Congressional Budget Office Projects $9.5 Trillion In Deficits By 2021, $2.3 Trillion More Than Obama's Estimate

Tyler Durden's picture

Today the Congressional Budget Office slammed the president's unrealistic budget presented recently, concluding that the cumulative deficit over the decade between 2011-2021 would be $9.5 trillion, or $2.3 trillion higher than that estimated by the White House. The reason for the differences according to the CBO is  "differences in the underlying projections of what would happen under
current law ($1.3 trillion) as well as from differing assessments of the
effects of the President’s proposals ($1.0 trillion)." Then again, as we fail to recall when was the last time even the slightly more realistic CBO predicted a correct cumulative deficit ten years forward, we are fairly certain both will vastly underestimate the actual deficit by 2021. And as gross debt issuance tends to run about 50% over cumulative deficits, Zero Hedge expects that the best case scenario is for $15 trillion in debt issuance over the next 10 years as a baseline, and likely far more (bringing total marketable debt to around $25 trillion by 2021). This is problematic to say the least, because as the AP notes, the White House's goal is to reach a point where the budget is balanced
except for interest payments on the $14 trillion national debt. Such
"primary balance" occurs when the deficit is about 3 percent of the size
of the economy, and economists say deficits of that magnitude are
generally sustainable. Instead, just the interest expense per the CBO will be greater than this threshold: "Outlays would be greater under the President’s budget than in CBO’s baseline in each of the next 10 years, largely because the proposed reduction in revenues would boost deficits and thus the costs of paying interest on the additional debt that would accumulate. In particular, net interest payments would nearly quadruple in nominal dollars (without an adjustment for inflation) over the 2012–2021 period and would increase from 1.7 percent of GDP to 3.9 percent." And once again, this is based on numbers which will likely way undershoot the final outcome.

The key summary points of the CBO's revised budget :

  • Under the President’s proposals, the federal budget deficit would
    total $1.2 trillion in 2012 and smaller amounts in later years,
    averaging 4.8 percent of gross domestic product (GDP) over the 2012–2021
  • Deficits would total $9.5 trillion between 2012 and 2021 under the
    President’s budget, $2.7 trillion more than the amounts projected in
    CBO’s March baseline. Debt held by the public would rise from 69 percent
    of GDP in 2011 to 87 percent of GDP in 2021.
  • The President’s policy proposals, on net, mostly affect the revenue
    side of the budget: Relative to CBO’s baseline, revenues would be lower
    in every year of the coming decade—for a total reduction of about 6
    percent over the 2012–2021 period. Most of the revenue changes would
    result from extending tax policies that are currently in effect or were
    in effect in the recent past.
  • Outlays (other than net spending for interest costs) would be
    slightly lower under the President’s budget than in CBO’s baseline over
    the next 10 years.

The details provided by the CBO (which are highly irrelevant: nobody in their right mind can predict what will happen next week let alone in 10 years, but that's what taxpayer money is spent on these days):

CBO’s Updated Baseline Projections. As a basis for
analyzing the President’s budget, CBO updated its baseline budget projections, which were last issued in January 2011. 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. Under that assumption, CBO estimates that the deficit will
total $1.40 trillion in 2011—$81 billion less than the agency estimated
in January. For the 2012–2021 period, CBO now projects a cumulative
deficit of $6.7 trillion—$234 billion less than the amount in the
previous baseline. CBO has not modified its economic forecast since
January, so the updated baseline projections largely reflect new
information that the agency has obtained about various aspects of the
federal budget.

CBO’s Analysis of the President’s Proposals. CBO
analyzes the President’s budget using its own economic assumptions and
estimating techniques (rather than the Administration’s) and
incorporates estimates prepared by the staff of the Joint Committee on
Taxation (JCT) for tax provisions. According to CBO’s projections, if
all of the President’s budgetary proposals were enacted, they would add
$26 billion to the baseline deficit for 2011. The 2011 deficit would
total $1.43 trillion, or 9.5 percent of gross domestic product.

In 2012, the deficit under the President’s budget would decline to
$1.2 trillion, or 7.4 percent of GDP, CBO estimates. That shortfall is
$83 billion greater than the deficit that CBO projects for 2012 in its
current baseline. Deficits in succeeding years under the President’s
proposals would be smaller than the deficit in 2012, although they would
still add significantly to federal debt. The deficit would shrink to
4.1 percent of GDP by 2015 but then widen in later years, reaching 4.9
percent of GDP in 2021. Federal debt held by the public would double
under the President’s budget, growing from $10.4 trillion at the end of
2011 to $20.8 trillion at the end of 2021.

The President’s policy proposals, on net, would have the largest
effect on the revenue side of the budget. Those proposals would reduce
revenues, relative to CBO’s baseline projections, in every year of the
coming decade. Nevertheless, revenues would rise relative to GDP: from
16.2 percent in 2012 to 19.3 percent in 2021. That figure is below CBO’s
baseline projection for 2021 (20.8 percent) but higher than the average
ratio of revenues to GDP seen over the past 40 years (18.0 percent).

Most of the revenue changes would result from extending tax policies
that are currently in effect or were in effect in the recent past. The
tax package enacted late last year extended through December 2012 many
of the tax reductions originally enacted in 2001 and 2003. The President
proposes to extend those reductions permanently, with some
modifications, and to permanently index for inflation the amounts of
income exempt from the alternative minimum tax, starting at their 2011
levels. In addition, the President proposes that, beginning in January
2013, estate and gift taxes return permanently to the rates and
exemption levels that were in effect in calendar year 2009. Those
policies would reduce tax revenues and boost outlays for refundable tax
credits by a total of more than $3.0 trillion over the next 10 years
relative to the amounts projected in CBO’s baseline.
Outlays would be greater under the President’s budget than in CBO’s
baseline in each of the next 10 years, largely because the proposed
reduction in revenues would boost deficits and thus the costs of paying
interest on the additional debt that would accumulate. In particular,
net interest payments would nearly quadruple in nominal dollars (without
an adjustment for inflation) over the 2012–2021 period and would
increase from 1.7 percent of GDP to 3.9 percent. Total outlays under the
President’s budget would equal 23.6 percent of GDP in 2012, decline
slightly as a share of GDP over the following two years, and then rise
for the rest of the 10-year projection period. They would equal 24.2
percent of GDP in 2021—about 0.3 percentage points above CBO’s baseline
projection for that year and well above the 40-year average for total
outlays, 20.8 percent.

Spending proposals with the largest budgetary impact over 10 years include the following: 

  • Medicare: The President proposes to freeze Medicare’s
    payment rates for physicians at the current level throughout the
    2012–2021 period. That policy would boost outlays by $0.3 trillion
    relative to the amount under current law (which calls for sharp
    reductions in payments to physicians). 
  • Transportation: Higher spending on surface transportation programs would add another $0.2 trillion to the total deficit between 2012 and 2021. 
  • Defense: The President’s budget includes a total of $0.9
    trillion less in spending for defense over the 2012–2021 period than the
    amount projected in CBO’s baseline. The main reason for the difference
    is that the baseline incorporates the assumption that funding for
    war-related activities will continue at $159 billion a year (the amount
    provided so far for 2011, annualized) with adjustments for inflation,
    whereas the President’s budget includes a request for appropriations of
    $127 billion for such activities for 2012 and a placeholder of $50
    billion a year thereafter.

The complete CBO analysis of the President's Budget can be found here.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
MsCreant's picture

My projection is the dollar does not exist in 2021.

Shameful's picture

You never know.  Look at other corrupt oligarchy governments.  They are able to rotate out fiat names pretty quick.  Didn't take long for Argentina to go from Peso to Austral to Peso again.  So this current Dollar maybe not, but still good chance the paper money will still be named the Dollar.

Dollar -> Dollar 2: Dollar of the Dead -> Dollar 3: Bernanke's Revenge

Make it like horror movies.  Can have a new Saw movie every year, why not a new currency?

Spitzer's picture

I agree but I don't blame the oligarchy anymore, I blame the people.

If people are so stupid, that they can watch what the Fed does every day and not buy an oz of gold, then they are the ones to blame.

If there was some meaningful gold purchases going on, this game would stop dead in its tracks.

Shameful's picture

Blame whoever you want.  The mass man has always been oblivious to the world around him, why should the present or the future be any different?

And why would gold purchases stop anything?  Why would it matter if gold was $20 an oz or $20 million.  Makes no difference to the overall structure of the ponzi does it?  Gold is no panacea, it's just a way for some of the people who see what is happening to carry a few chips into the next ponzi game.  This wasn't the first go around and will not be the last.

Gold changes nothing in the structure, sound money would make the game harder but still playable.  After all can always have gov pick up bad banker debt under a gold standard just as well as a fiat.  Only people waking up and refusing to be scammed by slick con-men will change it.  However that is largely against the nature of man, which hasn't changed in a long time, and I don't expect it to change.  A sucker is born every minute.

nmewn's picture

Well stated P.T. Shameful ;-)

Zero Govt's picture

Shameful    "..sucker is born every minute.."

Check your history books. Suckers are prevelent (only) when things are going well. When specifically the economy is going bad these 'suckers' turn on authority (Govt, Royalty etc). I suggest you check elections. When the economy is fine and dandy the Party stays in power. When the economy is tanking the incumbent party gets booted out.

When the economy is dire (ie. depresion) the authority in power gets linched by those 'suckers' history teaches us the economy is the lead indicator to anger/tolerance levels and how much these suckers will take... not much more i reckon

traderjoe's picture

I have been thinking about the issues around this string for a little bit. Not that I have, or will ever, come up with any real conclusions, but here is my theory loosely referenced:

1. The PTB do an excellent job co-opting as many people as possible to the Ponzi. In reality, without the Ponzi, the overall standard of living would be much lower. Life would be more sustainable, but a bit harder, with less excess. Think of all of the people who nominally benefit from the Ponzi - 45 million SNAP recipients, all MIC contractors/workers, .gov workers, all bankers and financial services employees, etc., etc.

2. While the nominal standard of living would be lower without the Ponzi, it would probably be more 'real' - with more free time, etc. I'm not from that time, but only 15-20 years ago one breadwinner could feed a family, but there was only one car, one TV, etc. Things were 'simpler' then. Far less skimming by the Ponzi of fees, premiums, etc. 

3. It's hard for people to see the creeping theft of their lifestyle and wealth - it is the boiling of a frog in a pot. 

4. The "American Dream" and the canard of class mobility also keeps the poor/middle class hoping they too someday can be rich. Therefore, these classes sometimes don't want to upset the current system, with the long-shot odds in mind that they might actually get to the top someday. 

Put this all together, and I believe most people actually support - and would support - the current system. They want theirs, and what's been 'promised' to them. Social Security is such a great example of how to create millions of 'defenders' of the system. They all now have a vested interest in the Ponzi - hoping that they someday will get paid (back). Even demanding they get paid. 

This, to me, is why when you explain the Ponzi, and its implications, to many people they simply roll their eyes and call you a 'doomer'. Now one wants to actually debate you on the facts, or can suggest the current course is sustainable. They know, deep down on some level, that you make great points. But, they know that they are living the 'good life' at the moment - with too many TV's, cheap gas, etc., etc. Yes, it's NOT the forest for the trees, but it's far too easy to participate and hope - then to change. 

Real work, for real money would take effort. We have been desensitized to that. Numbed. 

Anyway, that's why I don't think people are 'stupid' for not wanting changes. They are short-sighted though. They know that change (the Fourth Turning, if you will) will come eventually no matter what, but simply hope for a little bit more time before it happens. As long as they get their's, it's ok... 

Anyway, that's my yet-to-gel theory...

centerline's picture

All valid points.  And some of the primary reasons that I believe there is no real way this can end well.  CHS pointed out something simlar a few months ago... that technically there are more people beholden to the current system than not.  Once you factor in some of your points, it is clear that a large majority of the population, if truly knowledgable about what it going on, would likely seek to "kick the can" as long as possible anyhow.  Seems to me it is more like "kick the grenade."


Zero Govt's picture

it's a myth this system called Govt was ever endorsed by the citizens it robs in the first place. Let's not forget America and Europe were ruled by a bunch of property-banking-industrial vested interests that literally created, out of thin air, the notion of Govt. It was fabricated by parasites, a fantasy construct.

America was built largely without Govt by un-ruled immigrants escaping the parasitical elite in Europe. 

We don't need Govt, never did, never will. All it takes to remove this fantasy land of delusional self-important 'leaders' is civil disobedience. As simple as saying I won't pay taxes (be robbed).

Once a relatively small percentage of the people (say 10% ,maybe as low as 5%) say "Fuk the State" the game is over. The State is fuked, the parasites ponzi has no public mandate because they can't fine, pinalise, police and jail 5-10% of the populace. Very, very simple simple most people can't get their heads round it!

Dr. Porkchop's picture

America, and Canada are about to graduate the Boomers into their respective pension plans. This is a big cohort, and the slack will be taken up the generations coming after, which are smaller and don't have the benefit of having lived through a sustained economic boom time.

There is going to be a big battle, divided along generational lines, coming up. The people coming after the boomers might not think twice about kicking grandma to the curb if the alternative is paying more and more into a system that will probably never benefit them.

RockyRacoon's picture

It would actually have to come to the physical kicking!   Old people vote.  Young do not.  Politicians listen to those who vote.   A real revolt of the physical type will have to occur to change any of that.  Keep an eye on Wisconsin, etc., to see the political scenario play out in a microcosm.

ibjamming's picture

Elections are rigged now...din't you get the memo?


SS and Medicare are NOT fucking ENTITLEMENTS!!!  Get that LIE through your fucking heads!  These programs CAN support themselves...they've been ROBBED that's why there's no fucking money to pay out.  There better be NO fucking welfare at all before one dime get's cut to people who actually WORKED for their money!  It's the leeches collecting "disability" that's ruining SS.  It's the thieves who stole the SS money and replaced it with debt who fucked over SS.  Yes...we CAN'T pay back that which was robbed from SS.

Zero Govt's picture

what will happen in Wisconsin is 'Pretend & Extend'... it won't change anything because people are still expecting 'The System' to change itself in some miracle outbreak of integrity

the one and only thing that will change the system is civil disobedience and refusing to pay your taxes. You have to starve The Parasite Club of its lifeblood (a slice of your income) and remove the system altogether. Govt (the system) is the problem, not the solution.

Once you remove Govt (monopoly power, judiciary, Law, police, military etc etc) you remove all the major issues in society regards the economy too. Namely the mega-monopolies the State and its vested interests run (education, healthcare, energy, banking, transport etc) falls apart under the miracle power of the free market which kills with competition all the non-performing monopolies that use the State as its protection racket

Just say "No" to State taxation (the parasites robbing you)... very simple, very effective

Michael's picture

I want to thank you all at Zero Hedge, even the contrarians (from our perspective) for everything. I need to make preparations on  the home front in earnest that will consume much of my time. There's really not much more of a difference I can make at this point, as the die is cast. I will try to check in every day and post pertinent information when I can.

I received a strange sign I'm still trying to analyze. I'm not superstitious but I do believe there is an esoteric power in play. A nickel coin flew out of my pocket while pulling out a piece of paper and landed in a very special empty cup on my coffee table. The image on the back of the coin was the Lewis and Clark Expedition. Please don't think too much of it, but ponder the amazing achievement we have accomplished together in our history.

Thanks Again,


(Simple AVG Virus protection gave no virus problem with this link)

centerline's picture

Hope to see you around sometime.   Good luck with your preparations.  Maybe share a bit of your preparations and rationale out here from time to time.

Michael's picture

I'm planting fruit trees in my back yard in SW Florida.

I'm counting on planting hemp in the empty lots and marijuana in my secret garden soon.

sgorem's picture

Try grafting a little of that herb onto one of your fruit trees for some awfully sweet "herbalicious":) Yee Hiii. Good luck Michael.........

long juan silver's picture


You want to try that again? You aren't superstitious yet you divine meaning from a coin's fall.

Fruit anyone?

traderjoe's picture

Yes, good luck with your preparations. Thanks for the comments and the links...

Mr Lennon Hendrix's picture

Shameful, gold is the only meaningful asset on all Central Banks balalce sheets.  It is their only means of collateral.  Gold prices make all the difference to the ponzi.  If Bernanke is having trouble flooding the world with dollars, he leases gold and uses the proceeds to loan dollars to JPM, GS, BOJ, etc.

Judge Judy Scheinlok's picture

"Dollar -> Dollar 2: Dollar of the Dead -> Dollar 3: Bernanke's Revenge"

Cult of the Dead Dollar

slewie the pi-rat's picture


i yam barely able to do this math, msC, but it sure lQQked like a ten-year can-kick down the road to slewie, tooie. 

plus, we have a zeroHedge est. of $15 tril, right here, above, for a 58% ridicule of the "Congolese Budgetary Orfice" crap of $9.5 tril. 

and, we know that zeroHedge is conservative, radically so, even, in its "editorializing" about the fuking unicorns and the rainbows we're getting "shot up with", as in steady diet.

ergo, get out, now, and avoid the rush!

Twindrives's picture

Obama wouldn't lie to us, would he?

long juan silver's picture



 No!.... Why do you ask?



undereducated's picture

$100,000 in FRN or $100,000 in silver in a box to be opened in 10 years...your choice.

RockyRacoon's picture

Ha!  Missy, I won't even be here in 2021.  Forge ahead.

quantum dines's picture

banana republic, bitchezz

bankrupt JPM buy silver's picture

my projection is the dollar does not exist in 2012.  You may have had the last 2 digits backwards.

LowProfile's picture

Oh, it'll exist.  It's just the biggest bills will have a few extra zeros after.

Dr. Porkchop's picture

When you're talking imaginary money, why quibble over a few trillion? Why not move into the next monetary unit? What comes after trillion? Gazillion?

andybev01's picture

I don't have that many toes...

Irwin Fletcher's picture

And I can't count to 21 without pulling down my pants. How shall I be expected to comprehend this $2.3 tril difference?

JohnG's picture

Here's a handy reference guide to the demise of the US economy:



James's picture

In the future we will have Googleaires.A Google is any number with 100 zeros after it!

Papasmurf's picture

Obama had an estimate?  I thought he was playing golf.

Irwin Fletcher's picture

I saw his to do list when he was taking a cigarette break at the fairway on the 2nd hole - several estimates of note: green breaks slight left, 233 MegaSieverts, the 'milligram of silver' stops here, and uconn 3-peats as womens ncaa basketball champs.

Dr. Porkchop's picture

Isn't congressional budgeting just like lying on your golf card? Ooohhh 9 mulligan!

LowProfile's picture

Anyone else think we'll look back on reports like this as being a sign of just how detached from reality our government was?

Spitzer's picture

I really don't know..

What if you seen the current joke show 10 years ago ? You would say, no way.

dbTX's picture

what's the point of even having a budget, it means nothing, damn the deficit, full spending ahead

maximin thrax's picture

Government spends as the borrower of last resort in order to sop up all that money the Fed prints to keep interest rates low enough that the national debt can be serviced. As long as GDP is enumerated in dollars, rather than gold or oil for example, ever-weaker dollars can raise annual GDP to whatever level is required to be an acceptable proportion to the accumulated debt. So the question is, can the future real value of the dollar be divined by knowing what the future debt service will be, assuming that as many dollars as required are planned to be emmitted to maintain debt serviceability (low interest and a proportionate GDP)?

Backspin's picture

You're making sense to me, thrax.  What you are describing seems to be the way they are doing it, and I expect that it will continue to work... until it doesn't.  These things grow exponentially, and exponential growth gets out of control at some point.

So, when does it really get out of control?  I'm guessing in a few years.  We shall see.

Rainman's picture

No wonder Timmay followed the leader to Rio. Good time to release this noxious budget gas. Here I thought they were running from the radiation.

Shameful's picture

Yeah right.  By 2021 the yearly deficits will be at least 9.5 Trillion.  Forget debt to GDP of 100%, I'm looking for deficits to GDP of 100%!

Since debt growth will now rapidly expand past GDP growth, it's just circling the drain.  Don't know how long it will last, but I daresay this stage of the game will explode in a fiat fireball well before 2021.

maximin thrax's picture

Nah. GDP, priced in ever-weaker US dollars, will be three times what it is today by 2021. However, priced in oil it will be two-thirds today's GDP. Priced in gold it may be one-third today's GDP.

rich_wicks's picture

This is not rocket science.  You see this:

The red line is what our national debt would be if it grew at a steady 9.4% a year, since 1971.  The blue line is actual debt.

We'll be at over 30 trillion dollars by 2020 - provided the nation doesn't collapse first.  Any estimates from any government sources is pure BS. 

Oracle of Kypseli's picture

Spending cuts will not do.

You need a tilt and a radical game restart.

Show me a man with brass cojones, or a woman with steel breasts resembling the front bumper of a 1956 Buick please!

Show me a leader who utters "don't get stuck on stupid reporter" and then we can talk. 

If not, QE ad infinitum.