Obama Revises CBO Deficit Forecast, Predicts 110% Debt-To-GDP By End Of 2013, Worse Deficit In 2012 Than 2011

Tyler Durden's picture

While we have excoriated the unemployable, C-grade, goalseeking, manipulative excel hacks at the CBO on more than one occasion by now (see here, here and here), it appears this time it is the administration itself which has shown that when it comes to predicting the future, only "pledging" Greece is potentially worse than the CBO. WSJ reports that "President Barack Obama's budget request to Congress on Monday will forecast a deficit of $1.33 trillion in fiscal year 2012 and will include hundreds of billions of dollars of proposed infrastructure spending, according to draft documents viewed by Dow Jones Newswires and The Wall Street Journal. The projected deficit is higher than the $1.296 trillion deficit in 2011 and also slightly higher than a roughly $1.15 trillion projection released by the Congressional Budget Office last week. The budget, according to the documents, will forecast a $901 billion deficit for fiscal 2013, which would be equivalent to 5.5% of gross domestic product. That is up from the administration's September forecast of a deficit of $833 billion, or 5.1% of GDP." Where does the CBO see the 2013 budget (deficit of course): -$585 billion, or a 35% delta from the impartial CBO! In other words between 2012 and 2013 the difference between the CBO and Obama's own numbers will be a total of $542 billion. That's $542 billion more debt than the CBO, Treasury and TBAC predict will be needed. In other words while we already know that the total debt by the end of 2012 will be about $16.4 trillion (and likely more, we just use the next debt target, pardon debt ceiling as a referenece point), this means that by the end of 2013, total US debt will be at least $17.4 trillion. Assuming that US 2011 GDP of $15.1 trillion grows by the consensus forecast 2% in 2012 and 3% in 2013, it means that by the end of next year GDP will be $15.8 trillion, or a debt-to-GDP ratio of 110%. Half way from where we are now, to where Italy was yesterday. And of course, both the real final deficit and Debt to GDP will be far, far worse, but that's irrelevant.

More from WSJ:

"The Administration forecast is used to develop the Budget, and at that time we predicted the unemployment rate would average 8.9% in 2012 and 8.6% in 2013. These forecasts were close to the consensus of private forecasters at the time," White House Council of Economic Advisers Chairman Alan Krueger said in a statement earlier in the week.


The budget includes more than $350 billion in short-term measures for job growth; a six-year, $476 billion proposal for roads and other surface-transportation projects; and more than $360 billion in savings in health programs such as Medicare and Medicaid.


The draft documents don't include all the details of the president's budget but show similarities to the budget plan the White House laid out in September 2011. The budget proposal, for example, repeats a call for $1.5 trillion in new revenue, mostly from ending Bush-era tax cuts for families earning more than $250,000 a year.


The White House has said the budget will reflect the president's overall economic message of trying to ensure the economy maintains momentum while everyone is paying their "fair share" of deficit reduction. "The President's 2013 Budget is built around the idea that our country does best when everyone gets a fair shot, does their fair share, and plays by the same rules," one of the budget documents said.


The budget also calls for a 5% increase in nondefense research-and-development spending over the previous year and proposes $2.2 billion for advanced manufacturing research and development—a 19% increase over 2012.

Last but not least, it also means that the Treasury debt ceiling will now with almost absolutely certainty, be breached before the election, meaning as Obama is electioneering, the Treasury will be plunder government pension funds to stay under the ceiling for as long as possible.

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adr's picture

Obama should have had some balls and actually lied to the underside of the CBO. We all know the deficit will hit $20 trillion by 2014 or maybe more. Now Obama can't even make the claim he is trying to reduce spending.

French Frog's picture


The search facility does not seem to be working at the moment or is it just for me; can someone confirm/deny please;


TruthInSunshine's picture



And the emperor declared, "Dilutus Maximus Fiat Ad Infinitum!"

But soon, the crowd slowly became aware that he hath no clothing.


p.s. That chart only plots the money supply until mid 2005. 2006 to 2011 is very interesting. I can't wait until the 2012 through 2020 chart is here.

NotApplicable's picture

Yeah, by then, we'll have so much money, why we'll all be broke!

TruthInSunshine's picture

Paul Krugman is pissed that I posted that chart.

He tweeted:




I hope you enjoy your belly full of gold as I stay toasty warm with my fiat burning stove crammed with Federal Reserve Notes.



Dr. Paul Krugman, Ph.D., Nobel Laureate in Economics

Clueless Economist's picture

I own you End The Fed...indeed.

"The only solution to the debt problem, is more debt"

Dr. Paul Krugman, Ph.D., Nobel Laureate in Economics and All-Around Douchebag



economics1996's picture

Hope and Change has $1.2 trillion to blow in QII and QIII of this year for his reelection that would be a deficit of $16.4 trillion before the end of the year.

Betty Swallsack's picture

Well. According to the Christian Science Monitor, The Economy Is Improving Whether Conservatives Like It Or Not.  Uh, yeah.  Whether one is a 'conservative' or otherwise, the only thing improving, or increasing, is the level of nonsense and bovine excrement being fed to the sheep that 'all is well'.


TruthInSunshine's picture

That's not The Christian Science Monitor per se, but Jared Bernstein, economic advisor to the Vice President.

The Christian Science Monitor is actually a great news source (they DO NOT intersperse Christianity or any other religious viewpoint in their journalism) and probably among the handful of credible journalistic sources left in the world, IMO. They're not corporate owned whores.

They allow Op/Ed pieces to run just like most papers do.

Jared Bernstein is a political hack who is lying during an election year.

economics1996's picture

Betty I am a mother fucking economist in case you missed my bio.

Betty Swallsack's picture

Not just any economist. A MFing economist?  And just lookie at what the so-called economists have wrought.  Debt now equals money or liquidity.  I equate 'economists', of the keynesian ilk, to tarot card readers.  Please take your pissing contest elsewhere.  I care not for your resume.

Now, for your reading enjoyment, The Eleventh Marble:


Betty Swallsack's picture

Yes, Truth, I understand all of that.  Although, it does not reflect well upon the publication that 'allows' the lying to continue.  Op/Ed or not. 

Dugald's picture

Why not more debt, you all know you will never pay it out, default is the only option left, live it up boys n gals, a new golden era is over the horizon....or not

MiguelitoRaton's picture

So they raid the Government pensions and the whole thing doesn't hit the media until after the election, beautiful planner Barry, stunning.

smb12321's picture

Obama's economics work llike those "deals" where you safe $100 by spending $200.  How he can say with a straight face that he is tackling the debt is easy - no one in the MSM will challenge him.    The CBO can only work with the numbers and rules it is presented.  For Obamacare it noted that the :savings" come from paying in four years before expenses start. 


Muddy1's picture

And then comes the day when they raid the private pensions using the same excuses they now use to raid the government pensions, followed by the day when they say we must combine all pensions and dole out the money something like Social Security.  And the pile of money from the combined pensions will be squandered just like the SS "Trust Fund" has been squandered by the whores in Washington, both Republicans and Democrats.  Yep, whores take your money and then screw you.

The news of the raiding government pensions will be in the news prior to the elections, but the extent of how much they use may not be reported until after the elections.

non_anon's picture

new meaning of "extend" and "pretend"

WonderDawg's picture

And this is the best case scenario, with GDP actually growing, which at this point I deem unlikely. I think we'll see contraction this year and next year. But maybe that's just me and sunny disposition.

Silver Dreamer's picture

It depends.  By next year we may be in a hot WWIII.  No war? I suspect GDP will be dropping too.

NotApplicable's picture

As long as GDP includes government expenditures, I bet the Bernankecopter will keep it from shrinking.

Eireann go Brach's picture

And the difference between the fiscal situation Greece is in and what the US will be in (apart from being able to print) is.............?

tempo's picture

Your are afraid of the truth!!  Admit it, no one  will create a meaningful number of jobs in the highest wage most regulated, litigious nations in the world (USA/EU) when there is a world wide labor glut pushing wages to $25/day wo benefits e.g. Foxconn.  The ever increasing deficits result from no one admiting the truth that housing and jobs will not recover.  The deficits buy short terrm domestic peace with entitlements.  If just like a subprime borrower refinancing every 6 months at ever higher prices to have the money to make the payments on the mortgage.

NotApplicable's picture

So, what you're saying then, is that we need to bomb the 3rd World back to the Stone Age, in order to give the 1st World a little breathing room.

BTW, whatever happened to the 2nd World? Did we eat them, or something?

sid farkas's picture

2nd world is the communist bloc: russia, china, cuba, north korea.

NotApplicable's picture

Oh, the unmentionables. No wonder I didn't know.

trilliontroll's picture

Just let the Trillions tsunami do it's good work ...,

then we are all together closer to the same level of subsistence economy

and ready for sustainable growth again.

LasVegasDave's picture

unskilled labor is worth $25 per day, no benefits.

When we get around to understanding this, GM cars will be the best in the world once again and will cost $10,000.

Yeah right!!!!

Nascent_Variable's picture

I absolutely guarantee you that Obama will run on a platform of reducing spending.  He'll blame the deficit on the supercommittee, look the American people straight in the eye, and swear on all that's holy that he is the candidate for fiscal responsibility.

SheepDog-One's picture

Something tells me by November, an election will be completely irrelevant.

battle axe's picture

Hey I  know, lets get into another war, like with Iran, then we can get more in debt and crush are own country. YEAH YEAH

Archon7's picture

And 2012 has only just begun!  Imagine what it will look like when the real numbers on unemployment and income take their toll on 2012 tax revenues.  I'm thinking $1.6T might be achievable.

JailBank's picture

SO gold should be about $3000 by then?

silvertrain's picture

It wont be measured in Dollars, it will however be a boat load of some kind of paper..

Silver Dreamer's picture

And it may be illegal to own too.

NotApplicable's picture

Bidless! Sayeth the man with the gun.

DoChenRollingBearing's picture

Offerless!  Sayeth the man with the gold!

Hulk's picture

Odorless! Sayeth the man with Arm and Hammer

Archon7's picture

PPPffffttt....  very soon the Dollar will be so devalued that toilet paper will be a commodity.

Silver Dreamer's picture

20 trillion here we come!

j.tennquist's picture

Why plunder when you can print? A check is good until it's declined.  Borrowed time on a ZIRP.   

It was great while it lasted. 

dwdollar's picture

2 years?!?! Haha... I give it 1 year tops.

GeneMarchbanks's picture

'Half way from where we are now, to where Italy was yesterday.'

Relax, ZIRP will be here to keep you calm. Not sure about the Chinese, can't trust them slanty eyes. What? they're shifty zall I'm sayin'.

Id fight Gandhi's picture

Debt increases what $1 trillion give or take every 4 months? Then throw in some bailouts and nationaliztions... Probably will hit 20 Trillion by 2014.

Kiwi Pete's picture

Is that including or excluding the $5 tril Freddie/Fannie debt?