Budget deficit projections

The Congressional Budget Office says the combined budget deficit for the next ten years will be $7.1 trillion, assuming discretionary spending grows at the rate of inflation and taxes are as set under current law. The Concord Coalition says it has a more plausible estimate: assuming spending grows at the rate of nominal GDP growth rather than inflation, and that all expiring tax cuts (including the Bush tax cuts and those in the 2009 stimulus act) are extended, the deficit will total $14.4 trillion. And they have a scary picture:



Ok, no problem with the spending assumptions. But is it really fair to "score" explicitly temporary tax cuts as permanent? I mean, it's written right there in the tax code that the provisions of ARRA expire in three years and the top tax rate will be 39.6% in 2011. It would take an act of Congress to change that. Does it really make sense to base budget forecasts on predictions about future tax legislation? Or is the Concord Coalition's objective here just to promote some really scary numbers that people in the media or blogosphere will cite as evidence of the Obama Administration's reckless fiscal policies?

If that's the way the Concord Coalition wants to play the game, then I expect that if in coming years the Obama Administration declines to extend some of these tax cuts the CC will score that as fiscally responsible deficit reduction. I will be watching.