The Congressional Budget Office today released its latest budget projections, which show that the deficit in 2012 is expected to exceed $1 trillion and that economic growth is likely to slow over the next two years. Predictably, Republicans jumped to blame the large deficit on President Obama’s spending.

“The President and his party’s leaders have fallen short in their duty to tackle our generation’s most pressing fiscal and economic challenges,” claimed House Budget Committee Chairman Paul Ryan (R-WI). “By contrast, the new House Majority has fought to put the brakes on the President’s spending spree.”

However, as Center for American Progress Director of Tax and Budget Policy Michael Linden noted, CBO was projecting a surplus for 2012 as recently as 2007, and plummeting federal revenue — not the GOP’s imaginary “spending spree” — is responsible for the lion’s share of the swing from surplus to deficit:

Most of that swing from surplus to deficit was the result of the Great Recession’s onset. Between September of 2008 and January of 2009 alone, economic conditions prompted the CBO to revise estimates of 2012 revenue collections downward by over $240 billion. [...]

The remainder of the deterioration did happen after 2009, but higher spending wasn’t even close to the main culprit. The real problem was lower-than-expected revenues.

In January 2009, the CBO forecast 2012 revenues at $3.1 trillion. Today, the CBO expects that this year’s revenue will be just $2.5 trillion, a nearly $600 billion difference. That revenue decline accounts for fully 48 percent of the swing from projected surplus to current deficit.

And while some of that decline has to do with continued economic weakness, the majority of it, about $335 billion, is the direct result of the tax cut deal signed into law in December 2010. That deal, which extended all of the Bush tax cuts, even those that exclusively benefit the very wealthy, is the legislative factor by far most responsible for this year’s deficit.

It was Republicans who insisted that the Bush tax cuts be extended for everyone in 2010, even during a time of record deficits. Not only is revenue the main factor behind today’s deficit, but it’s also the driver behind projected deficits:

As we’ve noted, a do-nothing Congress could virtually eliminate the deficit by simply not extending a slew of expiring tax breaks at the end of the year.

Rick Santorum, who following a recount may very well have been the winner of the Iowa caucus, has released a tax plan that, like those of all his competitors, would overwhelmingly aid the wealthy while doing next to nothing for the middle class. In fact, 40 percent of the benefit of his plan would go to the richest 1 percent of the country.

Not only that, but as the Tax Policy Center found, Santorum’s plan would blow a $1.3 trillion hole in the budget, gutting federal revenue by about 40 percent:

The Santorum plan would reduce federal tax revenues substantially. TPC estimates that on a static basis, the Santorum plan would lower federal tax liability by about $1.3 trillion in calendar year 2015 compared with current law, roughly a 40 percent cut in total projected revenue. Relative to a current policy baseline, the reduction in liability would be about $900 billion in calendar year 2015.

“I was surprised at how large the revenue losses were,” said TPC’s Roberton Williams. “It’s a lot of rate cuts and doesn’t get rid of anything to help pay for that.”

The average tax cut for a millionaire under Santorum’s plan would be nearly $448,000. For the richest 0.1 percent of the country, the tax cut would be worth $1.3 million annually. Santorum often complains that the deficit “is exploding,” but his plan would do nothing to turn around the nation’s budget woes, instead spending trillions to cut taxes for those at the very top of the income scale.

When does a cut to the federal budget actually result in an increase in the deficit? When, as the New York Times profiled today, it cuts the Internal Revenue Service, leaving the IRS understaffed and unable to collect all the taxes owed to the federal government:

An expanding workload and cuts in funds have left the Internal Revenue Service unable to adequately perform either of its primary duties — collecting taxes and providing the public with reasonable service, according to a report released Wednesday by the I.R.S.’s internal monitor.

The agency’s staff reductions and backlog have limited its ability to collect the hundreds of billions of dollars a year that the government is owed but not paid, Nina E. Olson, the national taxpayer advocate, said in her annual report to Congress.

In the report, Olson noted that, due to budget cuts, the IRS “is unable to maximize revenue collection, contributing to the federal budget deficit.” “It will never be possible to eliminate the tax gap entirely, of course, but even modest improvements would help to reduce the federal budget deficit. Moreover, even apart from the fiscal implications, the size of the tax gap raises important equity concerns,” the report added.

The latest data shows that there is a $385 billion gap between the taxes owed to the U.S. and those collected, meaning close to 15 percent of federal taxes went unpaid. There would have to be a $3,400 “noncompliance surtax” paid by every tax compliant household, in order “to enable the federal government to raise the same revenue it would have collected if all taxpayers had reported their income and paid their taxes in full.” The IRS, meanwhile, estimates that every dollar spent on enforcement brings in $4-$5 dollars of additional revenue.

Billionaire investor Warren Buffet is telling congressional Republicans it’s time to put up or shut up on deficit reduction.

For the past year, Republicans have doggedly insisted that the nation’s deficit is a crisis that eclipses high unemployment. But they’ve only been willing to reduce the deficit through drastic spending cuts — and have denounced Buffett for saying tax increases on the rich need to be part of the solution.

Last fall, Sen. Mitch McConnell (R-KY) said that if Buffett was feeling “guilty” about paying too little in taxes, he should “send in a check to the Treasury. Now, Buffet says he’s willing to do just that to pay down the national debt — if Republicans will do their part too:

The billionaire investor, in the new issue of Time magazine, says he will donate $1 to paying down the national debt for every dollar donated by a Republican in Congress. The only exception is Senate Republican leader Mitch McConnell – for whom Buffett said he would go $3-to-$1.

The idea stems from a New York Times opinion piece Buffett wrote last August in which he said the rich ought to pay more taxes. It sparked an instant controversy, with some Washington conservatives calling on the 81-year-old “Oracle of Omaha” to voluntarily pay extra.

“It restores my faith in human nature to think that there are people who have been around Washington all this time and are not yet so cynical as to think that can’t be solved by voluntary contributions,” the Berkshire Hathaway CEO told Time…

McConnell certainly has the resources to meet Buffett’s challenge — he’s worth at least $10 million. Buffett went on to say that the U.S. needs a system that “takes very good care” of citizens who work hard but don’t happen to make millions in the financial sector.

Mitt Romney won the Iowa caucuses last night, squeaking past the late surging Rick Santorum by just eight votes. And when it comes to tax and budget policy, the two candidates are separated by about as much as their final vote tallies.

Romney’s economic plan includes a $6.6 trillion tax cut that overwhelmingly benefits the rich and corporations. As a result of this gargantuan giveaway, the plan “would yield approximately $6.5 trillion in deficits from 2013 through 2021.” And as the Tax Policy Center found, Santorum’s plan doesn’t fare much better:

The Tax Policy Center has not yet formally modeled the former Pennsylvania senator’s tax platform. However, because it cuts rates significantly but does not eliminate tax preferences—and even expands a few—it would very likely add trillions of dollars to the federal deficit. Looked at from that prism, it is not so different from the ideas raised by most of his GOP rivals.

Like other Republican tax planks, Santorum’s would benefit corporations and high-income individuals. No surprise there. But unlike his rivals, he’d also cut taxes for many families with children.

Santorum is no bleeding heart, however. Even as he’d cut their taxes, he’d shred direct government spending for programs aimed at assisting these same households.

When it comes to economic policy, the GOP field is largely in lockstep, supporting new, huge tax cuts for the rich and corporations and opposing efforts to ensure that millionaires can’t pay lower taxes than middle-class families. That kind of end result fits right in with the economic beliefs that Santorum holds, as he’s said that he is “for income inequality” and believes that the country’s economic woes are the result of “huge moral failings.”

Last month, Tea Party favorite Sen. Jim DeMint (R-SC) released a budget plan along with GOP Sens. Rand Paul (KY) and Mike Lee (UT) that purports to cut $5 trillion out of the federal budget over 10 years. The plan included about $4.2 trillion in direct spending cuts (with the rest coming from reduced interest payments on the debt and the sale of government assets).

The senators claim that these reductions are simply “real, sustainable spending cuts.” However, as McClatchy reported, about 70 percent of the deficit reduction in DeMint’s plan is placed right onto the backs of low-income Americans:

A plan by Republican U.S. Sen. Jim DeMint of South Carolina to slash the federal budget deficit would hit the poorest Americans especially hard, directing 70 percent of its $4.2 trillion in spending cuts at safety-net programs intended to help tens of millions of low-income people.

The plan proposes $20 billion in cuts that would affect the affluent. It suggests almost $3 trillion in cuts that would affect low-income Americans, leading one liberal economist to call the plan “cruel.”

“It’s cruel,” said Andrew Fieldhouse of the Economic Policy Institute. “It’s inexcusable to cut supports that help those adversely affected by the economic downturn.” Alan Viard, who was on the White House Council of Economic Advisers under President George W. Bush, added that “this plan places a disproportionate burden on low-income groups.”

Even with tax revenue at a 60 year low, DeMint proposes no new revenue other than from one-time sale of government assets, which is obviously not a sustainable revenue source. Interestingly, he also does nothing on Medicare, even while walloping Medicaid and means testing Social Security.

This is hardly the first time that DeMint has been the right-wing id on economic policy, as he also put forth the Senate Republican stimulus plan, which consisted of nothing but huge tax cuts for corporations and the wealthy. He simply shows what the right-wing would do if it had absolute control of the budget: gut the social safety net while largely sparing the richest Americans any pain.

As Senate Republicans continue to stand against raising taxes on millionaires — even if it means the current payroll tax cut that’s benefiting every working American expires — Sen. Tom Coburn (R-OK) took to C-Span today to say he believes that, when it comes to discussing the deficit, his “most liberal” colleagues are “more intellectually honest,” due to their willingness to look at both spending and revenue:

All of us are going to give a little something if we’re going to get out of the hole we’re in. Everybody’s going to see something different…I think it’s better for us to take the pain that we’re going to have to take and make sure it’s meted out in the proper order than take much more severe pain. When I talk to my colleagues on the other side, and some of my closest colleagues are the most liberal, I find them more intellectually honest oftentimes, the very people they want to help, unless we change these [government programs] now are the very people who are going to get hurt if we don’t fix it.

Watch it:

Coburn is absolutely a staunch conservative with whom we disagree on most budgetary issues, but to his credit, he has consistently said that new revenue needs to be a part of any realistic deficit reduction package, acknowledging what the vast majority of his Republican colleagues won’t. He has said it’s “pretty stupid and naive” for Republicans and anti-tax zealots like Grover Norquist to think that a budget deal won’t include new revenue, accurately pointing out the depths to which government revenue has plunged in recent years.