President Barack Obama put pressure on Congress today to pass a short-term budget deal to avoid automatic spending cuts that are scheduled to take place on March 1.
In a short statement released today in the White House briefing room, Obama said, “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.”
The president’s plan involves both spending cuts and tax increases, although it did not specify what the cuts or increases might be, how much the deal would be for, or how long it would last. Obama’s goal is to avoid sequestration, which would implement across the board spending cuts on March 1, save for Social Security and Medicaid.
Republicans in the House introduced legislation today that would require Obama to either submit a budget that was balanced within a decade or specify when it would come into balance. Most see the bill as a political message, rather than as viable legislation.
As it currently stands, the Congressional Budget Office said the government will run a $845 billion deficit this year, an improvement from the $1.1 trillion it ran last year. By 2015, the U.S. deficit could decrease to $430 billion, the result of economic growth, the higher tax rate on top earners that was recently negotiated, the end of the temporary payroll tax cut, and a slower growth rate for health care costs.
However, retirement by baby boomers will lead to deficit increases after 2015, as Medicare and Social Security costs increase. While a short-term solution is all well and good to avoid the pain of sequestration, the U.S. is running out of time to face down the ticking time bomb of retiring boomers.
– Benjamin Nanamaker, InvestorPolitics Editor
The opinions contained in this column are solely those of the writer.
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