File:CBO Forecast Changes for 2009-2012.png

Interpreting the graph

The U.S. budget situation has deteriorated significantly since 2001, when the Congressional Budget Office (CBO) forecast average annual surpluses of approximately $850 billion from 2009-2012. The average deficit forecast in each of those years is now approximately $1,215 billion. The NY Times analyzed this roughly $2 trillion "swing," separating the causes into four major categories along with their share:

• Recessions or the business cycle (37%);
• Policies enacted by President Bush (33%);
• Policies enacted by President Bush and supported or extended by President Obama (20%); and
• New policies from President Obama (10%).

CBO data is based only on current law, so policy proposals that have yet to be made law are not included in their analysis. The article concluded that President Obama's decisions accounted for only a "sliver" of the deterioration, but that he "...does not have a realistic plan for reducing the deficit..."^[1] Recessions have long-lasting impacts on forecasts, as they reduce the GDP estimates for future years and increase the amount of safety net spending, like unemployment and food stamps. The AMT refers to the "Alternative Minimum Tax" which would raise taxes for many middle-income families if Congress did not regularly pass a "patch" that prevented this tax increase from occurring. Many of these factors are explained in detail in the United States federal budget article. Notable economists Alan Auerbach, Alan Blinder and David Leonhardt discussed this topic on the Charlie Rose show.^[2]