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Economic News, Data and Analysis

$477 billion deficit for 2004

OMB Watch – Economy and Jobs Watch: CBO Projecting Large Deficits
The Congressional Budget Office (CBO) today released their baseline budget estimates for 2005-2014. The analysis shows that in 2004 deficits will likely reach $477 billion – which is 4.2% of GDP – and that deficits will continue over the next decade, reaching a cumulative $1.9 trillion baseline over the next 10 years.

The CBO “baseline,” however, is not a forecast, but rather an estimate of revenue and spending under current law. Current legislative proposals, including extending past tax cuts, any new tax cuts, or greater than legislated increases in spending on defense, homeland security, and other areas, would increase the deficit beyond the CBO’s baseline.

For example, the figure below shows the baseline deficit over the 1004-2014 period as well as the deficit adjusted to include the effect of making various tax cuts permanent. (Data is from Table 1-3 of the CBO report).

If the tax cuts are extended, the deficit will remain near $400 billion for the rest of the next decade.


(Click for Large Version)

In addition, the current estimated deficits represents a $1 trillion deterioration in the 10-year budget situation since just last August. About 70 percent of the change was due to new legislation, and the rest from economic factors and technical revisions.

This data continues to show continuing irresponsbility on the part of federal budgeters and the administration.

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