Revised March 10, 2002

Factoring in Costs Omitted from President’s Budget

Raises Likely Deficits Close to $3 Trillion

PDF of this report

View Economic Stimulus Analyses

If you cannot access the files through the links, right-click on the underlined text, click "Save Link As," download to your directory, and open the document in Adobe Acrobat Reader.

The Congressional Budget Office’s analysis of the President’s budget, released today (Friday, March 7), shows that under the President’s budget:

The President’s Fiscal Year 2004 Budget Plan

CBO estimates of the cumulative 2004-2013 deficits or surpluses, in trillions of dollars

Total net surpluses under current laws, projected forward (CBO “baseline”)


      Proposed tax cuts (and interest on them)


      Proposed program increases, e.g. prescription drugs and defense spending            increases (and interest on them)


      Total cost of President’s proposals


Resulting deficits under President’s budget policies


Unfortunately, even the CBO analysis paints too rosy a picture.  The CBO estimates do not include three major costs that are either inevitable or very likely.  These costs are not included because the Administration did not show them in its budget.

Enactment of ongoing AMT relief is inevitable.  Without it, the number of taxpayers subject to the AMT will soar from two million today to 43.5 million by 2013, according to calculations by the Urban Institute-Brookings Tax Policy Center.  Based on Tax Policy Center estimates, extending the AMT relief that the Administration has proposed through 2005 so that it remains in effect through the rest of the decade would add over $750 billion more to the deficit over the next ten years.

Adjusting the new CBO estimates to include these three costs adds about $1 trillion to deficits over the next ten years, raising the likely ten-year deficits under the President’s policies close to $3 trillion.  And this $3 trillion total includes $2.6 trillion in surpluses in the Social Security trust fund.  Not counting these Social Security surpluses, deficits are likely to total approximately $5.5 trillion over the next ten years and to exceed $400 billion in every year.

Finally, in a report issued March 5, the Committee on Economic Development — a respected group of corporate executives and university presidents — concludes that CBO’s projections of appropriated (or “discretionary”) spending understate likely defense expenditures in coming years as well as the long-term historical pattern for non-defense spending.  If CED’s view of the likely course of discretionary spending proves correct, the projection that deficits will total nearly $3 trillion over the next ten years will itself prove too low by a sizeable margin.