CBO: Obama budget underestimates deficits by $2.3 trillion over upcoming decade

[alp227]

Source: Associated Press

WASHINGTON — A new assessment of President Barack Obama’s budget released Friday says the White House underestimates future budget deficits by more than $2 trillion over the upcoming decade.

The estimate from the nonpartisan Congressional Budget Office says that if Obama’s February budget submission is enacted into law it would produce deficits totaling $9.5 trillion over 10 years — an average of almost $1 trillion a year.

Obama’s budget saw deficits totaling $7.2 trillion over the same period.

The difference is chiefly because CBO has a less optimistic estimate of how much the government will collect in tax revenues, partly because the administration has rosier economic projections.

Read more: http://www.washingtonpost.com/business/cbo_obama_budget_underestimates_deficits_by_23_trillion_over_upcoming_decade/2011/03/18/ABBctsq_story.html

[fascisthunter]

1. that's ok, because he is now a member of the special Club

and won't have to pay for it.

[tabatha]

2. It is all about projections.

I bet if you got 10 people together and asked them all to predict tax revenues, they would all come up with a different number.

Why is the CBO correct? and Obama incorrect?

[fascisthunter]

3. good question

we will know more soon...

[tabatha]

31. see #23

[Yupster]

47. The idea is that since everyone can come up with their own projections on anything,

then the CBO was set up to be non-partisan so there could be numbers that both sides would agree to work off of.

It doesn't mean they're going to be right.

It is just a group that isn't on one side or the other and uses the same formulas each time where both political sides will skew the formulas they use to suit the result they hope to get.

In the end though, the defecit and debt are so out of controll that what's another $ 200 billion a year? Is there really a diffrerence between a $ 1.4 trillion annual defecit and a $ 1.6 trillion? We can't last very long either way. The interest on the debt portion of the budget will soon start to eat up the budget.

[Fearless]

4. Why is the Congressional Budget office, a group of people who are experts, wrong and Obama right?

[NoTimeToulouse]

12. I really don't know what to say on that one.

I understand the whole 20-dimensional chess argument, but not on this one.

[tabatha]

32. Possibly because of this ?

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4777649&mesg_id=4777778

[NoTimeToulouse]

10. Really? Really? CBO is non-partisan.

Are you really going to go there?

[tabatha]

19. I don't understand your statement.

I was talking about probabilities and what I have seen over the years in business.

[NoTimeToulouse]

26. That's not what you wrote.

[tabatha]

27. I made summary statement

"I bet if you got 10 people together and asked them all to predict tax revenues, they would all come up with a different number."

Exactly what I have seen in business.

Btw, see comment #23 which supports what I said.

[NoTimeToulouse]

34. If you look at it closer it doesn't.

The CBO report was from 2000.

Bush's tax cuts cut into the CBO 2000 projections. Since the Bush tax cuts took place in 2001 and 2003 that pretty much accounts for it.

[Igel]

40. The CBO weighed in on the matter.

There was recession; there was war; there were tax cuts.

Any of the three was enough to scotch the projected surplus, which assumed no recession would occur for the next decade and that growth would continue at rates derived from the previous few years' growth rates up to and including 1999. Since the leading indicators were in place before the election in fall 2000, showing a downturn in growth and investment, that handles the surplus nicely enough.

[NoTimeToulouse]

43. So the argument now is that we will used the CBO data when convenient?

[elocs]

5. We cannot praise CBO results from the housetops when we agree with them

but trash them when we don't. That is what the Republicans do. Either the CBO is nonpartisan and trustworthy or it's not, it's one way or the other.

[tabatha]

6. Life is never black and white.

I doubt that anyone is 100% correct all of the time.

Some have higher probabilities of being correct than others - and I think that is the case with the CBO.

But, there could be different source data for arriving at the results.

[elocs]

8. True, true. When we agree with the CBO it's 100% right, when we don't it's 100% wrong.

Just like the Republicans.

[NoTimeToulouse]

13. Sad commentary.

[Plucketeer]

15. It's gonna be amusing

to see how the Rethugs spin this. It was only a few weeks ago that the dissed the CBO's work as mere opinions. You can damn sure bet that THIS projection will be treated as if Moses had delivered it!

[tabatha]

18. You missed the point.

I have never in my life met any person or any entity that has been 100% correct all of the time.

Actually, that is the methodology used by science.

Someone postulates something - it is submitted for peer review, and is modified, accepted or rejected.

Most scientists accept this because they know they are not 100% correct all of the time.

And to say that those who are 90% correct in what they postulate are 100% wrong when they are incorrect, is simply facile.

[ProgressIn2008]

42. True, that. nt

[tabatha]

28. See #23

[DeSwiss]

7. The CBO must not be......

...counting the trickle-down effect from all those Wall Street banker bonuses.

- K&R

[valerief]

11. Bwahahahahaha!

:rofl:

[valerief]

9. Let's throw three more wars on the budget. What the hell. It's only lives. And money. nt

[ProSense]

14. Just means that there needs to be more budget cuts

if you're a Republican.

Here is the OMB's statement CBO and the 2012 Budget

Today, the Congressional Budget Office (CBO) released its preliminary analysis of the President’s FY 2012 budget.

Their analysis leads them to a different projection of the deficit picture, and it’s worth understanding our analytical differences.

There are two main reasons why our projections differ. First, is that the CBO re-estimate does not reflect two important budget policies. In the budget, the President laid out a plan to make a historic investment in our transportation infrastructure in order that our country can keep pace with our competitors in the global economy. We were crystal clear that this spending had to be paid for with a bipartisan funding source and that if one was not identified, that the Administration would not support making these investments. This way there would be no risk that this spending would add to the deficit. CBO chose to treat this spending as a free-standing initiative, not in tandem with our commitment to pay for it – which is not the policy we proposed.

Similarly, the budget proposes that we fully pay for the cost of fixing the Medicare physician payment formula so that reimbursement rates are not cut dramatically which could lead to doctors refusing to treat Medicare beneficiaries. In past years, this fix was not paid for, but last year, the President signed into law a fully paid for fix for one year, and our budget identified tens of billions of dollars in specific health care savings that will pay for another two years. With three years of the fix paid for, we believe that this establishes a pattern of practice – critically important in scoring policies -- that strengthens our commitment to work with Congress on a permanent solution. Again, CBO chooses not to make this assumption.

The second main difference between our and CBO’s analysis is that our economic assumptions differ. The economic forecast in our 2012 Budget, which was prepared in November 2010, is actually more cautious than the consensus forecast for 2011, and is well within the range of the Federal Reserve’s assumptions in all years. Beyond the short-term, we believe that the economy will fully recover after this recession as it has after previous ones. It is our view that the economy will return to full strength, and that is a view shared by the Federal Reserve as well.

There is large uncertainty in economic projections and differences of opinion when it comes to assessing individual policies. But regardless of our differences, CBO confirms what we already know: current deficits are unacceptably high, and if we stay on our current course and do nothing, the fiscal situation will hurt our recovery and hamstring future growth. That is why the President’s 2012 Budget puts forward more than $1 trillion of deficit reduction including a five-year freeze in annual domestic spending that will save more than $400 billion over the next decade, and puts the nation on a sustainable fiscal course. And that is why we are committed to making real progress on our fiscal situation this year and not put off action any longer. As this debate continues, we look forward to working with people from across the spectrum to rein in our deficits, grow our economy, and win the future.

[Beartracks]

20. "Don't worry! If 'pubs disagree with us, we'll stop trying." WTF?

"... a plan to make a historic investment in our transportation infrastructure in order that our country can keep pace with our competitors in the global economy. We were crystal clear that this spending had to be paid for with a bipartisan funding source and that if one was not identified, that the Administration would not support making these investments. This way there would be no risk..."

Wait, so if a *bipartisan* funding source can't be identified, then the investment in this high-priority plan simply won't be made. Uh... So all the Republicans have to do -- again -- is refuse to play ball, and this whole idea gets scrapped? Well, thank God we won't increase the deficit as we fall behind our global competitors.

If only we had a war or two we could end, then we could get some budgetary breathing room. That would help a lot.

--------------------

[ProSense]

21. Hmmm?

"Wait, so if a *bipartisan* funding source can't be identified, then the investment in this high-priority plan simply won't be made. Uh... So all the Republicans have to do -- again -- is refuse to play ball, and this whole idea gets scrapped? Well, thank God we won't increase the deficit as we fall behind our global competitors."

First, the President identified the cuts he wants to make. Second, Republican will "refuse to play ball." That's a given.

[toddwv]

16. Don't worry, once all the revenues start flowing in from the continuation of the Bush tax cuts

we'll all be rolling in cash!

[NoTimeToulouse]

17. Tax cuts actually raise revenues or so the story goes.

[groundloop]

22. We've heard from many high powered economists not to worry about the deficit just yet...

Rachel talked about that many times, and I firmly believe (based on listening to some very smart people talk about this) that it's still too early to start worrying about the deficit. (But the Publican party will sure the hell use it as an excuse to axe as many government programs as they can).

[OnlinePoker]

23. CBO Predictions/Treasury Stats

Here's how the CBO saw it in 2000 if discretionary spending stayed at the rate of inflation:

Expected Revenue FY 2010 - $2.946 Trillion
Expected Outlays FY 2010 - $2.457 Trillion
Expected SURPLUS FY 2010 - $489 Billion

http://www.cbo.gov/ftpdocs/18xx/doc1820/eb0100.pdf Table 1-2

Here's the reality from the U.S. Treasury Monthly report from January 2011:

Receipts for FY 2010 - $2.162 Trillion ($784 Billion less)
Outlays for FY 2010 - $3.456 Trillion ($999 Billion more)
Total DEFICIT FY 2010 - $1.294 Trillion (A difference of $1.783 Trillion from projection)

http://www.fms.treas.gov/mts/mts0111.pdf Table 1

CBO can predict all they want, but when their predictions are a moving target, they are unlikely to ever come to a correct amount over that length of time (nobody ever predicted the country would be in a surplus situation before Clinton became President).

[boppers]

24. Nice!

I was hoping somebody could offer an example of how accurate their long-term projections were, and how assumptions made can really be off.

[ClarkUSA]

25. So you just proved that the CBO's 10-year projection was wrong for the past decade.

Bookmarked for future use:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4777649&mesg_id=4777778

Thanks, I trust Team Obama. They've gotten everything else right with their economic policy, contrary to the bean counters over at CBO.

[NoTimeToulouse]

33. 784 Billion less? That sounds like what the Bush tax cuts cost tthe USA.

CBO report 2000.

Bush tax cuts 2001 + 2003.

Sounds like Bush was more responsible for the decline in revenue that the CBO was.

[madville]

35. Take away the Bush tax cuts and wars and their numbers would have been much closer

Since their projection was made before those events came about.

[OnlinePoker]

39. Which is my point

We don't know what the future brings, so making predictions 10 years out is a waste of time. It is one possibility, not a certainty.

[NoTimeToulouse]

44. With that logic is Obama or the CBO both wrong or right?

[OnlinePoker]

46. The White House looks at the future through rose colored glasses

They want the public to think everything is going to work out. CBO tries works out their figures based on their own economists predictions, but economists are wrong more often than weathermen. Obama may make the White House's budget submissions, but congress actually passes the spending bill. Given that the bill passed is rarely (if ever?) the same as submitted, Obama can say what would happen if his submission is passed and the CBO can disagree with it, but the result is never what either expect. The numbers always shift around too much from one year to the next for either groups predictions to be reliable.

[Yupster]

48. The CBO projections are to me "sebt case" scenarios

They assume no recessions, no wars, no spending programs that haven't been proposed yet.

The CBO is often very wrong.

They are almost always way too optimistic.

When they projected in 2000, who expected 922, or the Department of Homeland Security, or a prescription drug benefit, or massive tax cuts, or wars in Afghanistan and Iraq?

Consider CBO to be the best case possible and you won't be too wrong.

When the best case is doubling the national debt in 10 years, we're pretty screwed.

[Lorien]

29. End the wars, tax the rich, adopt single payer. Done. No more deficit

But we can't embrace common sense now, can we? Gotta destroy the Country then take the money and run to Switzerland!

[Bigmack]

37. Simple.... but simple solutions don't work... or do they?...

Let's give your - our - plan a shot and see if it works.

Cut the "defense" budget about 50%, including closing most of the foreign bases, raise the tax rate and close loopholes for the upper brackets, and institute single payer.

Sounds good.

Let's give it 10 years and see how it goes.

We're dreaming, you know. But at least they can't stop us from dreaming...yet.

[TomCADem]

30. What? I Thought Republicans Were Saying That The CBO is full of S*&t!

Now, in order to push more cuts, they are now praying at the alter of the CBO? Will the media call them of their hypocrisy?

[Igel]

41. Yes.

The CBO was full of crap because its projections for the HCRA were positive, said the (R). The CBO was the gold standard, non-partisan, professional, and if it made a projection, it was to be held in high respect, (D) said. The CBO supported us. It is Good.

Now the (D) say that the CBO is full of crap because its projections are negative. The CBO is the gold standard, non-partisan, professional, and if it makes a projection, it has to be held in high respect, the (R) say. The CBO supports them, therefore it is Good.

The only difference is into whose ear it's whispering sweet nothings, it would seem. It says we're right, it's telling us what we've always known to be a defining truth of the universe. It says they're right, it's telling them what they've always known to be a defining truth of the universe.

I'm more interested in the assumptions. The assumptions in the 2000 CBO budget projections were crap and their crapitude was widely discussed at the time. The assumptions in the CBO projections for the HCRA savings are reasonably crappy too, and that's also been widely discussed. I have yet to see the assumptions for the current budget projections, but the response--that of course there are different assumptions, and no (negative) budget assumption should be trusted in the least, rings hollow after a couple of years of having (favorable) budget assumptions touted as rock solid--strikes me as nonsensical ass-covering.

The defining truth of the universe is that it is insensate and therefore not only doesn't care about who's right and whose wrong, it *can't* care about who's right and wrong.

Humorously, the article also says that the CBO is revising the assumptions that led to a wonderfully rosey HCRA budget-savings projection.

[madville]

36. Let's just split the difference and say it will be $8.35 trillion

Does that make everybody feel better? :eyes:

[Safetykitten]

38. The CBO asked him not to come or get involved.

[NoTimeToulouse]

45. Burn!

[daleo]

49. Better up that a few hundred billion

There's a fresh war to pay for.