海角大神

Following up on on , let me explain that the Obama Administration鈥檚 seemingly low-ball estimates of deficits under their own proposals isn鈥檛 so much a case of (very) 鈥渄ynamic scoring鈥� as a sort of 鈥渕ake-up call.鈥�

I thought I鈥檇 provide some apples-to-apples numbers to help see what鈥檚 going on. Recall that CBO scores the ten-year deficit under the President鈥檚 proposals at $9.470 trillion, while OMB (the Administration) says it would be only $7.205 trillion鈥揳 more than $2.2 trillion difference. It turns out that most of this difference is due to the Administration鈥檚 much rosier assumptions about the pre-policy baseline and the level of revenues that would be collected under current law. The CBO and OMB estimates of the cost of the President鈥檚 tax proposals (or more accurately, the net revenue loss under the President鈥檚 budget compared with current law) are actually very similar.

So here are the relevant numbers, all for the ten-year period of fiscal years 2012-21. The CBO numbers come from their analysis linked above, and the OMB numbers come from the in the President鈥檚 budget:

• CBO (all found in their Table 1): Revenues under the current-law baseline: $39.032 trillion;
• Revenues under the President鈥檚 FY2012 budget: $36.702 trillion; so鈥�
• Difference (net revenue cost of President鈥檚 proposals): $2.330 trillion.
• OMB: Revenues under their 鈥渁djusted鈥� baseline (from their Table S-3): $37.928 trillion;
• BUT this adjusted baseline took out $3.070 trillion in extended tax cuts that they count as 鈥渃urrent policy鈥� (see Table S-7); so鈥�
• Implied revenues under current law (add the $3.070 trillion back in): $40.998 trillion;
• Revenues under the President鈥檚 FY2012 budget (from Table S-1): $38.747 trillion;
• So, note, difference from current law due to the President鈥檚 proposals ($40.998 - $38.747): $2.251 trillion. (Pretty darn close to CBO鈥檚 $2.330 trillion鈥搊nly $79 billion (over ten years) apart.)
• Difference between assumed current-law baseline revenues (OMB minus CBO): $1.966 trillion.

So, out of the $2.2 trillion difference between CBO and OMB estimates of ten-year deficits under the President鈥檚 proposals, nearly $2.0 trillion comes not from differences in their cost estimates of the tax-cut proposals nor from differences in how effective those tax cuts might be in growing the economy/changing the economic forecast (鈥漝ynamic scoring鈥濃�搘hich isn鈥檛 done in these budget forecasts anyway), but rather from the differences in how strong they think the economy and therefore the levels of revenues would be even with no change in tax policy.

So it鈥檚 not anything sneaky or sinister buried in the Administration鈥檚 estimates, but it鈥檚 just a very optimistic view, for sure, and it certainly serves as a sort of 鈥渕ake-up call鈥� in that the $2.0 trillion in 鈥渞osier scenario鈥� effectively covers about 85-90 percent of the cost of President Obama鈥檚 proposed extension of what used to be the (Obama-labeled 鈥渇iscally-irresponsible鈥�) Bush tax cuts.

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