Deficit Reduction Proposals in the President's Last Budget
Tomorrow, President Obama will release his FY2015 budget, which will detail his visions and priorities for the upcoming years. In previous years, the President has included proposals to reform spending and the tax code in a way that would contribute to deficit reduction.
The Fix the Debt campaign today released a publication outlining what they would like to see from the President's FY2015 budget. Specifically, they would appreciate seeing the following:
1. Put the debt on a clear downward path relative to the economy.
2. Pay for any new initiatives, policy extensions, or sequester relief.
3. Propose reforms to slow the growth of health spending.
4. Offer support for comprehensive Social Security reform.
5. Include pro-growth, deficit-reducing tax reform.
6. Avoid budget gimmicks, phantom offsets, and rosy assumptions.
7. Focus on the long term.
Implicit in many of these requests is the importance that the President not backtrack on deficit reduction that he proposed last year. In his FY2014 budget, President Obama built upon the deficit reduction package he offered during the fiscal cliff negotaitions in 2012, and we estimated that cumulatively, the net savings from all his proposals would be between $1.7 and $1.8 trillion.
Last year, the budget included a number of spending cuts and revenue enhancements which would begin to reduce the debt as a share of GDP. This reduction resulted from a number of important policy improvements ranging from the adoption of the chained CPI to expanded means-testing of Medicare premiums to limits on various tax preferences for higher earners. Below are a few of the larger policies proposed by the President last year to lower long-term deficits and debt.
|Deficit Reducing Policies in the President's FY2014 Budget|
|Limit tax preferences to 28%||$490 billion|
|Chained CPI with low-income protections||$235 billion|
|Expand various drug rebates||$160 billion|
|Increase cigarette tax by 94 cents (to $1.95)||$85 billion|
|Reduce and reform post-acute care payments||$55 billion|
|Increase means testing of Medicare premiums||$55 billion|
|Increase Medicare cost-sharing||$40 billion|
|Reductions in hospital payments||$35 billion|
|Increase civilian retirement contributions||$20 billion|
Even though the White House has already stated that chained CPI will not be in this year's budget, we would like to see the President renew his commitment to deficit reduction, through both spending and tax reforms.
We'll be covering the President's budget throughout the week here.