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Wednesday, April 10, 2013

White House FY2014 budget differs little from the GAO Baseline

The Whitehouse FY2014 budget appears to differ little from the GAO unrealistic Baseline scenario in proposed spending as % of GDP  that this site addressed here in its analysis of more realistic long term debt projections. The differences would likely not  be  very noticeable in the graphs (it is  a tiny bit higher early on, a tiny bit lower at the end, likely to make the result slightly worse). The  existing page analyzing long term spending based on the GAO forecasts gives a useful picture of the financial mess the US may be in.

 Now that the public has become more worried  about the deficit, one concern regarding  budget proposals from  both Congress and the White House  is whether  their proposals might only be truly concrete for the next year or so and not for the decade afterwards. It may be they are becoming more adept at   rationalizing glowing figures for the future that will never actually appear . That is why the CBO and GAO do more realistic "current policy" scenarios and don't merely rely on the "baseline" figures.  The Chief Actuary for Medicare has called the official Medicare spending projections unrealistic in the past (they are provided to match assumptions they are required to use about future medical prices), and this site has shown the long range Social Security Administration estimates seem unrealistic, and seem to have become more optimistic over time.

All the White House and Congressional budget documents are based on more optimistic estimates of revenue as a % of GDP than is likely, and overoptimistic GDP forecasts.  It is not clear that the cuts proposed by the GOP's House budget will ever happen. They would reduce the deficit, but it wouldn't balance the budget if their optimistic revenue projections aren't met.  It is not clear without more research if those in the both parties in Congress are likely  providing entirely  too unrealistic "baseline" scenarios that are unlikely to happen, or to what degree they truly would be making any sustainable policy shits  in spending that would represent the core of a new  "current policy" scenario. In addition, it is not clear without more research if any of the budget proposals underfund anything over the next decade in a way that will lead budgets to balloon afterwards to make up for it.
 This site may plug   the Senate and House figures into a new analysis, time permitting (thought needs to be given to how they should be extended into future decades, among other issues like whether their spending categories match the GAO forecast used for this sites analysis). It would be useful to see their impact, but there are some other topics to get to first. A more realistic picture may not emerge until after the budget battles have gone further or until  future CBO or GAO long range forecast updates (or better entitlement forecasts) try to resolve what if anything  the proposals really imply for a "current policy" more realistic scenario (rather than just a "baseline") and for spending beyond the next decade.

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