CBO has gotten into the infographic game this year with some good results. Two days ago they released an infographic containing a basic breakdown of the budget and historical trends.
In a letter to Rep. Chris Van Hollen (D-MD), the ranking member of the House Budget Committee, CBO Director Douglas Elmendorf estimates the cyclical economic effects due to a slowed economy on the size of the federal deficit. He finds that cyclical effects will contribute $340 billion to the deficit this fiscal year, which is roughly one third of the $973 billion (or 6.2 percent of GDP) deficit projected for FY 2012.
In CBO's latest Budget and Economic Outlook, CBO includes revised projections of various economic indicators as part of its update. Since there is such a major relationship between economic conditions and fiscal policy, these numbers are of significant importance. CBO's latest economic projections do contain worse real GDP growth for the first few years, but much faster growth mid-decade.
Although CBO shows debt improving significantly over the coming decade, reaching 61 percent of GDP in 2021, debt will not follow this downward path without lawmakers putting in place specific debt reduction measures. As we have showed in our CRFB Realistic Baseline, debt is much more likely to grow to 82 percent of GDP by 2021 given that they are likely to continue extending the tax cuts and other policies.
CBO's updated economic and budget projections, released this morning, show for the first time in many years a declining debt path under current law. Unfortunately, these projections are wildly optimistic, given that they assume things like the tax cuts and AMT patches expire in 2013. But we'll take whatever progress we can get!
The caps on discretionary spending were, of course, the concrete centerpiece of last week's budget deal. Considering the importance of the caps, CBO published a blog explaining how they work and what would happen to discretionary spending over the ten-year window.
First, they go into some background on the caps:
Budget projections are a rather fickle thing, especially in the midst of great uncertainty about the strength of the economic recovery. By accident, CBO is providing a great demonstration of this fact in trying to get the numbers right for 2011.