Today, the Congressional Budget Office (CBO) released its analysis of President Obama’s FY 2014 budget request. CRFB has released a reaction to the score of the budget, praising the President for putting forward a deficit reduction offer that addresses the country's debt path, but warning that there would still need to be more done, particularly on entitlement spending.
Although it may be difficult to get an updated comprehensive score of the Affordable Care Act from CBO, CBO has updated its estimate of the coverage provisions of the Affordable Care Act with each new baseline. This baseline is no exception.
In February, we wrote the paper "Our Debt Problems Are Far From Solved," laying out the case for putting debt on a clear downward path as a percent of GDP with $2.4 trillion of additional savings. CBO's improved budget projections have prompted a new round of discussion of what should be the right direction for the budget.
Today, the Congressional Budget Office has released an update to its budget outlook from February. With little legislative changes since February, the budget outlook after a few technical revisions shows slightly lower debt levels compared to the previous baseline. However, debt remains on a clear, upward trajectory near the end of the decade, similar to the path in February's baseline.
A recent Washington Post article, “As Red Ink Recedes, Pressure Fades for a Budget Deal,” suggests that a fall in the short term deficits may diminish the motivation for a budget deal. But this misses the main concern of our fiscal outlook. While the short-term outlook has improved somewhat, long-term debt projections are still unsustainable.
Continuing our analysis of the President's FY 2014 budget proposal, we turn to how the President's budget would affect long-term revenues and spending. As we said last Monday after looking at the GAO's long-term projections of debt and deficits, our debt problem looks much more daunting when projecting beyond the standard ten-year window. With that in mind, it is useful to look at OMB's 75-year projections of the President's Budget.
Erskine Bowles and Alan Simpson's new plan, "A Bipartisan Path Forward to Securing America's Future," saves $2.5 trillion to $2.85 trillion over the next decade, exceeding the $2.4 trillion we identified as the minimum savings needed to put the debt on a clear downward path relative to the economy.
Last week, the Government Accountability Office (GAO) released its long-term fiscal outlook, presenting both long-term projections and estimates of the fiscal gap. Since the last longer-term projections from CBO came out in June, the report provides a good measure of what the budget looks like after the American Taxpayer Relief Act and the challenge we face going forward.
CBO's latest Monthly Budget Review (MBR) for March means that we now have budget data for the first six months of FY 2013. The six-month deficit stands at $601 billion, down from $779 billion over the same period last year. For context, CBO previously projected that the deficit for FY 2013 would be $845 billion, compared to the actual FY 2012 deficit of $1.089 trillion.