trillion in cuts from projected spending increases to slow – but not stop – the rapid increases in the nation’s debt.
That $3 trillion would come atop $1 trillion in projected savings over 10 years that he and Congress approved last summer.
His proposed budget will call for a 2013 deficit of $901 billion, or about 5.5 percent of the economy, according to senior administration officials who briefed reporters.
Projected deficits would decline to $575 billion in 2018, about 2.7 percent of the total economy. The total deficit would climb again to $704 billion in 2022, but administration officials said it would only inch up to 2.8 percent as a share of a fast-growing economy.
His proposed tax increases are the same he’s been pushing without success in Congress: ending the Bush-era tax cuts for those making more than $250,000, limiting deductions to 28 percent of income for the same people, and requiring that any millionaire pays at least 30 percent of their income in taxes.
To pare back spending increases, he’ll propose cutting Medicaid, Medicare and other health programs by $360 billion over 10 years.
At the same time, Obama will ask for $350 billion to stimulate job growth, including:
• $50 billion to improve roads, railways and runways;
• $30 billion to modernize 35,000 schools;
• $30 billion to pay teachers and hire new teachers and first responders.
He’ll urge a $476 billion transportation plan over six years to build roads and expand passenger rails.