This afternoon CBO released its preliminary analysis of the President’s Budget, projecting a significantly worse fiscal situation than the Administration does. It will release a more detailed report later this month that outlines the effect of the President’s Budget on the economy. We will release a more detailed analysis next week and when CBO releases its final report, likely at the end of March. But here's a quick preview:
CBO estimates that the budget proposal would increase the debt held by the public from $7.6 trillion, or 53 percent of GDP, in 2009 to $20.3 trillion, or 90 percent of GDP, by 2020. This is significantly larger than CBO’s baseline estimate of $15.7 trillion, or 67.5 percent of GDP, in 2020. It is also far greater than the debt levels projected by the Administration under its policy proposals of $18.6 trillion or 77 percent of GDP in 2020. And under the budget proposal, net interest would grow from 1.4 percent of GDP to 4.1 percent of GDP in 2020.
According to CBO, the President's proposal would result in a deficit of $1.5 trillion in 2010 and $1.3 trillion in 2011. These estimates are slightly more optimistic about the deficit in 2010 than OMB's estimates and slightly more pessimistic than OMB in 2011. In comparison to the CBO baseline, however, the President's budget would increase the deficit by $140 billion in 2010 and $346 billion in 2011.