The nonpartisan Congressional Budget Office (CBO) has released a new analysis of President Obama’s proposed budget that underscores the need for more fiscal responsibility if the U.S. wants to avoid a dangerous accumulation of debt over the next 10 years and beyond.

If all of the President’s proposals are enacted, the CBO says, federal debt held by the public would climb to $20.3 trillion by the end of 2020 . That would be up from $7.5 trillion at the end of last year. (“Debt held by the public” does not include money borrowed from certain government accounts, notably the Social Security trust fund.)

This projection means debt held by the public would rise from 53 percent of the Gross Domestic Product (GDP) at the end of last year to 90 percent in 2020. Many analysts sound warning sirens when a nation’s debt exceeds 60 percent of GDP – a level we will pass this year.

The President’s plan to extend many of the Bush era tax cuts would slice deeply into federal revenue although some of that loss would be regained through proposed tax increases. In total, the President’s budget would shave $1.4 trillion from revenues that the government would receive if current law were followed and the tax cuts allowed to expire at the end of the year. Revenues would average 18.9% of GDP between fiscal years 2011 and 2020.

At the same time, the president’s policies would increase spending by $2.3 trillion over current law and spending would average 24.1 percent of GDP. In an ominous sign, spending would be growing significantly faster than revenues by the end of the 10-year period. The 2018 deficit would be 4.8 percent of GDP but would grow to 5.6 percent of GDP by 2020. This reflects the accelerating growth of entitlement programs plus net interest, which would add a combined 0.9 percent of GDP to spending between 2018 and 2020. By contrast, revenues would grow by only 0.2 percent in that time.

Interest on the federal debt would jump from 1.4 percent of GDP this year to 4.1 percent in 2020. The government now enjoys low interest rates but will face more difficulties when those rates start to rise.

Under the President's budget, annual deficits average $976 billion, or 5.2 percent of GDP. By 2020, the projected $1.3 trillion deficit would equal 84 percent of all discretionary programs.

Since cutting 84 percent of the discretionary programs would clearly be an unrealistic and undesirable way to try to balance the budget, policymakers will have to consider entitlement spending cuts and revenue increases to at least make a meaningful dent in the deficit. There should be no pretense that all will be well once the economy recovers, or that simply cracking down on earmarks and waste will be sufficient. The budget already assumes a robust economic recovery and a three-year freeze on non-security appropriations.

The Concord Coalition's plausible baseline has been updated to reflect the numbers in the CBO’s new budget analysis. Concord’s baseline also adds in the effects of the new health reform law. For more on the Concord Coalition's plausible baseline, click here.

House Speaker Nancy Pelosi has named the last three members of the 18-member bipartisan commission that will try to chart a more responsible fiscal course for the nation.

The new Democratic appointees are Rep. John Spratt of South Carolina, chairman of the House Budget Committee; Rep. Xavier Becerra of California, vice chair of the Democratic Caucus, and Rep. Jan Schakowsky of Illinois, a member of the House Energy and Commerce Committee.

They will join three Democratic senators, six Republican members of Congress and six presidential appointees on the National Commission on Fiscal Responsibility and Reform. President Obama established the commission last month to recommend ways to reduce deficits over the next few years and address the longer-term fiscal challenges that threaten the country’s economic future. Its recommendations are due Dec. 1.

The Concord Coalition and other “deficit hawks” have cheered the establishment of the commission and urged it to put everything – including entitlement program cuts and tax increases -- on the table. Co-chairs Erskine Bowles and Alan Simpson have promised to do so.

For the commission to make a recommendation, at least 14 of the 18 members must agree to it. That sets a high hurdle that won’t make the panel’s job any easier. But even if its members have trouble reaching a final consensus, their work in the coming year should focus more public attention on the nation’s fiscal difficulties and could help identify possible solutions for Congress and the President to pursue.