Yesterday, the White House released its budget for FY 2011.  The budget spends $3.83 trillion in FY 2011 and contributes to a record deficit of $1.55 trillion this year.  The following is a summary of the record debt, deficits, and tax increases included in the President's budget, as well as a brief description of some of the budget's main items.

Debt:  The President's budget would dramatically increase the national debt, more than doubling the public debt from $7.7 trillion today to $18.57 trillion in 2020.  Under the President's budget, from today until the end of 2010, public debt would rise by $1.53 trillion or 20 percent.  By 2020, the public debt would be 77.2 percent of gross domestic product (GDP), the highest total since just after World War II.  By contrast, under current law, public debt would be $15.02 trillion in 2020, meaning the Obama Administration's budget would incur $3.55 trillion more in debt than doing nothing.  When President Obama took office in January, 2009, CBO estimated that the public debt in 2019 would be $9.3 trillion.

Deficits:  Under the President's budget, the FY 2010 deficit will reach a record high of $1.556 trillion or 10.6 percent of GDP, which is $143 billion or 10.1 percent larger than last year's record deficit.  Over the next ten years, annual deficits average $917 billion every year-twice as high as FY 2008's then record deficit of $458 billion.  The smallest deficit under the President's plan would be $706 billion in 2014.  However, the deficit would quickly increase again, before reaching over $1 trillion in FY 2020.  Between FY 2011 and FY 2020, annual deficits would total $8.53 trillion.  According to CBO, if current law were not changed the deficit would be $6.01 trillion over the same time span-$2.5 trillion less than it would be if the President's policies are enacted.

Tax Increases:  The President's budget would also increase taxes by a record $2.308 trillion over ten years.  The budget increases a broad range of taxes that would affect every taxpayer, including:

• $969 billion in tax increases by allowing the 2001 and 2003 tax cuts to expire for individuals earning above $200,000 (single) or $250,000 (married).  This includes a provision limiting tax deductions on charitable gifts to 28 percent, which one formula has estimated could decrease private charitable donations by $9 billion a year.
• $743 billion in new taxes associated with a government takeover of health care. 
• $122 billion in higher taxes related to changes in the U.S. international tax rules and enforcement.
• $90 billion in tax increases imposed on financial institutions, referred to as a "financial crisis responsibility fee."
• $59 billion in tax increases associated with the repeal of last-in, first-out inventory accounting practices.
• $39 billion in increased taxes related to the repeal of tax credits for the production of natural gas, oil, and coal fuels.
• $24 billion in tax increases on carried interest, doubling the tax rate from 15 percent to 39.6 percent.
• $262 billion in additional, miscellaneous tax increases over the next ten years.

In addition, the President's budget ignores any new taxes related to the Democrats' national energy tax proposal, known as "cap and trade."  Instead, the budget merely states that, "A comprehensive market-based climate change policy will be deficit neutral because proceeds from emissions allowances will be used to compensate vulnerable families, communities, and businesses during the transition to a clean energy economy."  Thus, the President's budget ignores the $843 billion in new taxes that CBO estimates the House-passed bill would impose on every American and assumes that redistributive spending programs will make each whole.  If these additional taxes were included, the President's budget would impose $3.15 trillion in tax increases over the next ten years.

Other Issues of Note:  In addition to the fiscal issues above, the President's budget also includes the following provisions which may be of note to Members and staff.

"Spending Freeze":  The President's budget "freezes" certain discretionary spending at FY 2010 levels for three years, through 2013.  However, the budget excludes the vast majority of federal spending from the freeze, including mandatory spending and "security" spending, including defense, homeland security, veterans, and foreign aid discretionary spending.  In addition, funding for Pell Grants also evades the freeze because the Administration proposes to convert it into a mandatory program.  The freeze would only affect about 13 percent of FY 2010 spending.  The President's plan to freeze some expenditures also comes after a year of unprecedented discretionary increases which inflated current spending levels.  According to the Republican staff of the House Budget Committee, including the "stimulus," the President has increased non-defense discretionary spending by 84 percent over two years.

Pell Grants:  The budget makes federal Pell Grants a mandatory program in order to clear approximately $17.5 billion from the discretionary spending category of the budget in FY 2010.  Pell Grants would automatically be increased with inflation.  This budgeting gimmick allows the President to clear billions from the discretionary spending category and meet the "spending freeze," while making Pell Grants-and Pell Grant increases-permanent regardless of appropriations.

Student Loan Takeover:   Once again, the Administration's budget has proposed to eliminate the federal government's guaranteed student loan program, the Federal Family Education Loan program (FFEL), which allows students to receive federal loans through a private institution, and begin making all federal student loans through the Direct Loan program.  According to OMB this proposal would save $45 billion over the 2010-2020 period, but this scoring neglects the risk to the federal government of defaults.  According to CBO, when this market risk is considered, proposals to have the Direct Loan program monopolize student lending actually cost taxpayers.

Social Security Payments:  The budget proposes a $250 payment to each Social Security and Supplemental Security Income (SSI) recipient, identical to the payment made in the "stimulus" bill at a cost of $13 billion.  A similar provision was requested by the President in a second stimulus bill, but the House did not include it in the bill.

LIHEAP:  The budget includes $3.3 billion for the Low Income Home Energy Assistance Program (LIHEAP) and provides for a new trigger that allows financial assistance through the program to increase automatically.

Contingency Funding:  President Obama's budget provides $41 billion for overseas contingency operations for the wars and missions in Afghanistan, Pakistan, and Iraq in FY 2010 and a total of $159.3 billion for FY 2011.  Last year's budget included only $50 billion for this purpose in FY 2011.

Unemployment and COBRA:  The budget provides $49 billion for an extension of emergency Unemployment Insurance benefits provided by the federal government and $5.5 billion for an extension of the COBRA health insurance subsidy at 65 percent of the cost of employer-provided health insurance.