This doesn’t come as a shock to most, but a new report from the Congressional Budget Office shows that President Barack Obama’s budget proposal would add over $6 trillion in budget deficits over the next 10 years:
Deficits for the next two fiscal years would be slightly higher than the White House envisions if President Barack Obama’s budget plan were adopted, the Congressional Budget Office said on Friday.
The CBO’s latest analysis shows the plan would pile up $6.39 trillion in cumulative deficits over a 10-year period, but that figure is about $294 billion less than the White House estimated in February for the same 2013-2022 period.
The differences between the CBO and White House estimates of the Obama plan are due largely to the CBO’s slightly more pessimistic near-term view of the economy and revenue growth, coupled with its projections of slower cost growth for Social Security benefits and lower interest costs later in the decade.
In fiscal 2013, the first full year in the president’s budget, the CBO estimated the deficit would reach $977 billion, about $76 billion more than the White House estimated in February. The deficit then shrinks to $702 billion in fiscal 2014, about $34 billion higher than the White House estimate.
But the trend then reverses for several years, with the CBO offering lower deficit estimates through 2021.
Of course, there are a lot of assumptions here. If the economy gets worse, such as another recession or worse, these estimates would be worthless. And the prospect of another recession between now and 2022 is very likely — given that that we’ve experienced one every eight to 10 years.
Also, with the 2001 and 2003 tax cuts, the payroll tax holiday and other tax breaks expected to expire at the beginning of the year, James Pethokoukis notes that we’re looking at a 3.4% contraction that may cause havoc in the economy.
And if something isn’t done about high gas prices by taking on a serious energy policy, one that would open up oil reserves inside the United States or on the coast, we can expect consumers will react negatively, as they are doing right now.