Monday, February 14, 2011

The 2012 budget


So, it is reported that the President's currently proposed budget will be on track to reduce the deficit from the current 9.8% of the economy (GDP) to a more sustainable 3% by 2015.

Per the White House Whiteboard, the red line on the graph shows the baseline scenario, while the blue line shows the effect of the President's FY 2012 budget... Hmm, so looks like the "President's budget" actually moves the deficit from approximately 4% to approximately 3% of GDP in 2015. Not quite as exciting as a putative 10% to 3%, is it? Actually with the increases in Medicare and with Social Security now permanently in the red, how exactly does the deficit stay flat from 2015 through 2020 and beyond?? The further you go in the "out years" the less realistic is the projected trend...

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