CBO: Obama budget to add $6.6T in deficits

 

President Obama's budget adds $6.6 trillion in deficits over the next 10 years, the non-partisan Congressional Budget Office (CBO) said Thursday.

That estimate is significantly worse than the $4.9 trillion in deficits predicted by the White House. The CBO used its own less rosy estimates of the economy to complete the analysis. 

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The CBO said by 2024, the deficit would be $746 billion, or 2.8 percent of the economy. 
The Office of Management and Budget had said by 2024, the deficit would fall to $434 billion or 1.6 percent of the economy under the budget. In 2013, the deficit was 4.1 percent of the economy.
 
 
The CBO said compared to its own baseline assumptions of what happens under current law, Obama's budget is better for the deficit than doing nothing.

Under the baseline scenario, deficits would total $7.6 trillion over 10 years, about $1 trillion worse than under Obama's budget proposal. The CBO estimates $1.4 trillion in tax increases are contained in the budget.
 
The federal debt level is also significantly higher under CBO's analysis of Obama's March 4 budget than under the administration's own accounting.

The agency says the debt held by the public would be 74 percent of gross domestic product in 2024, slightly higher than today. Under the White House math, the debt drops to 69 percent of the economy.

Under the budget, the gross federal debt would rise from $17.8 trillion this year to $26.1 trillion in 2024.  The White House had estimated that figure to reach $25 trillion. 
 
CBO's report did not list the gross federal debt in 2024 under Obama's budget, but they gave that figure to Senate Budget Committee Republican staff when asked. 

The biggest differences in the accounting comes from the CBO forecasting $1.8 trillion less in tax revenue over the decade resulting from the budget. The budget office said that half of this is due to weaker economic growth and half is due to technical analysis of the tax plans in the budget.

On the spending side, the CBO found that Obama's proposals would increase spending by $338 billion compared to the baseline scenario. Part of that total reflects savings from the drawdown in Afghanistan. Under CBO budget rules, it assumes the same level of war spending year after year, so Obama gets a $659 billion credit for reducing spending on the war.
 
Obama's budget has no chance of passing a divided Congress. 
 
The House last week passed the latest budget from Budget Committe Chairman Paul Ryan (R-Wisc.) which balances in 10 years by cutting $5 trillion in spending. The Senate is not planning to vote on a budget blueprint this year.
 
Appropriators in both Houses are proceeding on the assumption there will be no $56 billion increase in discretionary spending this year.
 
Ryan said the new CBO report accentuates the contrast between Obama's plan and the House-passed budget.

“This new report is just more confirmation: The president’s budget would take us in the wrong direction," Ryan said. "It would take more from families to spend more in Washington. It would hollow out our national defense. It would weaken key priorities like Medicare. And it would never balance the budget — ever."
 
This story was updated at 6:01 p.m.
 

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