President Obama submitted his U.S. government budget to the Congress in February, shortly after he was sworn into office on January 20, 2009. As of today, seven months later it has not yet been approved and passed into law by the legislators.
His budget asks for spending of $3.552 trillion by the U.S. government, while projecting revenues of $2.381 trillion, creating an additional deficit of $1.171 trillion for the fiscal period from October 01, 2009 up to September 30, 2009. That may be the reason it is still pending in Congress.
Because the new fiscal year starts in a few days - October 01, 2009 - the Congress approved yesterday an emergency funding measure of around $5 billion just to keep the U.S. government running for the next few days.
Many of the projections of increased income, economic growth rates and reductions in deficit written on Wikipedia below have been found to be overly optimistic and unrealistic by numerous independent economists.
Below are the numbers and comments we found on Wikipedia:
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President Barack Obama proposed his 2010 budget during February 2009. He has indicated that health care, clean energy, education, and infrastructure will be priorities.
The federal deficit is forecast to be $1.75 trillion in 2009, declining to $1.17 trillion in 2010 (the first year of the plan) and $533 billion by 2013.[2]
The annual increase in federal debt due to these deficits will total $2.56 trillion in 2009, declining to $1.14 trillion in 2010 and $520 billion by 2013.[3] However the total annual increase in federal debt will be $2.72 trillion in 2009, declining to $1.37 trillion in 2010 and $925 billion by 2013.[3] The difference between the debt due to federal budget deficits and the total federal debt is made up of debt held in government accounts,[3] mainly the Social Security and Medicare trust funds, which invest their excess receipts in government debt.
Tax increases will be levied on the highest income earning taxpayers, returning the highest marginal tax rate to the Clinton-era level of 39.6%.[4] The levels of funding for Medicare, Medicaid and Social Security has increased by 13% over the 2009 federal budget.
The base Department of Defense budget is also increased through 2014 (Table S-7), from $534 to $575 billion, although supplemental appropriations for the Iraq War are expected to be reduced.
Estimates of revenue are based on GDP growth forecasts that exceed the Congressional Budget Office's January forecast (which does not include the effect of the American Recovery and Reinvestment Act of 2009) through 2010 but which are broadly consistent with it from 2011 through 2019.[5] The budget's GDP growth assumptions are more optimistic than the February Blue Chip consensus forecast through 2014 (by an average of 1.2 percentage points) but again are broadly consistent with the Blue Chip from 2015 through 2019
Total receipts
Estimated receipts for fiscal year 2010 are $2.381 trillion, an increase of 8.9%.
* $1.061 trillion - Individual income taxes
* $940 billion - Social Security and other payroll tax
* $222 billion - Corporation income taxes
* $77 billion - Excise taxes
* $23 billion - Customs duties
* $20 billion - Estate and gift taxes
* $22 billion - Deposits of earnings
* $16 billion - Other
[edit] Total spending
Further information: Government spending
The President's budget for 2010 totals $3.55 trillion. Percentages in parentheses indicate percentage change compared to 2009. This budget request is broken down by the following expenditures:
* Mandatory spending: $2.184 trillion (+15.6%)
o $695 billion (+4.9%) - Social Security
o $453 billion (+6.6%) - Medicare
o $290 billion (+12.0%) - Medicaid
o $0 billion (-100%) - Troubled Asset Relief Program (TARP)
o $0 billion (-100%) - Financial stabilization efforts
o $11 billion (+275%) - Potential disaster costs
o $571 billion (-15.2%) - Other mandatory programs
o $164 billion (+18.0%) - Interest on National Debt
* Discretionary spending: $1.368 trillion (+13.1%)
o $663.7 billion (+12.7%) - Department of Defense (including Overseas Contingency Operations)
o $78.7 billion (-1.7%) - Department of Health and Human Services
US receipt and expenditure estimates for fiscal year 2010.
o $72.5 billion (+2.8%) - Department of Transportation
o $52.5 billion (+10.3%) - Department of Veterans Affairs
o $51.7 billion (+40.9%) - Department of State and Other International Programs
o $47.5 billion (+18.5%) - Department of Housing and Urban Development
o $46.7 billion (+12.8%) - Department of Education
o $42.7 billion (+1.2%) - Department of Homeland Security
o $26.3 billion (-0.4%) - Department of Energy
o $26.0 billion (+8.8%) - Department of Agriculture
o $23.9 billion (-6.3%) - Department of Justice
o $18.7 billion (+5.1%) - National Aeronautics and Space Administration
o $13.8 billion (+48.4%) - Department of Commerce
o $13.3 billion (+4.7%) - Department of Labor
o $13.3 billion (+4.7%) - Department of the Treasury
o $12.0 billion (+6.2%) - Department of the Interior
o $10.5 billion (+34.6%) - Environmental Protection Agency
o $9.7 billion (+10.2%) - Social Security Administration
o $7.0 billion (+1.4%) - National Science Foundation
o $5.1 billion (-3.8%) - Corps of Engineers
o $5.0 billion (+100%) - National Infrastructure Bank
o $1.1 billion (+22.2%) - Corporation for National and Community Service
o $0.7 billion (0.0%) - Small Business Administration
o $0.6 billion (-14.3%) - General Services Administration
o $19.8 billion (+3.7%) - Other Agencies
o $105 billion - Other
Deficit
The total deficit for fiscal year 2009 is forecast to be $1.75 trillion, a $1.29 trillion increase from the 2008 deficit. The deficit is forecast to decline to $1.17 trillion in 2010 and $533 billion by 2013.[2]
The 2009 deficit includes the cost of the Troubled Asset Relief Program ($247 billion in 2009)[6], the American Recovery and Reinvestment Act of 2009 ($202 billion in 2009, $353 billion in 2010, and $232 billion in 2011 forward[7]), and the 2009 Omnibus spending bill ($410 billion)--and changes due to President Obama's policy proposals.
The 2009 budget deficit would represent 12.3% of gross domestic product,[8] the largest share since World War II.[9]
[edit] Debt increases
2010 Budget: Total Debt $ and % to GDP
The 2010 Budget proposed by President Barack Obama projects significant debt increases.[10][11] The debt is projected to nearly double to $20 trillion by 2015, but is expected to increase to nearly 100% of GDP by 2010 and remain at that level thereafter. These estimates assume real GDP growth (after inflation) ranging from 2.6% to 4.6% annually from 2010 through 2019, which exceeds Blue Chip consensus estimates.[12]
The high level of debt and continuing large trade deficits have raised concerns regarding inflation and the value of the dollar relative to other currencies, as well as its place as the primary reserve currency. The Economist wrote in May 2009: "Having spent a fortune bailing out their banks, Western governments will have to pay a price in terms of higher taxes to meet the interest on that debt.
In the case of countries (like Britain and America) that have trade as well as budget deficits, those higher taxes will be needed to meet the claims of foreign creditors. Given the political implications of such austerity, the temptation will be to default by stealth, by letting their currencies depreciate. Investors are increasingly alive to this danger..."[13]
The Center on Budget and Policy Priorities reported in August 2009 that President Obama's proposals would actually reduce future deficits relative to just continuing the policies of the prior administration.[14]
[edit] Causes of Change in CBO Forecasts
Causes for Changes in CBO Forecasts
The U.S. budget situation has deteriorated significantly since 2001, when the Congressional Budget Office (CBO) forecast average annual surpluses of approximately $850 billion from 2009-2012. The average deficit forecast in each of those years is now approximately $1,215 billion. The NY Times analyzed this roughly $2 trillion "swing," separating the causes into four major categories along with their share:
* Recessions or the business cycle (37%);
* Policies enacted by President Bush (33%);
* Policies enacted by President Bush and supported or extended by President Obama (20%); and
* New policies from President Obama (10%).
CBO data is based only on current law, so policy proposals that have yet to be made law are not included in their analysis. The article concluded that President Obama's decisions accounted for only a "sliver" of the deterioration, but that he "...does not have a realistic plan for reducing the deficit..."[15]
[edit] Renewable energy
The budget proposes to support renewable energy development with a 10-year investment of US $15 billion per year, generated from the sale of greenhouse gas (GHG) emissions credits. Under the proposed cap-and-trade program, all GHG emissions credits would be auctioned off, generating an estimated $78.7 billion in additional revenue in FY 2012, steadily increasing to $83 billion by FY 2019.[16]
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