Comparing CBO’s and OMB’s Projections of the Budget Deficit
CBO released updated economic and budget projections today, showing baseline (i.e., current law) budget deficits of about $1.6 trillion for the current fiscal year that ends on September 30 and roughly $7.1 trillion for the 2010-2019 period. That 10-year total is about $2.7 trillion higher than the baseline projection CBO published in March 2009. As noted in our report, about half of that revision is attributable to legislation enacted since March (primarily from extrapolating the Supplemental Appropriations Act of 2009), while the other half stems from technical factors and updates to our economic forecast.
These baseline estimates were developed using procedures established by the Balanced Budget and Emergency Deficit Control Act, which defines the baseline used by Congress for legislative scorekeeping purposes. Broadly speaking, that baseline follows current law. For example, the tax cuts enacted in 2001 and 2003 that are scheduled to expire at the end of 2010 are assumed to expire for purposes of constructing the baseline.
In contrast, some of the numbers released by the Administration today in its Mid-Session Review assume enactment of the President’s policy proposals. The Administration currently projects that, under those policies, deficits over the 2010-2019 period would total about $9.1 trillion. Comparing that total to CBO’s baseline deficit total of $7.1 trillion over the same period is an “apples-to-oranges” comparison. An “apples-to-apples” comparison can be made by looking at the Administration’s new baseline projection that follows the same procedures as CBO’s projection (the so-called “BEA baseline” reported in Table S-7 of the Mid-Session Review) and removes the effects of the President’s policy proposals. As shown in the attached table, OMB’s projection of the BEA baseline deficit is roughly $6.3 trillion over the 2010-2019 period, or about $0.9 trillion lower than CBO’s baseline total for that period.
In June, CBO estimated that deficits under the President’s budget would total $9.1 trillion over the 2010-2019 period—an amount that is roughly in line with the Administration’s current estimate. However, we have not updated our analysis of the President’s budget to reflect our new economic and technical assumptions, so comparing our earlier estimate and the Mid-Session Review estimate published by the Administration today is also not an “apples-to-apples” comparison.