Obama budget predicts $1.3 trillion deficit for 2012

Associated Press

WASHINGTON

President Barack Obama’s new budget predicts a $1.3 trillion deficit for the ongoing fiscal year but that would drop to $575 billion in 2018 if the president gets his wish to raise taxes and if policymakers can live within tight restraints on the Pentagon and other Cabinet agency budgets, the White House said Friday.

After four-consecutive years of trillion-dollar-plus deficits, next year’s budget shortfall would drop to $901 billion under the administration’s tax-and-spending policies.

In his budget submission Monday, the president also will call for a “Buffett Rule” that would guarantee that households making more than $1 million a year pay at least 30 percent of their income in taxes. Billionaire financier Warren Buffett has made headlines proposing the idea, saying that it’s unfair for him to pay a lower tax rate than his secretary.

Obama also will call for Congress to enact a tax-reform plan that would raise about $1.5 trillion over the coming decade by eliminating numerous tax preferences and assuming revenues from the expiration of Bush-era tax cuts for people in the upper brackets. The president also is going to call for lower corporate tax rates as well as an end to many corporate tax loopholes; details will come later in the month.

The election-year document is sure to get a brushoff from Republicans controlling the House. The White House says that Monday’s budget will contain many items from a September submission to a failed congressional deficit “supercommittee,” which deadlocked over tax increases and how much to cut popular benefit programs such as Medicare.

The Obama budget also will reflect tight “caps” on agency operating budgets forged in last summer’s budget and debt-limit pact between Obama and House Speaker John Boehner. Those include a $6 billion cut in the budget for core Pentagon operations and cuts to many domestic agencies as well.