President Releases $3.8 Trillion Budget

President Obama released a Fiscal 2011 budget request today that would spend some $3.834 trillion next year and projects a deficit of $1.267 trillion, or 8.3 percent of GDP.

Under the budget plan, deficits would gradually fall to $706 billion in 2014, before rising back to just over $1 trillion by 2020. The plan includes a three-year non-security discretionary spending freeze which would save $250 billion over 10 years, and additional deficit-reducing proposals, according to the Administration.

At the same time, the budget also includes more than $300 billion in tax cuts in the next ten years (this excludes the renewal of the 2001/2003 tax cuts and continuation of AMT patches). It also calls for several new temporary initiatives, including a $100 billion jobs bill, including a $33 billion small business plan, a one year extension of the "Making Work Pay" tax credit, and an extension of the stimulus provision that allows small businesses to expense up to $250,000 of qualified investment.

In addition, the administration also renews calls for several plans that have stalled in Congress, including an overhaul of the student loan program to eliminate banks from the program. Obama calls for a $3 billion boost for programs authorized by the Elementary and Secondary Education Act; another $1 billion would be added if Congress overhauls the law. The administration also proposes a $17 billion increase in Pell Grant funding, and $4 billion for a new National Infrastructure Innovation and Finance Fund.

Although the Administration’s policies are not sufficient to reach their fiscal goal--balancing the budget excluding interest payments on the debt by 2015-- the  budget also discusses an executive deficit commission which would make recommendations to close the difference. "A decade of irresponsible choices has created a fiscal hole that will not be solved by a typical Washington budget process that puts partisanship and parochial interests above our shared national interest," the president said, in his budget message.

CRFB will provide additional details later today and analysis throughout the week.