The President's FY2011 Budget Series
CRFB has talked a lot about deficit and debt projections over the coming decade, and beyond. CBO's analysis of the President's FY 2011 budget shows us where these future deficits are coming from. As the effects of the recession slowly subside, federal outlays and revenues are scheduled to rise above historical norms. What is troubling about this is that the growth in outlays will exceed the growth in revenues, piling more onto our nation's debt.
This afternoon CBO released its preliminary analysis of the President’s Budget, projecting a significantly worse fiscal situation than the Administration does. It will release a more detailed report later this month that outlines the effect of the President’s Budget on the economy. We will release a more detailed analysis next week and when CBO releases its final report, likely at the end of March. But here's a quick preview:
In our final piece on the President's budget, CRFB has put together an analysis of the $10 billion in Terminations, Reductions, and Savings proposed by the President. In this paper, we describe the President's proposed cuts, and compare them to last year. Read our analysis here.
Although our initial analysis of the President's Budget focused on his ten-year budget plan, the Budget itself includes much, much more.
In the budget released last week, the President outlined his vision for additional economic stimulus. Included in his proposal was $76 billion over 11 years (including $29 billion in 2010) to extend existing stimulus measures on the tax side, $90 billion ($45 billion in 2010) to extend spending stimulus measures, and another $100 billion ($24 billion in 2010) to allow for new, yet-to-be-specified stimulus measures.
Does the President's Budget Increase the Deficit or Reduce It? (The Answer Depends on Your Baseline)
According to Obama Administraton, the President's FY2011 reduces the ten-year deficit by $2.1 trillion; or $1.2 trillion if the savings from the Iraq war are excluded. Yet according to our analysis, it would increase the deficit by $3.1 trillion. So who is right? Well, it depends on what baseline you use.
In our Analysis of the President's FY 2011 Budget, we discussed that, if the President's proposals were enacted, spending would grow to $5.7 trillion -- or 23.7 percent of GDP -- by 2020; that is well above the historical average of 20.7 percent of GDP over the last four decade. This post discusses the changing composition of the budget, over time.
A few months ago, we pointed out that the Administration was cheating in its Mid-Session Review budget baseline. Essentially it was taking policies which President Obama had signed into law as temporary, under the stimulus bill, and assuming them as permanent. The implication being that, if the policies were a part of the baseline, they wouldn't need to be paid for when enacted.
Well, the Administration is at it again in their FY 2011 budget submission, but this time they are doing a better job of hiding it.