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Date published: 2/6/2013
WASHINGTON--Eager to buy time and avoid economic pain, President Barack Obama urged Congress on Tuesday to pass targeted short-term spending cuts and higher taxes as a way to put off sweeping, automatic cuts that would slice deeply into military and domestic programs starting March 1.
Obama's appeal came as Congress' budget office projected a yearly federal deficit under $1 trillion for the first time in his presidency and as Republicans applied political pressure on the president to submit balanced budgets, pushing fiscal issues back to the forefront in Washington after weeks devoted to immigration and guns.
A short-term deficit-trimming measure would once again delay the broad and onerous spending cuts that are unpopular with both political parties, underscoring the government's difficulty adopting long-term budget policies. Obama conceded the problem, even though he has previously scoffed at temporary budget reprieves.
"Let's keep on chipping away at this problem together, as Democrats and Republicans, to give our workers and our businesses the support that they need to thrive in the weeks and months ahead," Obama said in a short statement in the White House briefing room.
Illustrating the challenge for the government, the Congressional Budget Office said the government will run an $845 billion deficit this year. That's down from last year's $1.1 trillion but still high enough to require the government to borrow 24 cents of every dollar it spends. The report predicted the deficit would decline to $430 billion by 2015, the lowest since President George W. Bush's last year in office.
However, as more baby boomers retire and claim Medicare and Social Security, deficits would move higher and again reach near $1 trillion in the latter portion of the 10-year window.
"We have a large budget imbalance. We have large projected deficits, debt that will remain at a historically high share of GDP and will be rising at the end of the coming decade," said CBO director Douglas Elmendorf. "What that implies is that small changes in budget policy will not be sufficient to put the budget on a sustainable path."
The slight reduction in the projected deficit for this year is due to anticipated higher revenue caused by a higher tax rate on top earners negotiated over the New Year's holiday, the end of a temporary payroll tax cut, a slowly improving economy and a slower rate of growth for health care costs.