President Barack Obama's fiscal 2015 budget request would boost U.S. tax revenues by nearly $1.4 trillion over 10 years if fully enacted, slashing deficits by $1.05 trillion while funding new spending, the Congressional Budget Office said on Thursday.
There is virtually no chance that Congress will advance Obama's plan in its entirety. But the CBO's latest analysis will feed campaign messaging by both Democrats and Republicans ahead of congressional elections in November.
The analysis compares Obama's request to a new "baseline" estimate that CBO released last week that assumes no changes to current tax and spending laws.
But Obama's budget plan is loaded with new policy changes, including an assumption that sweeping immigration reforms are enacted, producing a net 10-year deficit reduction of $158 billion.
It proposes to boost revenues by limiting tax breaks for wealthy Americans and businesses, imposing a new tax on millionaires, raising tobacco taxes, and restoring estate and gift taxes to their previously higher, 2009 levels.
At the same time, it would boost spending by expanding cash tax credits for low-income Americans, canceling the "sequester" automatic spending cuts to military and domestic programs, and increasing funds for job training programs, among other changes.
Republicans, who last week in the House of Representatives passed an austere, 10-year balanced budget plan with deep domestic spending cuts and no tax increases, will focus their criticism on tax hikes in Obama's plan. Democrats, who are basing their re-election campaigns on efforts to reduce the gap between rich and poor, are expected to highlight Obama's proposals to aid the middle class and the poor.
The CBO analysis shows that Obama's budget plan would increase deficits slightly relative to current law in fiscal 2014 and 2015, with deficits just above $500 billion in both years.
Deficits in later years of the 10-year budget window would begin to rise again in both Obama's plan and the current-law CBO estimate as more of the Baby Boom generation retires and draws federal benefits. But deficits under Obama's plan in those years would be lower than the CBO baseline as the new revenue measures gain steam.