Photograph by Andrew Harrer/Bloomberg

Jeffrey Zients, acting director of the Office of Management and Budget (OMB), speaks during a news conference on April 10, 2013.

That’s how much President Barack Obama’s budget proposal would trim federal budget deficits over the next decade, according to the Congressional Budget Office.

Obama’s budget would produce deficits of $5.2 trillion between fiscal 2014 and fiscal 2023, compared with $6.3 trillion under the CBO’s baseline projections, the nonpartisan budget agency said in a report May 17.

Obama’s proposals would increase the deficit in this fiscal year and in the next two, relative to the amounts the CBO projects in its baseline. The deficits would be smaller than the baseline figures between 2016 to 2023, ranging between 0.1 percent and 1.4 percent of gross domestic product.

The CBO last week projected a fiscal 2013 deficit of $642 billion, or 4 percent of GDP, the smallest shortfall in five years. The deficit was 10.1 percent of GDP in fiscal 2009.

The policy changes in Obama’s budget would increase revenues by $974 billion and reduce outlays by $172 billion, according to the CBO report. The biggest policy changes include reducing military spending in Afghanistan, limiting deductions that lower taxpayers’ income tax liability, and changing the way some benefit programs are indexed for inflation by adopting a “chained” consumer price index.

Original post is Bloomberg by the Numbers: $1.1 Trillion by Political Capital.

Photograph by Justin Sullivan/Getty Images

An adult daycare center in Novato, California.

“We don’t have an immediate crisis in terms of debt,” President Barack Obama said, during a discussion of the federal deficit and budget talks with Congress in an interview aired today by ABC News’ “Good Morning America.”’ “In fact,” the president said, “for the next 10 years, it’s gonna be in a sustainable place.”

The folks at The Public Notice, a nonprofit dedicated to reporting on the economy and government policy, have paired up the president’s comments with some other reports.

Such as the Congressional Budget Office’s annual budget and economic outlook:

“If the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $845 billion, or 5.3 percent of gross domestic product (GDP), its smallest size since 2008. In CBO’s baseline projections, deficits continue to shrink over the next few years, falling to 2.4 percent of GDP by 2015. Deficits are projected to increase later in the coming decade…

“However, because of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt. As a result, federal debt held by the public is projected to remain historically high relative to the size of the economy for the next decade. ”

“By 2023, if current laws remain in place, debt will equal 77 percent of GDP and be on an upward path, CBO projects such high and rising debt would have serious negative consequences: When interest rates rose to more normal levels, federal spending on interest payments would increase substantially.”

“Moreover, because federal borrowing reduces national saving, the capital stock would be smaller and total wages would be lower than they would be if the debt was reduced. In addition, lawmakers would have less flexibility than they might ordinarily to use tax and spending policies to respond to unexpected challenges. Finally, such a large debt would increase the risk of a fiscal crisis, during which investors would lose so much confidence in the government’s ability to manage its budget that the government would be unable to borrow at affordable rates.”

Original post is Obama: Debt No ‘Immediate Crisis’ — CBO: ‘Serious Consequences’ by Political Capital.

Photograph by Andrew Harrer/Bloomberg

Demonstrators in favor of the Affordable Care Act stand outside the Supreme Court building on June 28, 2012.

From Bloomberg Government’s Congress Tracker blog

President Barack Obama said in his State of the Union address that his health-care overhaul is taming costs, though Congress’s top budget advisor isn’t so sure.

Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, told lawmakers that he doesn’t know why once-spiraling costs have slowed in recent years.

“We have not attributed the slowdown to any particular factor like the Affordable Care Act,” he told the House Budget Committee, referring to the law enacted in 2010.

It’s a combination of the slow economy — people spend less on care when they feel strapped — and structural changes in the health-care industry that economists don’t yet understand, Elmendorf said.

“The structural part could have a number of possible causes,” he said.  “One could be providers thinking about the current incipient effects of the Affordable Care Act, but they also are driven by pressures from private insurers. I think providers are driven by their own sense that they’re not providing care in as efficient a way as possible.”

In his speech last night, Obama took credit for the slowdown, telling lawmakers: “Already, the Affordable Care Act is helping to slow the growth of health-care costs.”

Cost increases have been slowing for several years; Medicare grew by just 3 percent, or $16 billion, in 2012, the smallestannual gain since 2000. That helped prompt CBO to ratchet back its projections of future costs. It now anticipates that Medicare and Medicaid will cost $200 billion less in 2020 alone than it anticipated just three years ago.

“That’s a topic that we’re giving a lot of thought to,” said Elmendorf. “I think the right way to summarize the consensus is that we don’t know.”

Original post is Obama Says Health Law Cutting Costs; CBO Chief Isn’t So Sure by Political Capital.

Photograph by John Moore/Getty Images

An elderly congregation member in Warren, Ohio.

That’s the estimated federal budget deficit for this fiscal year, according to the Congressional Budget Office.

“Recent tax increases and spending cuts will help pare the deficit to its lowest level since 2008,” the nonpartisan agency said in the first comprehensive analysis of the government’s finances since last month’s deal that averted, at least temporarily, the so-called fiscal cliff, as Bloomberg News reported yesterday.

While the deficit shrank as a percentage of gross domestic product for the third straight year in 2012, deficits are projected to increase in the coming decade as an aging population consumes more health care services.

If tax and spending policies don’t change, “federal debt held by the public will reach 76 percent of GDP by the end of this fiscal year, the largest percentage since 1950,” the CBO report said.

Original post is Bloomberg by the Numbers: $845 Billion by Political Capital.

Photograph by Jason Alden/Bloomberg

Marissa Mayer, chief executive officer of Yahoo! Inc., in Davos, Switzerland.

It’s a day of setting agendas in Washington.

An assortment of CEOs and pack of progressives will descend on the White House for separate meetings with President Barack Obama, as he lays out his agenda for the economy and issues including immigration for his second term.

In the morning, AFL-CIO President Richard Trumka, NAACP President Ben Jealous and 14 other labor and progressive leaders hold a closed meeting the president. Obama later meets with 12 CEOs including Goldman Sachs’s Lloyd Blankfein, Motorola Solutions’ Greg Brown, and Yahoo!’s Marissa Mayer.

House Majority Leader Eric Cantor, a Virginia Republican, outlines the Republican agenda for the 113th Congress in an address to the American Enterprise Institute at 1 pm EST. Meanwhile, Senate Democrats are holding their annual retreat in Annapolis, Md., to formulate policy plans.

The Congressional Budget Office at 1 pm  today releases projections, economic outlook that will be carefully scrutinized by the White House and both House and Senate budget writers as they prepare plans for next fiscal year.

Also today, the House Judiciary Committee meets on immigration law enforcement as Homeland Security Secretary Janet Napolitano inspects border security in El Paso, Texas. FCC Commissioner Robert McDowell testifies at a joint hearing on Internet freedom before three House subcommittees. The SEC holds a roundtable discussion on decimal-based trading and tick sizes for small and medium-sized companies. CFPB Director Richard Cordray holds a webinar on the “Ability-to-Repay” rule.

And Washington, D.C. Mayor Vincent Gray delivers his State of the District address tonight at the Sixth & I Historic Synagogue.

Original post is Washington Daybook: Agenda-Setting by Political Capital.

Photograph by Andrew Harrer/Bloomberg

House Speaker John Boehner, a Republican from Ohio, right, walks out of a House Republican caucus meeting at the Capitol on Jan. 1, 2013.

Updated at 10:50 and 11:10 am EST

In the end, it’s on John Boehner.

The speaker of the Republican-run House couldn’t convince his own party to accept his own alternative to the year-end tax increases which now have technically taken effect, if for only a day or few. Now he faces the task of convincing his House to match the Senate on its early-morning, bipartisan New Year’s vote for new taxes.

In the end, the contours of a deal were drawn without him: Vice President Joe Biden, president of the Senate and a longtime veteran of that body, hashed out an agreement with Senate Minority Leader Mitch McConnell, an old colleague who, remember, had vowed to do everything in his power to prevent President Barack Obama from winning re-election.

Obama won, repeatedly reminding everyone since that he campaigned with a vow to tax the top-earning Americans harder and spare everyone else from the higher income tax rates which, technically, took effect after midnight. The Senate’s bill raises income tax and investment income rates on households earning more than $450,000 a year.

The agreement reached by Biden and McConnell somewhat amazingly drew next to no opposition in the Senate, save for a few who reserved for themselves the right to say they never bought this thing: Three Democrats voted against the measure: Michael Bennet of Colorado, Tom Harkin of Iowa and Tom Carper of Delaware. They were joined by five Republicans who voted no: Chuck Grassley of Iowa, Mike Lee of Utah, Rand Paul of Kentucky, Marco Rubio of Florida and Richard Shelby of Alabama. Senators such as Rubio and Paul are likely to save that claim for the next big political race each faces.

And that leaves Boehner precious little room for political cover.

In the end, the speaker has pledged to hear the Senate’s bill in the House — without promising to pass it unamended. Should the House amend the deal substantially, it runs the risk of no agreement at all. The lame-duck Congress has two-and-a-half days left. Thursday afternoon, it will be succeeded by one with more Democrats in it.

Rep. Debbie Wasserman Schultz, a South Florida Democrat and chairwoman of the Democratic National Committee, said today the Senate’s bill will earn an “overwhelming majority of Democratic votes.” She said in an appearance on MSNBC: “We have a balanced plan here in front of us.”

That leaves Boehner’s Republicans even less cover — and more responsibility for failure.

Rep. Tom Cole of Oklahoma is among the Republicans who have been calling for a compromise on taxes for some time. Now is the time, he said today.

“It’s a measured victory, it’s not a complete victory, it’s  a compromise, each side got something,” Cole said this morning on MSNBC as House Republicans prepared to caucus after noon. “I can walk away from this one thinking we’ve got a very good deal. We ought to take this deal right now.”

Boehner is standing at the bottom of what so many have readily called a “fiscal cliff” — the metaphor coined by Federal Reserve Chairman Ben Bernanke. The Fed chairman and Congressional Budget Office alike have warned of the economic consequences of taking this standoff too far.

The stock market liked what it heard of an impending agreement yesterday. The markets are closed today. They will reopen tomorrow to one kind of news, or another.

“Putting to bed this thing before the markets is really a pretty important thing to do,” Cole added today.

The White House and Senate have thrown the speaker a long rope.

In the end, it’s on him and his House to take it.

Roger Runningen contributed the comments from Congress on MSNBC. 

Original post is Boehner’s View from Bottom of Cliff by Political Capital.

Washington’s precarious fiscal-cliff stalemate. Photograph by Steven Puetzer

Volatility has returned to U.S. stocks since the presidential election, and it’s partly Washington’s fault as the fiscal-cliff stalemate makes investors more and more skittish, according to JPMorgan Chase & Co.

And even bigger swings may be on the way soon, because derivatives tied to the equity market expire tomorrow.

The Standard & Poor’s 500 Index has slumped more than 5 percent since the Election Day close, ending yesterday’s session at the lowest level since July 25. Ninety percent of that retreat “can be attributed to concerns about the U.S. fiscal cliff,” Marko Kolanovic, global head of derivatives and quantitative strategy at JPMorgan, wrote in a report today.

Most of the slide happened in the first session after the election and during or just after two addresses by President Barack Obama on Nov. 9 and Nov. 14. Those spurred “market concerns about going over the cliff” and coincided with the usually low-volume times around 1 p.m. and 1:30 p.m. New York time, Kolanovic wrote.

The president used his first post-election news conference yesterday to threaten that he’ll let the Bush-era tax cuts expire if the Republican-led House shows “too much stubbornness” and won’t extend the tax cuts only for income up to $200,000 for individuals and $250,000 for couples. Stocks extended declines after he spoke, ending the day down about 0.8 percent from before the press conference.

If Congress doesn’t act by year’s end, $607 billion in automatic spending cuts and tax increases scheduled would cause a recession, according to the nonpartisan Congressional Budget Office.

Concerns about Washington gridlock overlap with tomorrow’s expiration for options contracts tied to underlying stocks, which “could cause high intra-day volatility” as investors and traders buy and sell both derivatives and shares to adjust their positions, Kolanovic said in his analysis.

The November options expiring tomorrow are linked to about $450 billion in S&P 500 stocks and futures, the New York-based strategist wrote. That’s a fraction of the index’s $12.1 trillion market value, yet still enough to make the market gyrate because one gauge of value for the expiring contracts tilts in the direction of bearish options versus bullish ones, according to Kolanovic.

Coincidentally, he estimates, the $850 billion in stock market value wiped out since Americans cast their ballots is roughly equal to what the CBO estimates that allowing the Bush tax rates to expire for top earners over the next 10 years.

As lawmakers prepared for budget talks, the S&P 500 slipped 0.2 percent to 1,352.93 at 11 a.m. after swinging between gains and losses and moving in a 0.65 percentage-point range. That’s less than half the average full-day swing over the past month.

Original post is JPMorgan: Fiscal Cliff Slow-Walking Feeds Stock Market Volatility by Political Capital.

The conclusion: ”Five reasons we can’t afford four more years of Barack Obama.”

Republican Mitt Romney has spent a lot of time in debate and on the campaign trail talking about the last four years.

Now, in the final weeks of the contest, the Romney campaign is airing an ad talking about the next four years — should President Barack Obama win re-election

The ad, “The Obama Plan,” asks: “If Barack Obama Is Re-Elected, What Will The Next Four Years Be Like?”

“One, the debt will grow from 16 trillion to 20 trillion dollars,” it says — the campaign citing Office of Management and Budget projections.

“Two, 20 million Americans could lose their employer-based health care.” — citing the Congressional Budget Office.

“Three, taxes on the middle class will go up by $4,000.” — citing the partisan American Enterprise Institute.

“Four, energy prices will continue to go up.” — citing nothing for this except the track record of past gas price increases from the U.S. Energy Information Agency.

“And five, $716 billion in Medicare cuts that hurt current seniors.”  – citing the CBO, but not explaining that the cuts in payments to hospitals and doctors under the 2010 Patient Protection and Affordable Care Act are not intended to cut benefits for Medicare recipients.

The conclusion:  ”Five reasons we can’t afford four more years of Barack Obama.”

Original post is Romney Ad: `The Obama Plan’ by Political Capital.

Photograph by Sam Hodgson/Bloomberg

Job seekers meet prospective employers at an employment fair sponsored by National Career Fairs in San Diego.

The government’s two major budget agencies are taking opposing positions on the long-term impact of the 2007-2009 recession and sluggish recovery on the economy, Bloomberg BNA’s Jonathan Nicholson reports.

The nonpartisan Congressional Budget Office, in its  updated economic and budget forecast issued Aug. 22, estimated  the economy would still be about 1.5 percent smaller in 2022,  the end of the agency’s 10-year forecasting window, than if the recession had not happened.

That contrasts with a more upbeat report issued in July from the White House’s Office of Management and Budget, which said the current economic recovery could accelerate ahead as more resources are used.

“The U.S. economy is operating well below its capacity, with higher levels of unused resources than at any time in over a quarter century. The potential for a more rapid recovery is present in this low level of resource utilization,” the OMB report said.

The debate is important because the slower the economy grows when all its resources are productively in use, the harder it will probably be to reduce the budget deficit and stabilize government debt levels.

The CBO report said lingering weakness in the job market has led some people to retire earlier or leave the labor force in other ways, such as applying for disability benefits.

The slack labor market has also meant young people are putting off launching their careers, and thus delaying their peak earning and productivity years,  Bill Beach, director for the Center for Data Analysis at the Heritage Foundation, said Aug. 31.

Original post is Budget Agencies At Odds On Lasting Effect of Recession: CBO vs. OMB by Political Capital.

Photograph by William B. Plowman/Redux

Demonstrators on the steps of the Supreme Court protest against the Affordable Care Act in Washington.

The Congressional Budget Office’s new estimates of the budgetary impact of the Affordable Care Act, made in the wake of the Supreme Court’s ruling last month, glides right by one obvious fact: the budget analysts really have no idea how the court ruling will affect their previous estimates.

The CBO report says very clearly that “what states will be able to do and what they will decide to do are both highly uncertain.” Translation? They don’t know any more than anyone else right now about how states will act, now that the high court has determined that the federal government can’t force states to participate in the expansion of Medicaid by withholding the federal share for existing activities.

CBO isn’t to blame for this uncertainty. Rather, they should be commended for their candor in acknowledging the degree of uncertainty that remains. Most news reports and commentaries on the new CBO findings have downplayed or ignored this problem.

Some even claimed to find clarity in the court’s decision. The Fiscal Times said that “the Supreme Court ruling largely upholding President Obama’s health care reform plan may offer businesses a measure of needed certainty.” The technology research company Gartner Inc. posted on its website how the court’s ruling “ends a long period of uncertainty for U.S. healthcare stakeholders.”

Ironically, each statement was immediately followed by caveats about the degree of the certainty rendered by the court. The Fiscal Times noted that “it will be months, if not longer, before the new shape of the American health care system really becomes clear.” The Gartner analysis also noted how the law “could still be modified or revised, and could be affected by the November 2012 federal elections.”

The impact of this uncertainty has more than just budgetary or political effects. The desire of any business for certainty in order to make important decisions and investments is critical. Regardless of individual or corporate views supporting or opposing the Affordable Care Act, companies need to know how to comply with the law and make their businesses as profitable as possible within those rules.

Unfortunately, the new estimates from the CBO only reaffirm the concerns voiced by many that the court decision, while giving some limited guidance to health-care providers and investors, left many big questions without clear answers.

Matt Barry is the health analyst team leader for Bloomberg Government.

Original post is Latest CBO Report on Health Law Adds to Business Uncertainty by Political Capital.