CBO says Obama deficit will be $2.3 trillion higher

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3/18/11, "CBO: Obama understates deficits by $2.3 trillion," AP

"A new assessment of President Barack Obama's budget released Friday says the White House underestimates future budget deficits by

• more than $2 trillion over the upcoming decade.

The estimate from the nonpartisan Congressional Budget Office says that if Obama's February budget submission is enacted into law it would produce deficits totaling $9.5 trillion over 10 years — an average of almost $1 trillion a year.

• Obama's budget saw deficits totaling $7.2 trillion over the same period.

The difference is chiefly because CBO has a less optimistic estimate of how much the government will collect in tax revenues, partly because the administration has rosier economic projections.

But the agency also rejects the administration's claims of more than $300 billion of that savings —

• to pay for preventing a cut in Medicare payments to doctors —
  

because it doesn't specify where it would come from. Likewise, CBO fails to credit the White House with an additional $328 billion that would come from

• unspecified "bipartisan financing" to pay for
  

transportation infrastructure projects such as high speed rail lines and road and bridge construction.

• Friday's report actually predicts the deficit for the current budget year, which ends Sept. 30, won't be as bad as the $1.6 trillion predicted by the administration and will instead register $200 billion less. But 10 years from now, CBO sees a $1.2 trillion deficit that's almost $400 billion above White House projections.

The estimated cost of the new health care law increased by about $90 billion, to $1.13 trillion, from 2012-2021. But the budget office didn't issue a new estimate of the taxes and savings in the legislation that pay for Obama's expansion of health insurance.

CBO had earlier projected the total of those offsets at $1.25 trillion. So the margin by which the new health care law reduces federal deficits

• appeared to be shrinking....

"The President's budget never reaches 'primary balance,' meaning that it fails to clear even the low bar the administration set for itself in justifying its claims of sustainability," said House Budget Committee Chairman Paul Ryan, R-Wis....

The estimate adds urgency to calls on Capitol Hill for action on runaway deficits that many economists fear — if left unchecked — could trigger a European-style debt crisis that could force draconian measures such as cutting federal benefits for seniors or forcing broad-based tax increases.*...

Conversely, the report is a sobering blow to House Republicans** charged with developing a budget blueprint that could satisfy its core supporters in the tea party. Republican lawmakers had already acknowledged that they won't be able to generate a budget that comes to balance by the end of the decade.

Friday's news makes that task even more difficult."

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* The AP doesn't say where it came up with these 2 likelihoods. For example, they could have suggested AP employees give more in taxes to help out.

** The House Republicans had nothing to do with this budget. In any case, they're happy to do whatever Obama wants and they don't care about the Tea Party.

via Weasel Zippers