A CBO study found that middle class earners lost about 5 percent of their pre-tax income between 2007 and 2009, compared to 2 percent losses for low-income workers and 36 percent declines among the top 1 percent. The study counted government aid, such as welfare, unemployment insurance, and Social Security as income.

President Barack Obama included some tax relief in his Stimulus bill, which reduced the tax burden of low and middle class earners to the lowest levels in decades, while federal tax rates on the top 1 percent increased by .8 percent. This has led to a more progressive distribution of wealth. The top 20 percent of workers earn approximately 50 percent of all pre-tax income, despite its sharp decline in income, but cover about 70 percent of the nation’s tax bill, according to the CBO.

Obama has similar plans going forward. On Monday he proposed a one-year extension on the Bush tax cuts for those earning less than $250,000, while raising taxes on small businesses and high-income earners by nearly 5 percent.

“The fate of the tax cut for the wealthiest Americans will be decided by the outcome of the next election,” said Obama during a speech Monday advocating for his tax plan. “My opponent will fight to keep them in place. I will fight to end them.”

House Republicans and GOP nominee Mitt Romney support making the tax cuts permanent across the board.

Douglas Holtz-Eakin, a former director of the nonpartisan Congressional Budget Office (CBO), told the Washington Post that once the CBO recalculates the cost of the bill to incorporate the tweaks included in the court’s decision, the law’s total price tag could increase by $500 billion over the next decade.

“There’s real money at stake here,” Holtz-Eakin said.

How does it work? The Affordable Care Act seeks to cover the uninsured in two ways: It requires states to expand Medicaid to cover those earning less than 133 percent of the federal poverty level, with the federal government initially picking up the full tab (though federal funding would later fall to cover just 90 percent of the cost of expansion). It also creates new subsidies to help people at slightly higher income levels afford private insurance on new insurance exchanges.

Under the court ruling, the federal government may not punish states that refuse to expand Medicaid eligibility. Holtz-Eakin argues that this legal development gives states a huge financial incentive to opt out of the Medicaid expansion and encourage residents earning 100 percent to 133 percent of the poverty level to seek the more expensive subsidies for private insurance, which are funded entirely by the federal government.

“Suppose that every state takes advantage of this opportunity, and that every individual who is either on Medicaid or would be eligible for the expansion actually moves to the exchanges. The federal government would save as much as $130 billion in Medicaid in 2014, but it would be on the hook for $230 billion in new insurance subsidies,” Holtz-Eakin writes. “The net bottom line: a $100 billion annual expansion in federal costs.”

The nonpartisan Congressional Budget Office said Friday that President Obama’s 2013 budget will hurt the economy in the long term, arguing the larger deficits it would produce would reduce the amount of capital available to businesses.

After five years, the CBO says the Obama proposals would reduce economic output by between 0.5 percent and 2.2 percent.

Larger deficits caused by the budget would cause the government to issue more bonds, sucking up private capital to finance its debts and thereby reducing the funds businesses could use to expand and hire, the CBO said. An increased tax on capital gains included in the president’s plan would also tend to reduce private capital, it says.

The findings are not out of line with the projections offered by the Obama administration, which acknowledged that under the president’s budget, the nation’s “fiscal position gradually deteriorates” after 2022.

One chart included in the administration’s analysis of Obama’s budget shows the country’s economy ceasing to exist past the year 2027.

From the Wall Street Journal:

The Congressional Budget Office said Thursday that 45 million people in 2011 received Supplemental Nutrition Assistance Program benefits, a 70% increase from 2007. It said the number of people receiving the benefits, commonly known as food stamps, would continue growing until 2014.

Spending for the program, not including administrative costs, rose to $72 billion in 2011, up from $30 billion four years earlier. The CBO projected that one in seven U.S. residents received food stamps last year.

In a report, the CBO said roughly two-thirds of jump in spending was tied to an increase in the number of people participating in the program, which provides access to food for the poor, elderly, and disabled. It said another 20% “of the growth in spending can be attributed to temporarily higher benefit amounts enacted in the” 2009 stimulus law.

Former House Speaker Newt Gingrich has repeatedly referred to President Obama as a “food stamp president.”

“In all, between 2013 and 2022, deficits would total $6.4 trillion (or 3.2 percent of total GDP projected for that period), $3.5 trillion more than the cumulative deficit in CBO’s baseline,” the nonpartisan office wrote in its analysis of the president’s budget.

Under the CBO baseline, which assumes that current spending and tax policy would remain unchanged, the deficit would increase by $2.9 trillion over the same period.

In the next year alone, the president’s budget would increase the deficit by $365 billion, CBO projected.

The CBO projects that under the president’s budget, federal debt held by the public would rise by $8.7 trillion over the next decade, totaling $18.8 trillion (76 percent of GDP) by 2023. Under the current-law baseline, public debt would increase more slowly, to $15.1 billion by the end of the decade.

The findings cast considerable doubt on President Obama’s own claims about his budget.

When he unveiled his budget in February, Obama said it was a fiscally responsible document that, if enacted, would significantly reduce the federal deficit.

“Part of our job is to bring down our deficit,” Obama said. “And if Congress adopts this budget, then along with the cuts that we’ve already made, we’ll be able to reduce our deficit by $4 trillion by the year 2022—$4 trillion.”

He was off by $7.5 trillion.

From the Washington Examiner:

The CBO released its latest cost estimate of Obamacare’s spending provisions showing that the law will cost $1.76 trillion through 2022. But even that doesn’t capture the law’s true price tag.

Since Obamacare will not be fully implemented until 2014, we will not know until next year what a full 10-year cost estimate of the law looks like. But, extrapolating yesterday’s estimate forward, The Washington Examiner‘s Phil Klein predicts the final ten-year cost of Obamacare will exceed $2 trillion, more than double what Obama said it would cost.

On Thursday, the CBO provided an equally explosive report on the number of people who will lose privately provided health insurance once Obamacare is fully implemented. The office provided best case (5 million) and worst case (20 million) estimates on the report, both of which are far higher than previous estimates.

From the Hill:

Under CBO’s best estimate, 11 million mostly low-wage workers would lose their employer coverage. About 3 million would choose to drop their coverage to go into the new subsidized health exchanges or on Medicaid, while another 9 million would gain employer-sponsored coverage, for a net total of 5 million people losing employer coverage in 2019. …

Last year, CBO’s best estimate was that only 1 million people would lose employer-sponsored coverage.

The Hill reports:

In January, CBO assumed the 2 percentage point payroll tax break expired Feb. 29. After a bruising battle between the House GOP and the White House, the payroll tax break was extended to the end of this year without being offset by spending cuts.

In a small ray of good news, the projected deficits by 2022 are now $186 billion smaller than CBO had thought in January. The improvement is mostly due to technical changes to the way interest on Treasury bonds is accounted for.

CBO says the improvement is minor.