Back-up plan

21 March 2011 By James Pethokoukis

The U.S. fiscal scorekeeper reckons President Obama’s 2012 budget would be even worse for America’s finances than continuing current policies. Meanwhile, both parties in Congress are showing signs of embracing discipline. The administration is in danger of getting left behind.

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An analysis by the nonpartisan U.S. Congressional Budget Office released on March 17 found that President Barack Obama's latest budget proposal would worsen the country's fiscal situation over the coming decade.

The study found that Obama's budget would lead to a total of $9.5 trillion in budget deficits between 2012 and 2021 28 percent more than if current policies were kept in place.

The wider gap stems primarily from Obama's tax proposals, which would lower government revenue and boost annual deficits, the CBO said. That in turn would lead to higher interest payments, which would widen deficits further.

Interest payments on the debt would increase over the coming decade to 3.9 percent of GDP from 1.7 percent, the CBO said. Both taxes and spending would remain well above historical averages, the report found.

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