CBO: Obama budget produces a deficit of $977B for 2013

Associated Press

WASHINGTON

A new analysis of President Barack Obama’s budget for next year says the deficit scenario for next year isn’t as rosy as the White House figured last month.

Friday’s Congressional Budget Office report said Obama’s budget would produce a $977 billion deficit next year — $75 billion more than predicted by the White House.

Over the coming decade, CBO says Obama’s policies would result in deficits totaling $6.4 trillion. Deficits would be even higher were it not for Obama’s proposals to raise taxes on higher-income people.

The White House seized on the figures as validation of its claims that Obama’s budget brings the deficit under control — at least when measured against the economy, the measure used by most economists in evaluating the deficit.

“CBO found that by 2016 deficits as a share of the economy would be below 3 percent — a key milestone of fiscal sustainability,” said White House budget office acting director Jeffrey Zients. “Debt held by the public will decrease and then stabilize as a share of the economy, also a key indicator of improving fiscal health.”

The nonpartisan CBO said Obama’s budget office consistently overestimates tax revenues over the coming decade.

CBO predicts revenues on average that are about $120 billion less each year than predicted by the White House.

Still, CBO said Obama’s budget would generate somewhat lower deficits over the coming decade than the White House predicts. Much of that is due to lower interest costs and less generous cost-of- living adjustments in Social Security benefits.

The forecasting differences for 2013 aren’t unusual and generally are caused by CBO’s less- optimistic view of the economy over the next couple of years.