Today President Obama called on lawmakers to quickly pass a package of limited spending cuts and tax changes that can head off the automatic, across-the-board reductions — or sequester — that are set to take effect on March 1st. Obama will acknowledge that a broader budget agreement is unlikely to be reached by next month’s deadline when the cuts to domestic and military programs will go into effect, so is now urging Congress to avoid cuts in spending through a balanced approach that raises new tax revenue by closing loopholes on wealthy Americans and the oil and gas industries. The push by the President to avoid the sequester is also an admission that efforts to reach a bigger deal with Congressional Republicans to cut spending and raise revenues is not likely to be reached in the coming months.
Also happening today, the Congressional Budget Office (CBO) projects the 2013 federal deficit to be $845 billion, the first time the non-partisan Congressional Budget Office has forecast a deficit below $1 trillion under the current Administration. The reduction in the budget deficit is due to the actions Congress took on New Year’s Day to avoid the fiscal cliff by approving higher tax rates on households with annual income above $450,000. But the long-term forecast from CBO shows the fiscal cliff deal that prevented higher tax rates on most households did little to help the nation’s long-term budgetary outlook. CBO sees the deficit falling to $430 billion by 2015 before slowly rising again. By 2023, CBO projects the nation will be nearing the $1 trillion mark with a $978 billion budget deficit as the aging population and rising health costs explode entitlement spending.