How about $14 trillion? $9 trillion ($9.051 trillion) is the Obama Administration’s 10-year deficit projection based on their own economic forecast and their own estimate of the costs of their policy proposals (as proposed in their FY2010 budget). $7 trillion ($7.137 trillion) is the Congressional Budget Office’s 10-year deficit projection based on their economic forecast and policies already in place in current law. If you start with CBO’s more pessimistic baseline budget outlook of $7 trillion in deficits (by the way, the equivalent pre-policy baseline estimated by the Administration is $6.259 trillion), then add in the CBO-estimated cost of policies that have a good chance of coming true in the future (but aren’t yet written into law), you can come up with a projection that is perhaps more “plausible” than both the Administration’s (optimistic) $9 trillion and CBO’s (naive baseline-constrained) $7 trillion. That’s what we at Concord try to do when we come up with our “Concord Plausible Baseline,” which based on today’s CBO report shows that current policy would lead to $14.4 trillion in deficits over the next 10 years.
Here’s a link to our press release, where of course, my big soap box is the need for tax reform, or at least a rethinking of whether extending most of the Bush tax cuts (especially via deficit financing) makes any good economic sense:
“Today’s numbers illustrate that we have a revenue crisis in the federal budget as much as a health care crisis. The federal revenue system is clearly failing to keep up with our nation’s spending needs. Since last September, the 10-year revenue forecast has shrunk by over $3 trillion solely due to deteriorating economic conditions. What’s troubling is that even without any more tax cuts and even after the economy is expected to recover, today’s reports show revenues will continue to fall short. It is time to rethink tax policy, from the deficit-financed extensions of the 2001 and 2003 tax cuts proposed by the administration, to an even broader look at how to increase the revenue base,” said Concord Coalition Chief Economist Diane Lim Rogers.
And the bottom line from Concord’s perspective? My boss, Bob Bixby, says it best:
“The routine budget process has produced an unsustainable outlook. It is unrealistic to think that this will change without some mechanism to compel consideration of the hard choices that have been ducked in the past. Regardless of the outcome of this year’s health care reform debate, there will be a need to address other contributors to the structural deficit such as Social Security growth and inadequate revenues,” Bixby said.