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Elder Law Prof Blog
Katherine C. Pearson, Editor, and a Member of the Law Professor Blogs Network on LexBlog.com

Long term federal deficit crisis unchanged

By Elder Law Prof Blog

From the Center on Budget and Policy  Policy Priorities:

The Mid-Session  Review released July 13 by the Office of Management and Budget is   consistent with a recent report from the Congressional Budget Office that   shows revenues for fiscal year 2005 will be significantly higher than estimated   earlier this year and that the deficit for 2005 consequently will be lower   than was projected.  According to OMB, the deficit for the current year will   be $333 billion, or $94 billion lower than the deficit level that it projected   when it released the President’s budget in February.

The increase in federal revenues for the current fiscal year (OMB now estimates that revenues   will be $87 billion higher than it projected in February), and the resulting   reduction in the projected deficit for 2005, are good news.  But the Administration’s reaction to this news is troubling.  Based on the   greater-than-expected level of revenues in recent months, the Office of  Management and Budget now is assuming that revenues also will be substantially  higher than earlier projected for each of the next five years.  Over the five years (2006-2010), the increase in projected revenues totals $409 billion.  As a result, OMB has reduced its projections of deficits under the President’s   policies for the 2006-2010 period.  The Administration also is claiming that these reductions in projected deficits prove that the President’s 2001 and 2003 tax cuts are working and that deficits can be brought under control even if the additional tax-cut measures the President is proposing, including making the 2001 and 2003 cuts permanent, are adopted. 

CBPP has determined that

  • The Administration is overly optimistic in assuming that the recent increase in revenues signifies that revenues in future years, as well, will be substantially higher than earlier projections indicated.
  • An examination of factors behind the recent increase in revenues does not support the         notion that the President’s tax cuts are substantially boosting the economy and increasing tax collections.      
  • OMB’s estimates of deficit levels for the coming five years appear unrealistically low.
  • The troubling long-term budget outlook has not significantly changed.

Read more here.

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