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Full CBO Budget Forecast: "This Year’s Deficit Is Expected To Be The Second Largest Shortfall In The Past 65 Years"
Summary from the CBO:
The Congressional Budget Office (CBO) estimates that the federal budget deficit for 2010 will exceed $1.3 trillion—$71 billion below last year’s total and $27 billion lower than the amount that CBO projected in March 2010, when it issued its previous estimate. Relative to the size of the economy, this year’s deficit is expected to be the second largest shortfall in the past 65 years: At 9.1 percent of gross domestic product (GDP), it is exceeded only by last year’s deficit of 9.9 percent of GDP. As was the case last year, this year’s deficit is attributable in large part to a combination of weak revenues and elevated spending associated with the economic downturn and the policies implemented in response to it.
And some optimism from the CBO:
The Budget Outlook
Fiscal year 2010 will mark a change in the recent trends that have prevailed for both revenues and outlays. After falling sharply during the recession, revenues are projected to increase (in nominal dollars) for the first time in three years, rising by $38 billion, or about 2 percent. Outlays, which have grown rapidly in recent years because of the recession, the turmoil in financial markets, and policies enacted in response to those events, are expected to decline by about 1 percent. On the basis of tax collections through July 2010, CBO expects federal revenues to total $2.1 trillion this fiscal year, or about 14.6 percent of GDP (see Summary Table 1). Gains in receipts in recent months indicate that federal revenues are beginning to recover from the recession.
In the period from October to December 2009, revenues were about 10 percent lower than in the same quarter a year earlier. But from January to July 2010, revenues were about 6 percent greater than in the comparable period of 2009.
Outlays are expected to total $3.5 trillion this year, or nearly 24 percent of GDP—a level slightly lower than the 25 percent share recorded last year but still much higher than the average level of roughly 21 percent of GDP over the past 40 years (see Summary Figure 1). Spending has dropped sharply this year for certain programs related to the federal government’s response to the turmoil in the housing and financial markets. For activities other than those programs, overall spending will rise by 10 percent in 2010, CBO estimates.
Over the next few years, federal budget deficits would decline markedly as a share of GDP if the current-law assumptions about fiscal policy in CBO’s baseline came to pass. Under those assumptions, the deficit would drop to 7.0 percent of GDP in 2011 and 4.2 percent in 2012 and then would reach a low of 2.5 percent of GDP in 2014. For the rest of the 10-year projection period, deficits would range between 2.6 percent and 3.0 percent of GDP, close to the average of 2.6 percent of GDP experienced over the past 40 years.
What a stunner - optimistic government projections... For exponential revenue hockeystick estimates, look no further than the chart below. Somehow we fail to see the 20% of unemployed (the real number, not the government's) paying 50% more taxes.
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I am sure the administration and the CONgress can make sure, right after the August recess, that we don't fall short of exceeding last year's deficit by $71 billion.
JFC look at that revenue projection graph..HAHAHAHAHAHAHAHA.
The deficit is north of $2T.
That's the funniest shit I've ever seen.
They take a look at a strong downward trend line. And then they just draw a sharp upward curve.
total debt 20T to 52T from 99-present added a not so stellar 6T in GDP. Better start printing and fast - rinse wash repeat
Wait a second, we are in August of the "summer of recovery" and we shrank the deficit by just $71 billion?
Not to accuse the CBO - being congressional majority appointees, all - of political bias here, but if this is the best they can spin this then we are absolutely in for an epic world of hurt. Sooner rather than later, methinks.
$71 billion is about what Queen Sheeba Michelle spends per week on vacation with her 80 person staff!
Barry Barry Barry to the rescueeee
OT, sorry, but try this idea on for size The bond vigilantes are very active before our eyes in the US market. They were long bonds to begin with. What better way to profit than to pump up the bubble then prick it, taking all the gains and letting the prols take the losses?
Soon to be a bullshit krugman article about how the bond vigilantes are attacking America and this is not an issue for decades.
"It took 169 long years and seven major wars -- from 1776 to 1945 -- to rack up a cumulative deficit that matches the gaping budget hole of just 28 short days in February 2010." -- Marty Weiss
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"And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale. " -- Thomas Jefferson wrote on May 28, 1816
Total Debt Outsdanding - from TreasuryDirect:
10/1/09:
Held by the public: 7,505,894,097,177.82
Intergov: 4,414,625,067,141.60
Total: 11,920,519,164,319.42
Today (8/17/10)
Held by the public: 8,825,395,074,863.64
Intergov: 4,539,344,786,476.89
Total: 13,364,739,861,340.53
So seeing as how we're already at $1.32T "Held by the public" and $1.44T "Total" in total debt increase with more than a month left in the FY, methinks the CBOs "projection" of "only" $1.368T to be, well, perhaps a tad optimistic.
My poor children. And grandchildren. And great-grandchildren. And...
Howard Dean on CNBC demanding tax increases because we all need to pay for our fair share for the deficits as if its the American publics fault.
This clip from Animal House pretty much sums up the message the public is going to get from the politicians when it all comes down..
http://www.youtube.com/watch?v=zOXtWxhlsUg
Prediction: will be revised higher.
MAESTRO ON FACEBOOK
http://williambanzai7.blogspot.com/2010/08/maestro-on-facebook.html
The next leg down ...
http://stockmarket618.wordpress.com
1.1 Trillion spent, so far, on pointless, fruitless war games in the ME. Someone please wake me when the U.S. starts reaping some of that shock and awe.
Accroding to their graph 2011 is going to be an absolutely fantastic year!!!
Must...keep...believing...
This graph is aka work of some phd from the bs academy. Just how does he reconcile the revenue projections when the yield on the 10 year is at 2.57% today and trending down?
You must not be a PhD economist from a reputable university - therefore, you just don't get it. /sarcasm
I haven't read this.
Let me ask a question to those who have,
WHAT IS THE CBO CALCULATION for monthly job growth over the next several years?
A few comments:
When you look at this report, it is obvious that the CBO lives in a land far far away, where magical economic elfs and conjurers create reality. A land where debt does not effect growth. Where debt buyers spring from the bowels of the earth to purchase treasuries.
or, if you will, follow the yellow brick road, follow, flollow , follow .........
Considering world debt obligations and sensitivity to rates, the CBO has exceeded the worlds market capacity for US sovereign debt by 2015. This implies that we will monetize the balance of our debt and not discourage buyers.
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2011 to 2012 there is a deficit reduction of 37.6%. That means revenue goes up or spending is cut by this amount. How is this possible in one year? What is the actual mechanism of change?
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The CBO projections are deficits forever. This is not possible without debasing the currency? What happens when we have a uniform series of deficits lets say $500B, well forever (+20years). The only way to pay for this outlay is to have enough present worth today with the ability to offset interest costs.
It is like starting an annuitiy payout when you hold only massive amounts of debt. Not possible without destroying the real worth of the currency.
How does the CBO know that the FED riskier asset investments showed any growth? They are not marked to market rates.
The CBO expects lower SS participation by 2015, in light of the demographics. Utter crap.
They say the bank sector is recovering slowly. How is this possible when we are on track for substantially more bank failures in 2010 than 2009.
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As I have said before if the CBO were to talk about real issues is a pragmatic way, Congress would just shoot the messenger.
Mark Beck
This forecast would be a lot more believable if the CBO had a good track record of forecasting. Its hard to forecast without a basic knowledge of pyramid mathmatics.
There are certainly a lot of details like that to take into consideration.I read and understand the entire article and I really enjoyed it to be honest.
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