Obama budget predicts massive long-term deficits

President Obama’s $3.8 trillion budget blueprint shows deep, structural deficits extending into the next decade.

What happened

President Obama’s $3.8 trillion budget blueprint met immediate resistance from congressional Republicans this week, with each party seeking to avoid blame for deep, structural deficits extending into the next decade. After a $1.6 trillion deficit in 2010, Obama’s 2011 budget, which would begin Oct. 1, produces a $1.27 trillion deficit. Deficits are projected to decline in subsequent years before rising again sharply, driven by escalating Medicaid, Medicare, and Social Security costs. Obama’s budget allows Bush tax cuts to expire for individuals earning more than $200,000 and families earning more than $250,000, raising the top marginal tax rate to 39.6 percent and reducing itemized deductions for top earners. It calls for $39 billion in tax hikes on the oil, gas, and coal industries over 10 years. Republican Senate Leader Mitch McConnell denounced the plan as “more spending, more taxes, and more debt.”

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