Last year, when the President's budget used overly optimistic economic assumptions and various magic asterisks, we re-estimated their budget  using more realistic assumptions. As it turns out, our estimates were quite close  to CBO's estimate of the President's budget; the President claimed to get debt down to 77 percent of GDP by 2021, we estimated it would be at 87.4 percent, and CBO found it would get to 87.5 percent.
This year, it appears to us the President's budget estimates are much more closely in line with what CBO will project -- but nonetheless we figured we'd undertake a re-estimate. To do so, we start with CBO's current law baseline -- which projects nearly $500 billion in additional deficits compared to OMB through 2022 due to worse economic assumptions. We also use CBO's estimates of extending the 2001/2003/2010 tax cuts, patching the AMT, and enacting a "doc fix" in order to reconstruct the Administration's "adjusted baseline."
And finally, we take the Aministration's policy savings estimates as provided, adjusting only for different interest rates and for a $44 billion "timing adjustment" in 2022, which adjusts for the fact that payments at the beginning of FY 2023 will be pushed into FY 2022 because of the configuration of the calendar that year. You can see the policy adjustments in the table below:
|Estimate of the President's Budget (billions)|
|Current Law Deficits||$2,260||$2,250||$3,870||$4,340|
|"OMB Current Policy" Adjustments||$2,130||$1,980||$5,990||$5,640|
|Interest on Policy Proposals||-$30||-$40||-$410||-$440|
|President's Budget Deficits||$3,440||$3,280||$6,690||$6,820|
Note: Numbers may not add up due to rounding
All told, as it turns out, deficits from 2013 to 2022 would likely be pretty similar if CBO were to calculate them -- $6.82 trillion instead of $6.69 trillion. This difference does mean that CBO debt projections would be higher -- but by less than one percentage point of GDP.
On top of these higher deficits, though, GDP is lower in CBO's projections. That means for any given nominal level of debt, debt as a share of GDP should be higher for CBO's numbers. When we calculate our new debt as a share of CBO's GDP projections, we find that it would reach nearly 80 percent of GDP in 2022 as opposed to less than 77 percent under OMB's assumptions.
Not a big difference, but enough to remind policymakers that they should overachieve in order to make sure slight fluctuations in the economy don't prevent the debt from stabilizing.