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.