President’s Proposals would Produce Lower Deficits than Continuing Current Policies

by Bruce Webb

That is the subtitle of the new Center for Budget and Policy Priorities (CBPP) analysis of the Aug 25th CBO and OMB Reports on projected budget deficits that is being injected into the health care debate as a reason for non-action. The CBPP analysis can be read here: New OMB and CBO Reports Show Continuing Current Policies Would Produce Large Deficits. The authors’ introduction:

On August 25, both the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO) released updated budget projections. Some observers, comparing OMB’s estimate of the deficit over the next ten years under the President’s proposed policies ($9.1 trillion) to CBO’s “baseline” estimate of the deficit under current law ($7.1 trillion), jumped to the conclusion that the President proposes to increase the deficit dramatically. In fact, the opposite is true. The President’s proposals would produce significantly lower deficits over the next ten years than continuing current policies.
This and other confusions have occurred because both the OMB and CBO reports are chock-full of numbers that are hard for even seasoned budget-watchers — and almost impossible for ordinary citizens — to interpret. This brief analysis explains what some of the numbers mean, how CBO’s official baseline must be adjusted to show what CBO’s estimate of deficits would be if it assumed current policies are continued, and why even that adjusted baseline should not be compared with OMB’s estimate of deficits under the President’s policies.

The whole document is five pages long and should be read in full. But one lesson to take away is that you cannot directly compare CBO and OMB numbers, the former being bound by current law and the latter by current and proposed policy, two different things. To see the explanations from CBO and OMB try these links:
Orszag Press Release Mid-Session Review
OMB Mid-Session Review Mid-Session Review Web-Page with link to PDF of full report.
CBO Director’s Blog Comparing CBO’s and OMB’s Projections of the Federal Budget Deficit with link to PDF.
A table below the fold .

Kevin Drum who pointed me to this has an annotated version of this table at MJ: where he totals the bottom line to get $10.556 trillion which is actually $574 billion below the figure CBPP comes up for an adjusted CBO number.

So before people jump to conclusions about how these new OMB and CBO numbers show Obama is breaking the bank be sure you know whether you are dealing with apples and oranges both with the initial and revised numbers.