Congressional Budget Office

White House predicits $1.33 trillion budget deficit

Nearly two weeks ago, the Congressional Budget Office (CBO) issued a report on the budget outlook for this year, noting that taxpayers can expect yet another trillion dollar deficit — $1.08 trillion, to be exact, under President Barack Obama. But a new estimate from the White House from the yet to be released budget proposal shows a slightly higher deficit — $1.33 trillion — than the CBO, showing that the Obama Administration has no intention of reducing the red ink flowing out of Washington:

President Obama’s Monday budget request to Congress will forecast a fiscal year 2012 deficit of $1.33 trillion and will include hundreds of billions of dollars in proposed infrastructure spending, The Wall Street Journal reported on Friday.

The projected deficit is higher than 2011’s $1.296 trillion deficit and slightly higher than the Congressional Budget Office’s roughly $1.15 trillion projection released last week. The budget, according to draft documents viewed by Dow Jones Newswires and The Journal, will forecast a $901 billion deficit for fiscal 2013, which would be equivalent to 5.5 percent of gross domestic product. That is up from the White House’s September forecast of a deficit of $833 billion, or 5.1 percent of GDP, the newspaper said.

According to The Journal, the White House’s projected 2012 deficit would be about 8.5 percent of GDP.

CBO: Stimulus bill will crowd out the private sector

Even though the Obama Administration, congressional Democrats, and Keynesian economists claimed that spending would get the country moving again, critics of the 2009 stimulus bill argued that the it was wasteful and would result in a negative impact on the economy when it was all said and done. Who was right? Well, a new report from the Congressional Budget Office shows that many of the criticisms of Obamanomics were well-founded:

The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy.

CBO said that while the Recovery Act boosted the economy in the short run, the extra debt that the stimulus piled up “crowds out” private investment and “will reduce output slightly in the long run — by between 0 and 0.2 percent after 2016.”

The analysis confirms what CBO predicted before the stimulus passed in February 2009, though the top-end decline of two-tenths of a percent is actually deeper than the agency predicted back then.
CBO has re-evaluated the stimulus every three months, and its estimates for the total cost have varied. Initially the package was pegged at $787 billion, rose as high as $862 billion at one point, and is now projected to be $825 billion once all the money is paid out.

The nonpartisan agency also has changed its model for the spending’s impact on the economy, and the new calculations show the Recovery Act did less than originally projected.

Obama, Senate Democrats double-down on class warfare

With President Barack Obama making yet another statement today on the economy and pushing again for his misguided “jobs” bill, the Congressional Budget Office reports that the latest gimmick from the White House will increase spending by $175 billion:

Congressional budget examiners have projected President Obama’s jobs bill will increase spending by $175 billion over 10 years.

That’s less than the White House’s $447 billion price tag, but the nonpartisan Congressional Budget Office did not include the major tax cuts in Obama’s proposal when it offered its score.

The figures released by CBO on Wednesday represent a preliminary estimate of the increased stimulus spending in President Obama’s jobs proposal. CBO and the Joint Committee on Taxation are still working out the comprehensive cost of the bill, which would include Obama’s tax proposals.

Warren Buffett’s tax idea would cover a week of spending

Looks like Warren Buffett’s pitch to raise taxes on the rich isn’t all that good of an idea; in fact, the tax hike would cover about a week’s worth of federal spending:

Warren Buffett is known as the Sage of Omaha for a good reason: his outstanding ability to find profitable investments that took him from a small portfolio owner to one of the richest people in the world.

Recently, he used his formidable reputation to suggest in the New York Times, Financial Post and an interview with Charlie Rose on PBS that the U.S. government should raise taxes on the 400 super-rich, who in 2008 together earned $90.9 billion and paid only on average 21.5 percent of it in taxes. That is lower than the average percentage paid by most middle-income Americans.

Buffett justifies his proposal on the grounds that the present tax system is unfair, parroting the mantra of tax-addicted interventionists and socialists everywhere. He said “It will not be pretty” in response to Rose’s question about what he thinks would happen in the United States if the present unfairness continues and unemployment remains high. What does he mean? Will there be riots in the streets or the proletariat rising to shed its shackles?

CBO report lowers deficit projection, job growth expected to be slow

The Congressional Budget Office (CBO) released an updated budget forecast yesterday in the wake of the debt ceiling deal (ie. based on current law) that requires some $2.5 trillion in spending cuts over the next 10 years.

The good news is that the budget deficit will be less than expected for FY 2011, only $1.3 trillion or 8.5% of gross domestic product (GDP), but still the third highest budget defict on record; only the the last two fiscal years were greater.

So what’s the bad news? Peter Suderman explains:

Employment is expected to expand, but only very slowly, remaining above eight percent through 2014, and that’s without factoring in some very recent bad news. By 2013, public debt will equal roughly three quarters of the country’s total annual economic output, and, under the most likely scenario, continue upwards from there.

That’s not something that President Barack Obama wants to run on during his re-election; moreover, if Republicans keep control of Congress and manage to take the White House, they’d be running in a very difficult mid-term if unemployment doesn’t significantly improve. I’m saying that no one can jump for joy because it has omnious consequences for everyone, either in this election or the next.

When $38.5 billion means $352 million

Remember when we were told that the budget deal reached between House Republicans, Senate Democrats and the Obama Administration would result in $38.5 billion in spending cuts? That’s not true, according to the Congressional Budget Office:

A Congressional Budget Office analysis of the fiscal 2011 spending deal that Congress will vote on Thursday concludes that it would cut spending this year by less than one-one hundredth of what both Republicans or Democrats have claimed.

A comparison prepared by the CBO shows that the omnibus spending bill, advertised as containing some $38.5 billion in cuts, will only reduce federal outlays by $352 million below 2010 spending rates. The nonpartisan budget agency also projects that total outlays are actually some $3.3 billion more than in 2010, if emergency spending is included in the total.

The astonishing result, according to CBO, is the result of several factors: increases in spending included in the deal, especially at the Defense Department; decisions to draw over half of the savings from recissions, cuts to reserve funds, and mandatory-spending programs; and writing off cuts from funding that might never have been spent.

National Journal previously reported that after removing rescissions, cuts to reserve funds, and reductions in mandatory-spending programs, discretionary spending would be reduced only by $14.7 billion. CBO’s analysis, which takes into account the likelihood that certain authorized funding will never be spent, suggests that the actual cuts will be even smaller.

CBO estimates $9.5 trillion in deficits over 10 years

The Obama Administration received some bad news on Friday when the Congressional Budget Office released numbers showing deficits over the next 10 years to be $9.5 trillion, more than $2 trillion higher than the White House’s estimate:

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 be $1.1 trillion more without the recommendations included in Obama’s budget.

Marc Goldwein, policy director for the Committee for a Responsible Federal Budget, said that CBO has found the effects to be almost nil.

He 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.

Yep, Paul Krugman is still a hack

In case you had any question that economist Paul Krugman is nothing more than a shill for the Obama Administration and its policies, here is a recent statement that should convince you:

What would real action on health look like? Well, it might include things like giving an independent commission the power to ensure that Medicare only pays for procedures with real medical value; rewarding health care providers for delivering quality care rather than simply paying a fixed sum for every procedure; limiting the tax deductibility of private insurance plans; and so on.

And what do these things have in common? They’re all in last year’s health reform bill.

That’s why I say that Mr. Obama gets too little credit. He has done more to rein in long-run deficits than any previous president.

The folks from NewsButers cite this piece from that should shoot down any notion of fiscal responsibility from President Barack Obama’s health care “reform” legislation. It shows that to achieve the so-called “savings” in ObamaCare, the administration is:

Balancing the budget without tax hikes

On last week’s report from the Congressional Budget Office that shows budget deficits of nearly $7 trillion over the next 10 years and also very bad news for Social Security, economist Dan Mitchell explains how Congress can balance the budget without tax hikes:

The chart below shows that revenues are expected to grow (because of factors such as inflation, more population, and economic expansion) by more than 7 percent each year. Balancing the budget is simple so long as politicians increase spending at a slower rate. If they freeze the budget, we almost balance the budget by 2017. If federal spending is capped so it grows 1 percent each year, the budget is balanced in 2019. And if the crowd in Washington can limit spending growth to about 2 percent each year, red ink almost disappears in just 10 years.

These numbers, incidentally, assume that the 2001 and 2003 tax cuts are made permanent (they are now scheduled to expire in two years). They also assume that the AMT is adjusted for inflation, so the chart shows that we can balance the budget without any increase in the tax burden.

Tax cut vote delayed until after Thanksgiving

It looks like we’ll have to wait until after Thanksgiving for Congress to decide whether or not they will extend the Bush tax cuts, including cuts on upper income earners; many of whom are small business owners:

Democratic leaders in the House and the Senate have decided to move ahead with votes after Thanksgiving to extend the Bush tax cuts for those making $250,000 or less.

These decisions come hours after Democratic leaders met at the White House with President Obama, where several sources say they talked extensively about the tax cuts. Until now, how or whether Democrats would proceed on the thorny issue of extending the Bush era tax cuts was unresolved.

In the House, Majority Leader Steny Hoyer told CNN that Democratic leaders have scheduled a vote. “At least that will be available for members to have a vote on,” Hoyer said.

What is still unclear is if that House vote would extend so-called middle class tax cuts permanently, or just on a temporary basis.

In the Senate, Majority Leader Harry Reid said he plans to vote on the middle class tax cut extension most Democrats want, but he will also allow Republicans to hold a vote on what they are demanding: a permanent extension of all Bush-era tax cuts.

Some Democrats, such as Rep. James Clyburn (D-SC), are open to the idea of new extending any of the tax cuts. This is a repeat of an idea floated by outgoing House Majority Leader Steny Hoyer (D-MD) earlier this year.

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