President's budget would increase debt more than projected
File this one under news that ruins a pleasant Friday afternoon. The Congressional Budget Office just released its analysis of the President’s FY2012 budget. Saying the numbers are disappointing would be an understatement.
The Hill reports:
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 [increase] by $2.2 trillion more without the recommendations included in Obama’s budget.
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.
CBO said the biggest reasons for the deficits, compared to the status quo, are the permanent extension of the Bush-era tax rates for the middle class and changes to the Alternative Minimum Tax that Obama favors in this budget. As a result of the tax policy, there is a $2.7 trillion net increase in the deficit over the next 10 years.