Wonderful: CBO Has the USA Running Up 1.5 Trillion Deficit This Year

CBO

How Bad, well expect 1.5 trillion this year:

The agency’s analysis of the President’s proposals is based on its own economic assumptions and estimating techniques (rather than the Administration’s) and incorporates revenue estimates from the staff of the Joint Committee on Taxation (JCT) for tax provisions. According to CBO’s projections, if all of the President’s budget proposals were enacted, those polices would add $132 billion to the deficit in this fiscal year, reducing revenues by nearly $60 billion and boosting outlays by more than $70 billion. The deficit in the current fiscal year, which ends on September 30, would total $1.5 trillion, or 10.3 percent of gross domestic product (GDP). As a share of the economy, that deficit would be slightly greater than the 2009 shortfall, which totaled 9.9 percent of GDP.

Over the 2011–2020 period, deficits would total $9.8 trillion, or 5.2 percent of GDP during that period (see Table 1-1). In 2011, CBO estimates, the deficit under the President’s budget would decline to 8.9 percent of GDP and would total $1.3 trillion—$346 billion more than the deficit that CBO projects in its March baseline (which is based on the assumption that current laws and policies remain in place).

Deficits in succeeding years under the President’s pro­posals would be smaller but would continue to add significantly to federal debt. The deficit would fall to about 4 percent of GDP by 2014 but would rise steadily thereafter, reaching 5.6 percent of GDP in 2020 (see Figure 1-1). The cumulative deficit over the 2011–2020 period would be $3.8 trillion more than the cumulative deficit projected under CBO’s baseline. Of that difference, $3.0 trillion stems from proposed changes in policy, and the other $0.8 trillion results from additional interest on the public debt.

Under the President’s budget, debt held by the public would grow from $7.5 trillion (53 percent of GDP) at the end of 2009 to $20.3 trillion (90 percent of GDP) at the end of 2020—$5 trillion above what CBO projects for 2020 in its baseline (see Figure 1-2). In addition to the $3.8 trillion in added deficits from the President’s policies, the government’s borrowing needs would rise by another $1.3 trillion in order to finance additional direct lending to students and other credit programs. (The subsidy costs of that lending are included in the projected deficits, but they represent only a small fraction of the cash disbursements for loans.)