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A friend of mine does not believe CBO projections because he thinks they are biased on the high side and the TCJA II will revive the economy.

I don’t believe CBO deficit projections because history shows CBO estimates are consistently on the low side.

Please consider the WSJ article The Path to Record Deficits

In 2000, the federal government actually ran a surplus and the Congressional Budget Office, Capitol Hill’s nonpartisan scorekeeper, projected the Treasury would keep collecting enough revenue to pay for all government programs and generate continuing surpluses.

Fast-forward to 2025, and the U.S. is running record deficits outside of wars, recessions or crises. The nation’s publicly held debt is nearing 100% of gross domestic product and is projected to surpass the post World War II record of 106% in a few years.

What happened?

It wasn’t a single event but a mix of factors: an aging population, tax cuts, wars, the 2008 financial crisis, expanded healthcare spending, the Covid-19 pandemic and rising federal assistance to households. Both parties played a part. Democrats did little to reverse that tide of red ink when they controlled Congress and Joe Biden was president. Now, Republicans and President Trump are pushing a tax-and-spending megabill that would add trillions to deficits, compared with letting tax cuts expire as scheduled.

Here’s a look at how we got here. The solid black line is reality. The dotted lines are CBO’s moment-in-time forecasts of a future that never happened.

The June 2025 projection reflects a WSJ analysis of CBO estimates of change in outlays and revenues from the One Big Beautiful Bill Act [OBBA] passed by the House of Representatives May 22, including resulting increase in debt service, as a percentage of CBO’s January 2025 GDP projections.

Note: Estimates do not include the Senate bill released this week. Source: Congressional Budget Office

Surplus Lies

Nearly every year, debt rises more than the alleged deficit. This is not a fiscal vs. calendar year distortion, but an ongoing deficit lie. 

For example, there were alleged budget surpluses in four consecutive years, 1998 through 2001. Yet debt only fell once, in the year 2000, by 113.875 billion vs a purported budget surplus of $236.241 billion. 

2001 had a reported surplus of $128,236 billion. Yet ,debt rose by $281,223 billion.

For 2020, the reported deficit was $3.132 trillion but debt rose by $4.546 trillion. That’s a whopping negative discrepancy to the tune of $1.414 trillion.

I discussed this on Nov 27, 2022 in The Budget Deficit Big Lie and When Will Soaring Debt Finally Matter

No Recession Forecast Ever

The CBO never factors in recessions nor government responses to them. Another recession is coming and deficits will balloon again.

And Trump’s Tariffs and deportations are not factored in. Both will be negative to GDP.

Governments always overstate benefits and understate costs.

So take the CBO deficit projections and increase them because that’s what going to happen.

The Senate improved on OBBA but you may as well believe in the great Pumpkin if you think Trump’s fiscal plans will reduce the deficit.

Big Changes to Trump’s One Big Beautiful Act

On June 16, I noted The Senate Makes Big Changes to Trump’s One Big Beautiful Bill but don’t expect miracles.

The biggest changes are SALT and Medicaid, but there are many significant details.

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June 18, 2025: Fed Projects Higher Unemployment and Higher Inflation Citing Tariffs

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June 20, 2025: Did the Fed Just Predict a Recession for Later this Year?

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