海角大神

The just came out. Will have more to say after a more careful read this weekend, but a few things immediately jump out from the main tables in the report:

1. Deficits under the President鈥檚 budget proposals as estimated by CBO are more than $2.2 trillion higher than estimated by the Administration. (Ten-year deficits are $9.470 trillion according to CBO, vs. $7.205 trillion according to the Administration鈥檚 Office of Management and Budget. See bottom lines on Table 3, page 18.)
2. CBO estimates the total cost of the President鈥檚 proposals to be $2.733 trillion over ten years. The great bulk of this (85%) is the cost of proposed tax cuts, at $2.331 trillion鈥搘ithout including any additional interest costs associated with these tax cuts.
3. In fact, if you decompose the cost of the spending proposals into mandatory, discretionary, and net interest effects, you find that the contribution of tax cuts is more than 100 percent of the total cost. Again from Table 3, the President鈥檚 mandatory proposals cost $1.335 trillion over ten years, and his discretionary proposals save $1.452 trillion over ten years, for a net $117 billion in savings without interest. In other words, the higher net interest costs of $519 billion over ten years are due entirely to the deficit-financed $2.3 trillion in new tax cuts.
4. It is only coincidental that the difference between CBO鈥檚 estimate of deficits under the President鈥檚 proposals and the Administration鈥檚 (OMB鈥檚) own estimate ($2.2 trillion) is almost identical to CBO鈥檚 estimate of the cost of the tax cut proposals ($2.3 trillion). But it effectively means that through the Administration鈥檚 rosier assumptions (which I hope to investigate further), they are implicitly suggesting鈥搊r at least not contradicting鈥搕he notion that tax cuts pay for themselves. On the Administration鈥檚 part there seems to be some implicit denial about what this tax-cut-monopolized budget means for the deficit.

Oops! Somehow this doesn鈥檛 seem like a very good start on our path to fiscal sustainability.

------------------------------

海角大神 has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.