Obama budget to miss deficit goal

Updated at 6:30 p.m.:

President Obama's proposed 2013 budget will forecast a $901 billion deficit for next year, falling far short of his goal to halve the deficit in four years.

The budget, an outline of which was released by the White House Friday night, will show a higher deficit this year than in 2011, up from $1.3 trillion to $1.33 trillion.

In addition, the projected decline to $901 billion in 2013 is dependent on enactment of the president's policies, including spending reductions agreed to last summer and ending George W. Bush's tax cuts for the wealthy at the end of this year.

For weeks, White House officials have said the budget would make little news because many of its elements were well known:

• About $1 trillion in spending cuts agreed to with Congress and signed into law in August
• Obama's goal of slashing another $3 trillion from annual deficits over 10 years, including about $1.2 trillion mandated by the August agreement
• Obama's key priorities, outlined in his State of the Union address last month and in the American Jobs Act he proposed in September. Those include initiatives in manufacturing, energy production, education and training, and infrastructure repair.
• His desire to add $1.5 trillion in new revenue, much of it by ending Bush's tax cuts for families with income above $250,000. Republicans who control the House have previously blocked that proposal.

But the outline released Friday includes a few details sure to draw attention on Monday, when Obama releases the full 2013 spending plan:

• The deficit would decline as a percentage of the economy from 8.5% this year to 5.5% in 2013 and 2.7% by 2018. Most economists say deficits should be below 3% of the economy.
• Tax breaks for the wealthy would be reduced so that they are no better than those for the middle class. No household making more than $1 million a year would pay less than 30% in income taxes.
• More than $360 billion would be cut from Medicare, Medicaid and other health programs over 10 years -- an amount that's sure to be seen as too much by seniors and liberal groups, and paltry by Republicans in Congress pushing more robust cuts in entitlement programs.
• Defense spending would be reduced by nearly $500 billion from what was planned in the budget Obama proposed a year ago.
• Savings from winding down the wars in Iraq and Afghanistan would be put toward deficit reduction and investments sought by Obama, including new infrastructure spending.
• About $350 billion in new investments, most of them remaining from Obama's American Jobs Act that was derailed in Congress, would be rejuvenated.

Earlier this week, the White House announced that its unemployment projections included in the budget -- 8.9% in 2012 and 8.6% in 2013 -- already are outdated. If the actual jobless rates are a full percentage point lower, that could mean a $95 billion reduction in the deficit, according to a previous estimate from the non-partisan Congressional Budget Office.

Obama will unveil the budget at 11 a.m. Monday at Northern Virginia Community College in Annandale, Va. -- just beyond Washington's Beltway. On Wednesday, he'll go further, embarking on a three-day trip to Wisconsin, California and Washington.

Administration officials said a more complete proposal for corporate tax reform will be forthcoming later in February.