I suspect that a lot of those posting on this board do not know what the cbo is. Or else they are simply waiting for their talking points to be printed. Because what the cbo said is interesting, and important.
This was kind of an experiment to see what happens when we just post the raw information. The CBO release also made the observation that the deficit declined by $368 billion, mainly as a result of the higher revenues created with an improving economy. This is about a 40% decline in the deficit y.o.y. from $974 billion to $606 billion.
There are some obvious implications. First, the best way to reduce the deficit is to grow the economy. We can argue over what the best way is, but growth and a lower deficit go together. I haven't double checked the forecast numbers, but this puts us real close to where the budget would be balanced with a moderate unemployment rate, say 5.5--6%.
Second, spending, including Social Security, Medicare, and Medicaid, all of which grew (5.4%, 3.0%, and 5.7% respectively). I was astounded that expenditures for federal unemployment benefits decreased from $82 billion to $62 billion, a drop of 24.4%.
The rest of the budget is a little weird too. Military spending went down $36 billion (6.7%), net interest paid down $5 billion (2.4%), and other spending was reduced $25 billion (2.8%). The net cost (recovery) from GSE's (Fannie & Freddie) went from a cost of $5 billion in 2012 to a recovery of $82 billion this fiscal year, a $87 billion swing.
Pause to think about that a minute. Despite all of the borrowing and a continuing deficit. the outlays for interest expense WENT DOWN. If we ignore the GSE figure, which has some problems, spending would have been essentially flat.
So the reason for the improvement had nothing to do with entitlement programs, except possibly for unemployment benefits. I think the argument for a "grand bargain" that includes entitlement cuts is taking a pretty good hit.
Finally, we have had some debate on other threads about what constitutes research and analysis in economics. Technically what CBO does is research and when we talk about it, that's analysis. I have done some original economic research, in the sense that I took some raw data (in one case 100 years of land titles in a given county) and organized it into a usable form to confirm or confute a hypothesis about what was going on. And of course I do a good bit of analysis of well packaged data.
When I try to analyze a report of a packaged data set, like the CBO monthly report, I try to post a link to the announcement or at least a citation. I try to avoid using another commentator as the citation for the data set if the primary source is available. IMHO if we all followed this distinction, a lot of misleading and incorrect supposition would be avoided.
Peace all!
