Budget Referee Sees Less Deficit Reduction in Obama’s Proposal – Real Time Economics

The nonpartisan Congressional Budget Office sees President Barack Obama’s budget proposal for the year beginning Oct. 1 reducing deficits over the next 10 years by $1.2 trillion.

That is less than the $2.2 trillion in cuts forecast by the White House in its budget. (In public, the administration has said its proposal would reduce deficits by $1.8 trillion because the larger figure includes reductions in war spending.)

The disparity between the CBO and White House forecasts reflects a higher baseline estimate in the White House budget, which sees deficits rising higher over the next decade under current law than the CBO does. The White House also sees its budget adding a little less to the debt, $5.6 trillion over 10 years, than the CBO does, around $5.9 trillion over 10 years.

By 2025, the CBO forecasts the annual budget deficit will rise to $801 billion, from $486 billion this year, under Mr. Obama’s proposal. The White House says the deficit would rise to $687 billion in 2025.

For the first five years of the budget window, the forecasts are closer together. The CBO forecasts the Obama budget would cut deficits by $400 billion cumulatively through 2020, while the White House says its proposal would cut deficits by $556 billion.

In the immediate future, the CBO actually sees the White House’s budget proposal providing greater deficit reduction than the White House expects. The budget score-keeping agency says tax receipts from several deductions that the administration would eliminate or cap would be responsible for the largest component of deficit reduction, aside from the drop in war funding.

Republican control of Congress means big battles loom this spring over how much money the government should collect and how it should be spent. Mr. Obama has called for an increase in spending above levels agreed to in law four years ago known as sequestration. Republicans are preparing to introduce budgets next week that would keep spending at sequester levels.

Related reading:

GOP to Stick to Sequester Spending Limits in 2016 Budget

White House Sees Workforce as Best Bet to Tackle Deficits

Obama Budget Sets Off Push for Deals

 


 


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12 March 2015 | 9:00 pm – Source: blogs.wsj.com

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