Oooops! CBO says Obama's budget understates deficits
By how much, you might wonder? The Hill:
The Congressional Budget Office on Friday released its analysis of President Obama's 2012 budget proposal and found it does less to rein in deficits and the debt than the administration had estimated.
CBO estimates Obama's plan would produce 10 years of deficits totaling $9.5 trillion. By 2021, it would increase the debt held by the public to 87 percent of gross domestic product.
The administration, using different methods, estimated budget deficits would total $7.2 trillion over the next 10 years under the 2012 budget. It forecast that total debt in 2021 would be 77 percent of GDP.
The White House also said total deficits over the next decade would by $2.2 trillion more without the recommendations included in Obama's budget.
Marc Goldwein, policy director for the Committee for a Responsible Federal Budget, explained that the difference between the CBO's $9.5 trillion estimate and OMB's $7.2 trillion estimate comes from two sources: rosy economic growth assumptions by OMB and offsets for the Medicare doc fix as well as transportation spending OMB did not specify in the budget and which CBO will not factor in.
The most important aspect of CBO's analysis is that, while OMB claimed the president's budget "stabilized" the debt at 77 percent of GDP over the 10-year window, CBO estimates the debt will grow throughout the period and end up at 87 percent, he said.
CBO said the biggest reasons for the deficits, compared to the status quo, are the permanent extension of the Bush-era tax rates for the middle class and changes to the Alternative Minimum Tax that Obama favors in this budget. As a result of the tax policy, there is a $2.7 trillion net increase in the deficit over the next 10 years.
Rosy scenarios and flat out cooking the books gives us a difference between Obama's OMB and the CBO of $2.3 trillion over ten years. The troubling number is the percent of GDP that the debt will represent; as long as it keeps climbing, the interest we must pay to service that debt will soak up more and more funding that could be used elsewhere.
All recent presidents have issued budgets that don't tell the whole story. But Obama's fantasy budget seems particularly egregious in its lies and deceit.
Hat Tip: Ed Lasky