For those who see the Congressional Budget Office as the most accurate arbiter of future deficit projections, it’s worth noting that its latest projection for the 2011 budget deficit is $1.5 trillion, or 9.8 percent of GDP.
If you don’t find that number astounding on its own merits, note that total projected revenues for 2011 are $2.2 trillion. In other words, taxes would have to go up on every American by 66 percent, at projected levels of economic activity, in order to pay for our 2011 spending commitments, including interest on the debt.
What’s ironic is that last year, the CBO projected a 2011 budget deficit of just $980 billion. What’s a $500 billion, 50 percent error among friends?
— Avik Roy is an equity research analyst at Monness, Crespi, Hardt & Co. in New York City. He blogs on health-care issues at The Apothecary.
I must say that with calculation errors of that magnitude I am tempted to consider implementing the Chinese system where they either throw the offending bureaucrat in jail for life or just shoot him! That might provide some incentive for those doing the adding and subtracting to get a bit closer to the mark. (Oops, I suppose that statement isn't going to meet the non-threatening, civility standard which will prevent a lunatic from running amok. So be it, I'll risk it.)
Reply to this commentLinkReport Abuse"60 percent error among friend": That really isn't fair to CBO. The bulk of the difference comes from the bipartisan legislation extending the Bush tax cuts and the temporary reduction in social security taxes.
Reply to this commentLinkReport Abusegood point Mark, inputs = outputs as always with the CBO ...
Reply to this commentLinkReport AbuseI would point out that in the real world Obama was never going to raise taxes on the "not rich" which is the bulk of the difference as well ... yes, the CBO doesn't take that into account for scoring but then again Obama was crowing about the reduction from 1.3 to 1.0 ...
Reply to this commentLinkReport Abusewhats good for the goose ...
I've always been amused by the notion of governments at ALL levels talk about fantastical numbers for this or that budget line. The one thing that always seems to happen though is that when discussing details the numbers are always rounded UP. When was the last time government rounded its budget numbers down? I'll be waiting with the crickets for a response.
Reply to this commentLinkReport AbuseBlaming the Bush tax cuts is inaccurate, according to the CBO. CBO projects that eliminating the Bush tax cuts, together with eliminating AMT indexing, would have increased revenues by a combined 1.9% of GDP. Remember that the CBO uses a static model whereby the impact of tax increases on economic growth is not measured, so this 1.9% is almost certainly a high number.
Let's also remember that spending growth has something to do with deficits.
Reply to this commentLinkReport AbuseHow close would CBO have been by their own estimates if, as the law seemed to be, the Bush tax cuts ended? Pretty close. Here's what they say about it.
"CBO now projects that revenues in 2011 will be lower by $419 billion than it had estimated in August and that over the 2011–2020 period, revenues will be reduced by a total of $1.9 trillion (or 5 percent) for the following reasons:
" Most of the changes in the projections for 2011 and 2012 result from recently enacted legislation, primarily the 2010 tax act, which have led CBO to lower projected revenues by $409 billion for 2011, by
$335 billion for 2012, and by $713 billion for the 2011–2020 period."
I don't think your gobbledegook response above does anything to refute this. If anybody's making mistakes it's you. Your scorn is entirely directed at the wrong person(s).
Reply to this commentLinkReport AbuseEither your ignorance or your bias is showing. The $442 billion dollar discrepancy is due to the late-breaking tax cut extension.
I'm not sure which is worse: that you'd gin up this outrage to beat up the CBO, or that you missed it in the first place.
Reply to this commentLinkReport AbuseHi guys,
I read the full CBO report this afternoon, and I agree -- this isn't an error by the CBO but is instead driven by the late-2010 tax legislation. I've posted a correction and followup here.
External Link
My apologies for the mistake.
Reply to this commentLinkReport AbuseThank you.
Reply to this commentLinkReport Abuse