Mid-session budget review

Pete does a good job with an overview of the numbers from the mid-session budget reviews released this morning by OMB and CBO, so there's no need to repeat them.

It's important to note, though, that there are some indications that even the lower-than-previously projected deficit included by OMB in its report may be lowered further when the final numbers for fiscal 2009 are released in late October.  As Donald Marron posts on his blog, the actual deficit may well end up closer to $1.4 trillion than $1.6 trillion.

No matter what the actual deficit is, it is clear from reading the two reports that very little can be blamed on either the Obama administration or the current Congress.  Bruce Bartlett sent the following e-mail earlier today (which is quoted with his permission) with an excellent analysis:

Thanks to a late-Friday "leak" from the White House (note the 6:50 pm date stamp on the article), we now know the bottomlines of what will be in the mid-session budget review the Office of Management and Budget will release on Tuesday.  The deficit will be lower than expected in 2009 and, as Pete correctly predicted, higher than previously forecast in 2010 and beyond.

This will lead to the three almost-always-most-likely-to-be-asked deficit-related questions being asked when the OMB and CBO mid-session reviews are actually released.

1.  Whose fault is it?

The usual partisan divide will immediately occur with this question: Democrats will blame George W. Bush and Republicans will blame Barack Obama.

Jim Horney at the Center for Budget and Policy Priorities is the budget analysts' budget analyst.  Here's why.

Over at his own blog, Donald Marron does a good job getting out additional details on the OMB mid-session budget review that will be released next Tuesday.

According to Donald, spending will be lower mainly because the funds the White House included in its proposed budget for an additional round of financial bailouts won't be needed, and because the costs of the first round of financial bailouts will be less than originally expected.  Other spending will be $17 billion less than previously forecast but revenues will be $83 billion less than had been projected.

So the estimated deficit falls to $1.58 trillion.

Several points to keep in mind as next Tuesday approaches:

1.  The imperfections of the English language virtually force the use of some version of the phrase "deficit will be less" when describing this situation.  That's true: if the mid-session's numbers are correct, the deficit will indeed be less than had been expected.  And that's definitely good news.

Actually, as this report last night from the Associated Press points out, the leak from the administration says the 2009 deficit will be less than $1.6 trillion -- $1.58 trillion to be exact.

Several things to keep in mind as the debate on this plays out over the next few days leading up to the release next Tuesday of both the Office of Management and Budget and Congressional Budget Office mid-session reviews.

1.  This lower-than-previously-projected deficit could end up being even lower when the final numbers are released in just about eight weeks.  The reason: It's not yet clear whether the mid-session is completely taking into account that the $250 billion the administration included in its original budget for additional help for Wall Street this year won't be provided.  It is entirely possible that only part of that has been taken out of the deficit calculation in the mid-session.