OMB Releases 2014 Mid-Session Review
Today, the Office of Management and Budget released its Mid-Session Review, revised estimates of the President's 2014 budget incorporating legislative, economic, and technical changes in projections since the budget was released in April. The new estimates show a deterioration in the outlook that CBO's most recent scoring of the President's Budget and slightly worse than OMB's original scoring.
Instead of debt falling to 73 percent of GDP in the original budget by 2023 or below 70 percent of GDP in CBO's estimate, OMB now projects debt to rise to 75.4 percent of GDP by 2023. Deficits are smaller in 2013 in the MSR compared to the original estimate but 2014-2023 deficits are over $500 greater. For comparison, debt would be 75.5 percent of GDP in 2023 under CRFB's Realistic Baseline, although the President's Budget would be on a very modest downward path while the Realistic baseline is on an upward path.
Source: OMB, CBO
The Mid-Session Review is a reminder that while changes in projections can make the budget outlook appear better, revisions can also make it appear worse depending on how different agencies view what is happening with the budget and economy. While budget estimates should be taken seriously, they are not set in stone, and lawmakers should be cautious when dealing with them. Recent revisions have improved prospects for 2013, but both CBO and OMB currently show that the long-term problem is left to be solved. The President's Budget remains a serious proposal, but more needs to be done on both entitlement and tax reform if lawmakers are going to be able to put debt on a downward path.
We will dive deeper into the Mid-Session Review later in the week.