CBO and OMB In Tune on President's Budget
Today, the Congressional Budget Office (CBO) released its analysis of President Obama's FY 2013 budget proposals. In a somewhat surprising analysis, CBO is slightly more optimistic than the Office of Management and Budget (OMB) was in its analysis this past February. CBO finds that when compared to current law, President Obama's budget would add $3.5 trillion to the deficit, but the current law baseline assumes a number of policies which Congress routinely extends -- such as the AMT patch and the "doc fix" -- and assumes all of the 2001/2003/2010 tax cuts expire and the sequester goes off. Compared to the CRFB Realistic Baseline, or current policy, deficits are about $2.6 trillion lower between 2013-2022.
CBO finds that the President's policies would stabilize the debt at 76.3 percent of GDP by 2022 -- after rising from 73.2 percent this year -- and finds it to be at a slightly lower level than OMB projected (76.5 percent). Still, it would not appear to be enough to stave off rising debt beyond the ten-year window, as OMB's long-term projections show.
CBO projects the 2012 deficit to be $1.25 trillion, about $75 billion less than OMB projected. In addition, 2013-2022 deficits are about $300 billion lower in CBO's estimate than OMB's estimate ($6.4 trillion versus $6.7 trillion).
It is encouraging that, unlike last year, the President's budget does not rely on more optimistic economic and technical assumptions or magic asterisks. Still, CBO's analysis does not change the fact that the President's budget would not put debt on a downward path and likely would not go far enough to ensure long-term fiscal sustainability. Stay tuned for CRFB's full analysis soon.