President Obama’s deficit-reduction plan “falls short” of targets set by House Republicans and Obama’s own fiscal commission and would be unlikely to stabilize borrowing, according to a new independent analysis.
The analysis, by the bipartisan Committee for a Responsible Federal Budget, found that the plan Obama unveiled in a speech last week would require the nation to borrow another $7 trillion during the next decade, compared with about $5.4 trillion under the House Republican budget and about $5.3 trillion under the recommendations offered in December by Obama’s fiscal commission.
The new outline is a significant improvement over the budget request Obama submitted to Congress in February, which would have required $9.5 trillion in fresh borrowing through 2021. However, the framework is unlikely to reduce deficits as much as Obama suggested, the analysis found, and would therefore permit the portion of the national debt held by outside investors to continue rising, when measured against the size of the economy, to just less than 80 percent of gross domestic product by the end of the decade.
By contrast, the budget blueprint adopted last week by the House matches the fiscal commission’s plan “dollar for dollar” with new savings, according to the analysis. While the total debt would keep growing under both proposals, the rate of borrowing would slow dramatically and the debt would slowly begin to diminish when measured against the size of the economy, settling at less than 70 percent of GDP by the end of the decade.
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“By presenting his own framework for deficit reduction, the President has done a substantial service in moving the ball forward,” the analysis says. “Not only is the President’s Framework a significant improvement over his February budget proposal, it represents a balanced approach to begin improving the nation’s finances — a move we praise.”
“At the same time, when compared to the House budget and Fiscal Commission plan, the President’s Framework falls short,” the analysis says, adding that the level of savings achieved by both the GOP plan and the fiscal commission “is the minimum level of savings policymakers should aim for.”