Last Friday the Congressional Budget Office released its scoring of the President’s budget using CBO’s own baseline and economic projections.
The bottom-line results confirm the overall composition of spending and revenues projected by the President’s Office of Management and Budget (OMB) along with the slight downward trend in projected debt as a share of GDP toward the end of the 10-year budget window (2014-2023).
While the two agencies differ on the amount of “deficit reduction” contained in the President’s budget (CBO says $1.1 trillion while OMB says $1.8 trillion), what counts is where spending, revenues, deficits and debt all end up as a share of the economy (GDP). On these key metrics, CBO and OMB come out in a very similar place.
According to both agencies, the President’s budget would spend $46.5 trillion over the next 10 years. CBO estimates that revenues would be $41.3 trillion while OMB puts the number at $41.2 trillion. The 10-year deficit under CBO’s scoring of the President’s budget ($5.2 trillion) is thus lower than OMB’s projection ($5.3 trillion), but remarkably close.
Viewed as a percentage of the economy, the numbers are also very similar although OMB projects stronger economic growth toward the end of the period. On average, CBO projects that revenues would equal 19.4 percent of GDP over the next 10 years under the President’s budget, while OMB projects 19.1 percent.
In both estimates, the trend is slowly upward during the second five years. Spending under the President’s budget would average 21.8 percent of GDP according to CBO, versus 21.6 percent under OMB’s scoring.
More significant than the 10-year totals is that CBO and OMB agree on the trend that would result under the President’s budget. In both projections, spending would remain relatively flat and revenues would slowly increase, leading to stable deficits and a slowly declining debt-to-GDP ratio. CBO estimates that after an increase to 77 percent of GDP in 2014, the ratio would fall to 69.8 percent in 2023.
The CBO analysis does not extend beyond the 10-year budget window so it does not make any projections as to whether the policies in the budget would continue to improve the fiscal outlook over the long term. Nor does it draw conclusions on the likelihood that certain policies can be achieved or sustained.
Following release of the report, CBO Director Douglas Elmendorf posted an informative blog that graphically comparing the President’s budget, the House budget and the Senate budget to the current-law CBO baseline.