CBO letter Committee on Appropriations-$2.75 Trillion Deficits OverDecade

[papau]

Hi-lights:

Bush's budget would produce deficits totaling $2.75 trillion over the next decade, if Bush's pretend future cuts to programs to zero growth saving $700 B is realized - otherwise it is 3.45 Trillion. Making Tax cuts permanent is 1.3 trillion of the above deficit.

First long term projection since Bush Budget was only a 5 year projection

For the decade ending in 2014 annual shortfalls never smaller than $242 billion (in 2007) bouncing back up to $289 billion in 2014.

These are permanent, structural deficits we will never dig our way out of if we follow in the president's path.

Bush says this is good news because just looking at the first five years of CBO's forecast, assuming those $700 B in expense reductions from un-named programs, the deficit is cut in half within five years.

Kerry and Edwards have said they would roll back the reductions for the wealthiest Americans.

Just two years ago, the budget office and Bush envisioned surpluses totaling $5.6 trillion for the decade ending in 2011.

Congressional Budget Office: http://www.cbo.gov
http://www.cbo.gov/showdoc.cfm?index=5116&sequence=0

Retrieve in: http://www.cbo.gov/showdoc.cfm?index=4129&sequence=0


February 27, 2004

Honorable Ted Stevens
Chairman
Committee on Appropriations
United States Senate
Washington, DC 20510

Dear Mr. Chairman:

As you requested, the Congressional Budget Office (CBO), with contributions from the Joint Committee on Taxation, has analyzed the President's budget submission for fiscal year 2005. This letter and the attached tables summarize the main results of CBO's work; a report on the full analysis, including an assessment of the macroeconomic effects of the President's proposals, will be published on March 8. <snip>

Over the 10-year period from 2005 through 2014, deficits would total $2.75 trillion under the President's policies--$737 billion higher than CBO's baseline projection of the cumulative deficit.(1) Debt held by the public would rise from 36 percent of GDP at the end of 2003 to about 40 percent during the years 2006 through 2014.

Under the President's budgetary proposals, revenues would grow from 15.8 percent of GDP this year to 16.8 percent of GDP in 2005, slightly below the baseline level (see Table 2). By 2007, revenues would reach nearly 18 percent of GDP and remain around that level through 2014. From 2005 through 2014, outlays would total slightly less than 20 percent of GDP if the President's policies were enacted. Over that same 10-year period, spending for entitlements and other mandatory programs under the President's proposals would grow faster than nominal GDP (5.7 percent annually versus 4.7 percent), whereas discretionary outlays would grow at an average annual rate of only 1.8 percent a year.

By CBO's estimates, the President's budget proposes nearly $823 billion in discretionary budget authority for 2005 (including $2.5 billion previously enacted for Project Bioshield) and $44 billion in obligational authority for transportation programs--for total discretionary funding of $867 billion. (The Administration does not include the advance appropriations for Project Bioshield in its discretionary funding total. In addition, for a number of reasons, including different projections of offsetting collections and the effect of changes to mandatory programs proposed in appropriation bills, the Administration estimates that budget authority will be $1.8 billion lower than CBO's figure.) Total discretionary funding for 2004 (including $43 billion in obligational authority for transportation programs and $0.9 billion for Project Bioshield) is $919 billion (see Table 3). That total includes $87 billion in supplemental budget authority for reconstruction efforts and ongoing military operations in Iraq and Afghanistan. The President's budget for 2005 does not include any funding for those purposes.

If the supplemental appropriations for 2004 were excluded from the comparison, growth of discretionary funding (including obligational authority) in 2005 under the proposed budget would equal 4.2 percent, or $35 billion. Defense spending would grow by nearly 7 percent, and nondefense spending for homeland security would rise by 15 percent. Other nondefense funding, by contrast, would grow by 1 percent. For the years 2006 through 2009, the President has proposed average annual increases of 4.8 percent in defense funding, 4.0 percent in homeland security funding, and 0.5 percent in all other nondefense discretionary funding. <snip>



Sincerely,

Douglas Holtz-Eakin
Director


1. The President's budget does not provide year-by-year estimates of spending and revenues after 2009. It does, however, specify a total effect from changes in tax and mandatory spending laws for the entire 10-year period and proposed levels of discretionary spending through 2009. CBO estimated discretionary outlays for the 2010-2014 period by projecting the discretionary budget authority recommended by the President for 2009 and adjusting for inflation.
2. The Balanced Budget and Emergency Deficit Control Act of 1985 states that discretionary spending should be projected by adjusting the current year's budget authority to reflect inflation. As a result, CBO has extended supplemental appropriations in 2004 through the 2005-2014 period. If those supplemental appropriations were excluded from the baseline, CBO estimates that outlays for defense discretionary spending under the President's proposals would exceed baseline levels by $451 billion from 2005 through 2014; nondefense discretionary outlays would fall below baseline levels by $279 billion over that period.

Preliminary Results of
CBO's Analysis of the President's
Budgetary Proposals for Fiscal Year 2005

February 27, 2004

Table 1. <snip>