Budget Update:  New CBO Estimates Likely To Show $400 Billion Deficit in 2003; $500 Billion in 2004
8/18/2003

The Congressional Budget Office (CBO) will release a new budget baseline on August 26.  The 2003 deficit is projected to be $401 billion, more than $50 billion less than the deficit for this year forecast by the Bush Administration.

CBO's Monthly Budget Review, released August 8th, cites a new projected budget deficit of $401 billion for the fiscal year ending September 30, 2003.  That is $155 billion higher than CBO projected in March of this year, but it is roughly $55 billion better than the deficit projected by the Bush Administration in July.

According to CBO, outlays for certain defense, international affairs, homeland security, and agricultural accounts will be lower than the Administration projects in 2003.  However, if outlays are simply being delayed, that could imply higher spending in those accounts in fiscal year 2004.

Therefore, it seems reasonable to expect CBO's estimate of the deficit in 2004 to exceed the Administration's estimate of $475 billion.

Centrists.Org will update is short-run budget projections shortly after CBO's new data are released.  This update will probably affect only the short-run figures, between 2003 and 2005 or 2006.  Unless CBO's longer-term outlook or projections have changed, there is little new data available to suggest that changes in the long-term outlook are warranted.  

One legislative item that could affect Centrists.Org's long-term outlook would be the enactment of a Medicare drug benefit.  In most cases, CBO does not include the impact of laws not yet enacted in its projections.  However, Centrists.Org does include the impact of majors laws judged likely to be enacted.  The final agreement on a Medicare drug benefit has been delayed by several weeks in Congress, and the probability of the law's enactment this year has diminished slightly.  If it looks like a Medicare deal will not be reached, that would significantly reduce the projected budget deficit, at least by Centrists.Org's calculations.

Links:
Congressional Budget Office Monthly Budget Review (August 8, 2003)
Centrists.Org No-BS Long-Term Budget Baseline Homepage