One reason for the slightly smaller projected deficit is the decision to let the Bush tax cuts of 2001 and 2003 expire for individuals making more than $200,000 a year and families making more than $250,000. This tax increase, which will occur automatically, will bring in a projected $678 billion in the next decade, the administration said. The tax cuts are due to expire at the end of the 2010 calendar year.
The Obama administration will ask for the Bush 2001 and 2003 tax cuts to be made permanent for individuals who make less than $200,000 and families who make less than $250,000.
Other potential savings include the proposed three-year spending freeze on nonsecurity discretionary spending, which amounts to roughly $250 billion in 10 years; the proposed bank tax -- called a financial crisis responsibility fee -- to repay taxpayers for the Wall Street bailout, amounting to $90 billion in 10 years; and eliminating tax cuts and subsidies for oil, gas and coal companies, which is estimated to be $40 billion.
The budget also includes $20 billion in savings from various terminations and reductions in federal programs, such as eliminating the Save America's Treasures and Preserve America grant programs at the National Park Service, eliminating the advanced earned-income tax credit and terminating the Brownfields Economic Development Initiative.
Defense Secretary Robert Gates "will be putting increased emphasis on also moving forward on canceling the C-17 [military transport aircraft] purchases and alternative engine for the F-35 [stealth fighter jets]," White House Budget Director Orszag said.
"The president dispatched his budget staff to engage in the process of going line by line through the federal budget to look for ways we could save money, so that we can ensure that where there is waste, where there are duplicative programs, where there are programs that have outlived their usefulness, they are eliminated or reduced appropriately," White House communications director Dan Pfeiffer said.
"Even without any new policy changes," Orszag said, "the recovery of the economy will reduce the deficit from roughly 10 percent of the economy in 2010 to about 5 percent of the economy by 2015."
NASA will also experience some cuts, including a cancellation of the NASA Constellation program to develop spacecraft to replace the Space Shuttle with the goal of sending astronauts to the moon and perhaps even Mars. The president also wants to shift "the activity of NASA research into longer range R&D," Orszag said, such as "advanced robotics and other steps that will help to inspire Americans and not to just return a man or a woman to the moon but to undertake the longer-range research. That could succeed in things like space flights to Mars."
The president is proposing a 6 percent increase in education spending, including up to a $4 billion increase for programs authorized by the Elementary and Secondary Education Act, $1.35 billion to continue the Race to the Top challenge; and $17 billion more in Pell grant funding.
Administration officials say the reason for the heavy investment in education, despite massive deficits, is to invest in future growth.