I was watching Obama on the Today show and they were talking about the Budget. I came across a CBO analysis and had the following questions.
Deficit Impact of the President's Budget
1 - What is the methodology that the CBO uses vs. OMB? Because it widely differs.
2 - If the President’s proposals were enacted, the federal government would record deficits of $1.5 trillion in 2010 and $1.3 trillion in 2011. Those deficits would amount to 10.3 percent and 8.9 percent of gross domestic product (GDP), respectively. By comparison, the deficit in 2009 totaled 9.9 percent of GDP.
3 - (and this is what scares me the most) Under the President’s budget, debt held by the public would grow from $7.5 trillion (53 percent of GDP) at the end of 2009 to $20.3 trillion (90 percent of GDP) at the end of 2020, about $5 trillion more than under the assumptions in the baseline. Net interest would more than quadruple between 2010 and 2020 in nominal dollars (without an adjustment for inflation); it would swell from 1.4 percent of GDP in 2010 to 4.1 percent in 2020.Leland's Response
CBO must follow rules and only use existing law. OMB can estimate based on expected changes and add in estimated gains from things like HCR. There is upside and downside to both, b/c CBO can't include AMT changes that happen every year. The AMT consideration that CBO gives makes the picture better than it is. Other tech assumptions about growth rates and employment vary, but several basis points can be billions of dollars due to compounding.
The last items on amy's list are the reasons Obama wanted a fiscal commission. Even if you eliminate all non-defense discretionary funding from the budget (not freeze--ELIMINATE), we still have a deficit. Abysmal. Experts also maintain that a deficit around 3% of GDP is sustainable. I don't buy that, esp when soc sec comes calling. I want a surplus until our debt outstanding stabilizes at $2 or $3 T.
