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Analysis of the President's Budget

Each year, CBO estimates the budgetary impact of the proposals in the President's budget using the agency's own economic assumptions and estimating techniques—thus enabling the Congress to compare the Administration's spending and revenue proposals to CBO's projections of spending and revenues under current law, and to other proposals, using a consistent set of economic and technical assumptions. CBO also estimates the economic impact of the proposals in the President’s budget and the "feedback effect" that those changes in the economy would have on the budget.

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CBO To Release Analysis of the President’s FY 2014 Budget and Updated Baseline Projections in May

posted by Doug Elmendorf on April 22, 2013

The Economic Impact of the President's 2013 Budget

Apr 2012 - CBO analyzes the potential effects of the President's budget on the economy and, in turn, the impact of those macroeconomic effects on the federal budget.

monthly archive

  • May 2013 (2)
  • April 2013 (14)
  • March 2013 (22)
  • February 2013 (10)
  • January 2013 (11)
  • December 2012 (4)
  • November 2012 (10)
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related publications


  • The Economic Impact of the President's 2013 Budget

    April 20, 2012
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CBO Releases Its Analysis of the Economic Impact of the President’s 2013 Budget

blog post

April 20, 2012


  • Supplemental Material

  • Blog Post

related publications


  • An Analysis of the President's 2013 Budget

    March 16, 2012
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The Economic Impact of the President's 2013 Budget

report

April 20, 2012

read complete document  (pdf, 678 kb)

Highlights

Each year, after the President releases his annual budget request, the Congressional Budget Office (CBO) analyzes the proposals and, using its own estimating procedures and assumptions, projects what the federal budget would look like over the next 10 years if those proposals were adopted. CBO usually provides those results in two parts: The first part presents an examination of the proposals’ budgetary impact without considering their effects on the U.S. economy. The second part, which takes more time to prepare, shows their potential effects on the economy and, in turn, the impact of those macroeconomic effects on the budget. CBO has now completed that second analysis, and this report summarizes the results.

In its analysis of the President’s proposals excluding any macroeconomic effects, which was issued on March 16, CBO concluded that the federal budget deficit would equal $1.3 trillion (or 8.1 percent of gross domestic product, GDP) in fiscal year 2012 and would decline to about $1.0 trillion (or 6.1 percent of GDP) in 2013. The deficit would decline further relative to GDP in subsequent years, reaching 2.5 percent by 2017, but then increase again, reaching 3.0 percent of GDP in 2022.

The projected deficits under the President’s proposals would exceed those in CBO’s baseline—a benchmark showing the outcome if current laws generally remained unchanged—by 0.5 percent of GDP ($82 billion) in 2012, by 2.2 percent of GDP ($365 billion) in 2013, and by between 1.4 percent and 1.9 percent of GDP in each year from 2014 through 2022. In all, between 2013 and 2022, deficits would total $6.4 trillion (or 3.2 percent of total GDP projected for that period), $3.5 trillion more than the cumulative deficit in CBO’s baseline.

Estimates of the macroeconomic effects of those proposals depend on many specific assumptions and judgments, so CBO used several different approaches to estimating those effects, generating a range of possible outcomes. The estimates cover the periods 2013 to 2017 and 2018 to 2022.

CBO estimates that the President’s budgetary proposals would boost overall output initially but reduce it in later years. For the 2013–2017 period, under most of the estimates CBO produced using alternative models and assumptions, the President’s proposals would increase real (inflation-adjusted) output (relative to that under current law) primarily because taxes would be lower than those under current law, and, therefore, people’s disposable income and their demand for goods and services would be greater. Over time, however, the proposals would reduce real output (relative to that under current law) because the deficits would exceed those projected under current law, and the effects of increasing government debt would more than offset the favorable effects of lower marginal tax rates on labor income. When the net impact of those two types of effects would shift from an increase in real output to a decrease would depend on various factors, including the impact of increased aggregate demand on output and the effect of deficits on investment.

By CBO’s estimate, under the President’s proposals, the nation’s real output during the 2013–2017 period would be, on average, between 0.2 percent lower than the amount under current law and 1.4 percent higher than under current law. For the 2018–2022 period, CBO estimates that the President’s proposals would reduce real output, on average, by between 0.5 percent and 2.2 percent compared with what would occur under current law.

Those economic effects would in turn influence the budget through changes in taxable income, in outlays for unemployment insurance and other programs, and in interest payments on government debt, among other factors. According to CBO’s estimates, the effects on the budget would be as follows:

  • For the 2013–2017 period, before accounting for the macroeconomic effects, CBO estimates that the President’s proposals would add a total of $1.5 trillion to deficits, resulting in a cumulative deficit of $3.2 trillion over that period (see Table 1). The economic feedback from the President’s proposals would yield projected deficits totaling between $3.0 trillion and $3.2 trillion over that period.
  • For the 2018–2022 period, before accounting for the macroeconomic effects, CBO estimates that the President’s proposals would add a total of $2.0 trillion to deficits, resulting in a cumulative deficit of $3.2 trillion over that period. The economic feedback from the President’s proposals would yield projected deficits totaling between $3.3 trillion and $3.6 trillion over that period.


monthly archive

  • May 2013 (2)
  • April 2013 (14)
  • March 2013 (22)
  • February 2013 (10)
  • January 2013 (11)
  • December 2012 (4)
  • November 2012 (10)
  • October 2012 (4)
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  • August 2012 (5)
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CBO Releases An Analysis of the President's 2013 Budget

blog post

March 16, 2012


  • Full Text

  • document

  • Additional Data

  • tables from the analysis of the president's budget

  • Supplemental Material

  • blog post

  • Estimates of Proposals for Mandatory Spending Programs

  • Social Security Proposals
  • Pension Benefit Guaranty Corporation
  • Farm Programs
  • higher education
  • Medicare, Medicaid, and Other Mandatory Health Provisions
  • unemployment compensation

related publications


  • The Economic Impact of the President's 2013 Budget

    April 20, 2012

  • Updated Budget Projections: Fiscal Years 2012 to 2022

    March 13, 2012
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An Analysis of the President's 2013 Budget

report

March 16, 2012

read complete document  (pdf, 767 kb)

Highlights

This report by the Congressional Budget Office (CBO) presents an analysis of the proposals contained in the President's budget request for fiscal year 2013. The analysis is based on CBO's economic projections and estimating techniques (rather than the Administration's) and incorporates estimates by the staff of the Joint Committee on Taxation for the President's tax proposals.

In conjunction with analyzing the President's budget, CBO has updated its baseline budget projections, which were previously issued in January 2012. Unlike its estimates of the President's budget, CBO's baseline projections largely reflect the assumption that current tax and spending laws will remain unchanged, so as to provide a benchmark against which potential legislation can be measured. Under that assumption, CBO estimates that the deficit would total $1.2 trillion in 2012 and that cumulative deficits over the 2013–2022 period would amount to $2.9 trillion.

The President's budget request specifies spending and revenue policies for the 2013–2022 period and also includes initiatives that would have budgetary effects in fiscal year 2012. CBO estimates that enactment of the President's proposals would have the following consequences for the budget:

  • The deficit in 2012 would equal $1.3 trillion (or 8.1 percent of gross domestic product), $82 billion more than the 2012 deficit projected in CBO's baseline.
  • In 2013, the deficit would decline to $977 billion (or 6.1 percent of GDP), $365 billion more than the shortfall projected for 2013 in CBO’s baseline.
  • The deficit would decline further relative to GDP in subsequent years, reaching 2.5 percent by 2017, but then would increase again, reaching 3.0 percent of GDP in 2022. The deficits after 2013 would exceed those in CBO's baseline by between 1.4 percent and 1.9 percent of GDP each year.
  • In all, between 2013 and 2022, deficits would total $6.4 trillion (or 3.2 percent of total GDP projected for that period), $3.5 trillion more than the cumulative deficit in CBO's baseline.
  • Federal debt held by the public would increase from $10.1 trillion (68 percent of GDP) at the end of 2011 to $15.2 trillion (77 percent of GDP) at the end of 2017 and then to $18.8 trillion (76 percent of GDP) at the end of 2022. Under the assumptions of CBO's current-law baseline, debt held by the public would increase more slowly, ending 2022 at $15.1 trillion; as a percentage of GDP, however, such debt would decline to 61 percent by the end of 2022.


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Glossary

report

January 31, 2012

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Additional Information on the Program Integrity Initiative for the Internal Revenue Service in the President's Budgetary Proposals for Fiscal Year 2012

report

June 23, 2011

read complete document  (pdf, 0 kb)

monthly archive

  • May 2013 (2)
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An Analysis of the President's Budgetary Proposals for Fiscal Year 2012

blog post

April 15, 2011


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Selected budget projections - April 2011

data or technical information

April 15, 2011

read complete document  (xls,  kb)

Abstract

These spreadsheets reflect CBO's estimates, assumptions, and projections at the time the associated publication was released; that is, the spreadsheets are not continuously updated.

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