President Obama came under new pressure to address the mounting federal debt as a report Friday concluded that deficits over 10 years will be higher than administration projections and a majority of senators urged him to take the lead on deficit reduction.
Obama, leading Democrats and Republicans all have proposed negotiations to rein in deficits, but talks on the politically combustible issue have yet to begin. Analysts have warned that, without action, the situation could balloon into a European-style fiscal crisis.
Friday’s report from the nonpartisan Congressional Budget Office amplified the worries. It said Obama’s proposed 2012 budget would result in $9.5 trillion in deficits over the next decade — $2.3 trillion more than the administration projected.
The White House budget director, Jacob Lew, said the report relied on different economic assumptions and failed to credit the administration for its anticipated reductions in transportation and health costs. The Obama budget projected deficits would total $7.2 trillion over the decade.
“But regardless of our differences, CBO confirms what we already know: current deficits are unacceptably high,” Lew wrote on the Office of Management and Budget blog, “and if we stay on our current course and do nothing, the fiscal situation will hurt our recovery and hamstring future growth.”
Republican leaders in Congress seized on the report to portray the president as unresponsive to the rising concerns about the nation’s debt load.
"[The] report exposes the widening gulf between the president’s rhetoric and his budget’s reality,” said Rep. Paul D. Ryan (R-Wis.), chairman of the House Budget committee.
Concern over the rising discrepancy between revenues and expenditures led 64 senators — half Democrats and Republicans — to sign a letter to Obama on Friday pressing the president to take a more active role on the deficit.
“This letter sends a very powerful bipartisan message that there is a long list of senators ready to make tough decisions,” said Sen. Mike Johanns (R-Neb.), one of the primary authors of the letter.
Separately, another bipartisan group of six senators has been meeting behind closed doors for months to devise a budget blueprint. Their plan would be based on sweeping conclusions last year by Obama’s bipartisan fiscal commission. Sens. Mark R. Warner (D-Va.) and Saxby Chambliss (R-Ga.) lead that group.
Meanwhile, House Republicans also are developing a comprehensive budget proposal.
The undertakings involve difficult policy decisions. Analysts agree that reining in deficits will require more than simply cutting the domestic programs that have been targeted in recent debates over 2011 spending. Those domestic programs make up less than 12% of the overall budget.
Rather, as Obama’s fiscal commission said, a balanced budget will require substantial changes to the nation’s existing tax policy and its entitlement programs, including Medicare.
Most of the deficit spending over the next decade under Obama’s budget would come from the continuation of tax policies enacted during the George W. Bush administration and extended by Congress last year. Obama proposes to continue most of those tax breaks.
Deficit spending also comes from the ever-growing cost of borrowing, with interest payments on the debt skyrocketing four-fold to more than $900 billion a year by 2021.