Along with CBO's preliminary analysis of the President's Budget on Friday came an update in CBO's baseline, which actually shows a $234 billion reduction in deficits over the 2012-2021 period compared to its January baseline. It also shows an $81 billion reduction in the deficit this year, meaning that they project the 2011 deficit to not be an all-time high.
Earlier today, the Congressional Budget Office (CBO) released its preliminary analysis of President Obama’s FY2012 budget request. In conjunction with CBO’s release, we have published a paper that looks at the President’s budget in the context of CBO’s most recent analysis. In it, we explore the differences between CBO and OMB estimates, the factors contributing to these differences, and what all of this means for our fiscal outlook.
Brackets – As many busy themselves today going over the brackets for the big tourney, picking the next Cinderella and who will win it all, the real challenge for prognosticators remains predicting how the budget impasse will pan out. The budget process has gotten uglier than the 68 team bracket and all the moving parts – FY 2011 spending, the FY 2012 budget and the debt limit – make the road to Houston look like an easy jaunt.
Going into further detail on one of the most useful CBO reports, Budget Options, there are a plethora of very interesting policies that CBO has scored. While there are over 100 different options with cost estimates, we have selected four from each area of the budget to highlight just some of what's included in the report.
While no where near exhaustive, these options can serve as a guide for policymakers in discussing the budgetary impacts of many policies appearing in some discussions today.
Today, CBO released an updated version of its giant compilation of potential savings from various spending and tax options. The report covers all areas of the budget--from domestic discretionary, to defense, to mandatory programs, to taxes and tax expenditures. The report includes some previous options with updated cost estimates in addition to many new budget options.
Interest rates have an enormous effect on how much we pay each year on servicing our debt. In the Budget and Economic Outlook from January, CBO estimated that 1 percent higher interest rates each year could increase deficits by $1.3 trillion over ten years. CBO also estimated a few other "rules of thumb" to show how changes in inflation and economic growth have significant impacts on budget forecasts.
While the budget world is caught up in the President's budget, it's time to celebrate an important birthday. On this day two years ago, President Obama signed into law the American Recovery and Reinvestment Act (ARRA), which provided $821 billion in spending and tax cuts over ten years, although most of these funds were targeted for the first three years. (Previous estimates from CBO have put the cost initially at $787 billion, then $862, then $814.)
It's an interesting time in the fiscal policy world right now. A lot of uncertainty is up in the air about what will happen with our deficits and debt. Last week, a lot of bad news came in.
Game On – The Super Bowl in Texas won’t be until Sunday, but Washington had its own big game last week as President Obama gave his State of the Union address.