CBO Shows Dent in Federal Budget — But There’s Bad News, Too
- Posted on August 24, 2011 at 9:40pm by
Christopher Santarelli
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After months of unrelieved gloom and discord, Congress and President Barack Obama are starting to make a dent in the federal budget deficit. It’s projected to shrink slightly to $1.28 trillion this year, and bigger savings from this month’s debt ceiling deal are forecast over the next decade. That sounds good on the surface, but that’s not the whole story — there’s some bad news, too, including sustained unemployment levels above 8 percent.
First, the good news.
The nonpartisan Congressional Budget Office projected Wednesday that annual budget deficits will be reduced by a total of $3.3 trillion over the next decade, largely because of the deficit reduction package passed by Congress earlier this month. The office also forecasts persistently high unemployment, a troubling political prospect for President Barack Obama in the crucial months of his campaign to win a second term.
Now, the bad news.
Even with the anticipated big savings, annual budget deficits are expected to total nearly $3.5 trillion over the next decade. That number, however, could increase to nearly $8.5 trillion over the next 10 years if tax cuts (that are set to expire at the end of this year) and certain spending programs are kept in place, the budget office report said.
The national debt now stands at more than $14.6 trillion. And things could be worse. National Journal writes on the many assumptions the that the CBO projection relies on:
“Though the new CBO data released on Wednesday paints a more optimistic picture than previous agency reports, this version is predicated on some highly fickle assumptions: from the prowess of the super committee to find consensus this fall, to increased revenue through the expiration of tax cuts, to decreased spending on programs such as federal unemployment benefits.
‘If we continue current policies, we will end up with much larger deficits than what would occur under current law,’ CBO Director Douglas Elmendorf said at a news conference. ‘There is a good deal of work left to do.’”
The numbers help illustrate the urgency facing a new joint committee in Congress that is charged with finding $1.2 trillion to $1.5 trillion in budget savings over the next decade. Some lawmakers are calling for an even bigger package, a tall order given the bitter debate that produced this month’s debt deal.
“CBO’s report is yet more evidence that Congress faces a twin challenge of a sluggish near-term economy and a still very serious long-term debt threat,” said Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee. “Congress cannot afford to ignore either challenge.”
Those within the President‘s Office of Management and Budget believe that the CBO report shines well on President Obama’s performance.
“This CBO report shows that the budget control act signed by the president earlier this month brought down the deficit significantly, but much more work remains to be done,” said Meg Reilly, speaking for the Office of Management and Budget.
However AP writes that most of the improvement in this year’s deficit picture comes from higher than anticipated tax collections from 2010 returns filed in the spring. Over the longer term the biggest savings are expected to come from the belt-tightening required in the new deficit reduction law, the report says.
Deficits could end up larger if CBO’s economic forecast, which is more optimistic than private projections, proves to be too rosy. The agency doesn’t foresee another recession but modest economic growth over the next few years. And it expects the unemployment rate to fall only slightly, to 8.5 percent in the last three months of 2012, and staying above 8 percent through the following year.
“A great deal of the pain of this economic downturn still lies ahead of us,” said CBO Director Douglas W. Elmendorf.
Democratic leaders say the report shows the need for programs and policies aimed at creating jobs. Republicans say the report is an indictment of Obama’s economic policies.
“A slight decrease in the projected deficit is nothing to celebrate, particularly when it is accompanied by the grim news that CBO expects the national unemployment rate to continue to exceed 8 percent well past next year,” said House Speaker John Boehner, R-Ohio. “The president’s policies were supposed to keep that from happening.”
At $1.28 trillion, this year’s budget deficit would be the third highest, surpassed only by those of the past two years. The budget year runs through the end of September.
The new deficit projection for this year is $116 billion lower than the one made by CBO in March.
The new deficit reduction law accounts for most of the savings over the next decade: $917 billion in spending cuts already identified in the law, and at least $1.2 trillion in savings to be spelled out by the new joint committee. If the committee of six Republicans and six Democrats fails to agree on a package that is passed by Congress, the law would trigger $1.2 trillion in automatic spending cuts, affecting the Pentagon as well as domestic programs.
The budget office also projects $600 billion in savings over the next decade from lower interest rates.
The Associated Press contributed to this story.
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rcrosby66
Posted on August 25, 2011 at 8:58amIsnt this the same CBO that first said that Obamacare would save millions in healthcare and then later admitted they were wrong.
Report Post »Bill Rowland
Posted on August 25, 2011 at 6:18amSmoke and mirrors just like Clintons budget surplus.
Report Post »Roberto G. Vasquez
Posted on August 25, 2011 at 10:13am@ BILL
Right! Figures lie & liars figure.
Report Post »kindling
Posted on August 25, 2011 at 12:49amOne Million seconds = 12 days
One Billion seconds = 32 years
One Trillion seconds = 32 THOUSAND years
I have this written on my back window of my car and it is amazing how many people didn’t realize how big a number a Trillion is. I am beginning to think the Democrats and most Republicans don’t either.
I wish they would stop spending my grand kids futures.
Report Post »snidley-whiplash
Posted on August 25, 2011 at 12:28amMake a copy of this article, tuck it away and it will prove to be used as toilet paper.
Report Post »Govmt does not create jobs, printing money pays nothing off. GD idiots stop spending.
264win
Posted on August 25, 2011 at 12:25amBoss the deficit is spiraling out of control your need to take charge immediately!
“Not now where did I put my nine iron”
“Warm up the telepromter I will do a quick speech and tell the middle class fold what they want to hear and we will be fine”
“Now what about those illegal aliens do you think we can get there votes by 2012? What if we offer thne free tacos and bean dip on there link cards?”
Report Post »miles from nowhere
Posted on August 24, 2011 at 11:53pmObama the destroyer of America!
Report Post »Delores at CH WV
Posted on August 24, 2011 at 10:57pmGreat News , IF you believe the CBO. Personally, I don’t. Figures or Facts cannot change day by day to paint the WH’s happy pictures. This Government puts out reports with stats every day, week, month, and quarter; then, on a slow Friday night they report an update of their so called facts. So, why did the CBO paint this picture; Is it because of the Earthquake or the FACT that this PRESIDENT has destroyed this country and they are trying hard to raise his approval rating for political reasons. I think you guys are smart enough to answer this with out my comments. Example: Joe Biden comments are updated within the hour or day he speaks them. You cannot trust the WHITEHOUSE WORDS. AND COMMENTS ON ANY SUBJECT. ..
Report Post »Marci
Posted on August 24, 2011 at 11:13pmCorrect Delores! Notice that they threw in “if tax cuts remain in place”. How convenient. A report that says the WH must tax us more. ALL OF US. Fed up with the class warfare and even more fed up with the fact that they can’t stop spending. Does no one pay attention to the loads of money they throw out the window to other countries and ridiculous wasteful spending? And they can NEVER seem to cut this! They all slip it in other bills and it goes unnoticed. (well, by most..)
Report Post »TRILO
Posted on August 24, 2011 at 10:47pmOnly in the la-la land known as the federal government can reducing deficit spending but still deficit spending be a good thing. No wonder our country is in the shape it is in.
Report Post »skilaxdad
Posted on August 24, 2011 at 10:47pmOnly in the brave new world of “New Speak” could going deeper in debt by trillions of dollars over the next decade be construed as “the good news”. Truth has died in the streets.
Report Post »Steel Awesome
Posted on August 24, 2011 at 10:36pm“The nonpartisan Congressional Budget Office projected Wednesday that annual budget deficits will be reduced by a total of $3.3 trillion over the next decade, largely because of the deficit reduction package passed by Congress earlier this month.”
Um, that’s interesting. Not too long ago the media was castigating the Tea Party for being so inflexible in debt reduction talks. How much do people want to bet that BHO will take credit for “moving the deficit in the right direction?”
Report Post »RA0725
Posted on August 24, 2011 at 10:31pmJust like claims of “jobs saved or created”, this is just another release of propoganda. Claims of savings while in the same breath speaking of historical annual deficits and the need to raise taxes.
Every time these people open their mouths our economy takes another dive.
Report Post »tarkus
Posted on August 24, 2011 at 10:21pmIt’s funny that most of us here could solve the economic issues…
Major cuts in spending. Major tax cuts. It’s really simple.
Report Post »drattastic
Posted on August 24, 2011 at 10:25pm1.28 trillion this year ,WOW ! That’s like taking a bucket of water out of the Atlantic Ocean. We’re saved! I guess the S&P can go ahead and upgrade us again.
Report Post »lonewolf57
Posted on August 24, 2011 at 10:20pm“However AP writes”….
Report Post »Anyone who gets ‘news’ from the Associated Press are sheep,sleepy,or don’t give a damn..
lonewolf57
Posted on August 24, 2011 at 10:13pmThe ‘nonpartisan’ Congressional Budget Office.Like the Federal Reserve,There‘s no such a thing or government entity when it’s corrupted.
there is no such thing.
They will LIE,CHEAT, and STEAL just like a desperate individual doe’s before the hammer comes down.
Report Post »8jrts
Posted on August 24, 2011 at 10:13pmWOW a shocker???
Report Post »progressiveslayer
Posted on August 24, 2011 at 10:09pmWe have a spending problem so get rid of dept.of energy,HUD,IRS,and start the fair tax,dept.of education,and I‘m sure there’s many more useless departments that can be eliminated without missing them.End all forms of welfare and drill for oil everywhere there’s provable oil.Scrap all green energy programs it’s a bunch of BS anyway.
Report Post »kalli
Posted on August 24, 2011 at 10:21pmI like it!
Report Post »kindling
Posted on August 25, 2011 at 12:54amThis is why so many call Tea Party members racist. Most of these departments are minority employees and they would be loosing their cush jobs with $180,000 per year pay and great perks. How will we ever get rid of all the federal jobs that are supposed to be state run? We need to get rid of everything that is not border security.
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