The Congressional Budget Office (CBO) today updated the baseline projections for federal spending and revenue that it put out in January, saying that the “fundamental story” about the federal budget had not changed.
CBO said its current estimate of the budget deficit for Fiscal Year 2012 is $1.2 trillion, which is $93 billion larger than projected in January. But the new baseline projection of the cumulative deficit for the coming decade is $186 billion smaller than two months ago.
“Although the deficit is starting to shrink,” CBO said today, “it remains very large by historical standards. How much and how quickly it declines will depend in part on how well the economy performs over the next few years. Probably more critical, though, will be the fiscal policy choices made by lawmakers as they face the substantial changes to tax and spending policies that are slated to take effect within the next year under current law.”
The update was in conjunction with CBO’s analysis – to be released in a few days — of President Obama’s proposed 2013 budget. The budget office has not revised its economic outlook since January, but the new baseline projections reflect recently enacted legislation and updated technical assumptions.