With the administration budget revealed, and it appears taxes and deficits are going up. At least that’s the plan if the President’s budget passes as is. President Obama will try once again to increase taxes by limiting mortgage, tax and charitable deductions for upper income earners. This proposal did not pass a Democrat majority in Congress last time, so we are not too concerned that it will pass this time.
The 2011 deficit will reach a record level of $1.65 trillion but a framework will be put in place to trim $1 trillion back out of the deficit over the next ten years. Unfortunately this will have little effect when the current proposed budget sees $607 billion as the lowest deficit of any single year over the next ten years. This still tops President Bush’s worse deficit of $458.6 billion in 2008.
With Republicans looking to trim social spending back to 2008 levels while maintaining current tax rates and the administration budget including cuts to military spending and tax hikes, this is sure to be a drawn out budget battle with the same sort of clarity we saw at the end of 2010. In other words, clear as mud. We will keep you posted of any pending tax changes in the final 2011 budget.