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How Much Would the Obama Budget Reduce the Deficit? Part 2 (Updated)

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Controversy continues over whether President Obama's fiscal year 2013 budget would reduce deficits by $4 trillion over ten years. As we've previously written, however, the $4-trillion figure is a sound one, is based entirely on Congressional Budget Office (CBO) data, and does not include any gimmicks or any savings from winding down the wars in Iraq and Afghanistan.

In a new paper, my colleague Richard Kogan estimates that the budget plan from presidential deficit commission co-chairs Erskine Bowles and Alan Simpson calls for $6.3 trillion in deficit reduction over fiscal years 2013-2022.

As Kogan also explains, policymakers have already enacted about half of Bowles-Simpson's nearly $2.9 trillion of program cuts. CBO data show that because of the caps on discretionary funding in last year's Budget Control Act (BCA) and cuts in discretionary spending enacted earlier in 2011, discretionary spending will be $1.5 trillion lower over 2013-2022 than under the CBO baseline in use when the Bowles-Simpson commission deliberated (that is, CBO's August 2010 baseline). Including the associated interest savings, the total budget savings enacted since Bowles-Simpson issued its report equal $1.7 trillion. The $6.3 trillion estimate of savings under Bowles-Simpson includes this $1.7 trillion in savings.

Thus, for an apples-to-apples comparison with the Bowles-Simpson plan, the $1.7 trillion in budget savings enacted last year has to be counted in the estimate of President Obama's budget as well.

CBO data also show that the President's fiscal year 2013 budget would produce $2.3 trillion in new savings over ten years relative to a current-policy baseline. That's the baseline approach that Bowles and Simpson, the Senate's "Gang of 8," and the Committee for a Responsible Federal Budget (CRFB), among others, now use and that the congressional "supercommittee" used last year. Adding the $2.3 trillion in new savings that Obama has proposed to the $1.7 trillion enacted last year, the total comes to $4 trillion.

Moreover, CRFB's estimate of the amount that the 2013 Obama budget would save is virtually identical to ours. And as Politifact's corrected version of its analysis of this issue recently noted, the $4 trillion total is accurate if you count the savings enacted in 2011.

Should those savings be counted? If you want to compare Obama's budget, or House Budget Committee Chairman Paul Ryan's, or anyone else's to Bowles-Simpson, then you have to count savings that Bowles-Simpson proposed and counted and that have since been enacted into law. If you don't, the comparison won't be valid.

Note: This blog has been updated from a previous version in which we cited Washington Post fact-checker Glenn Kessler as among those who question the claim that President Obama's fiscal 2013 budget would reduce deficits by $4 trillion over 10 years. In communication with the Center and in a revision of his own blog, Kessler has since clarified that he was questioning, instead, President Obama's claim that his budget would generate $1 in tax increases for every $2.50 in spending cuts. Thus, our updated blog post on the issue, above, does not cite Kessler.