The NYT article on the new CBO budget projections tells us that CBO projects that if the Bush tax cuts are left in place, and the alternative minimum tax is adjusted to protect middle income taxpayers, deficits would return to more than $200 billion a year. When I look at the numbers (table 1-8), I see a deficit projection for 2017 of $360 billion. This can better be expressed as a not very scary 1.8 percent of GDP.
By the way, CBO's track record on picking up recessions and their budgetray impact is not very good. In January of 2001, after the stock market crash was already in progress, CBO had not adjusted downward its projections of capital gains tax revenue from the bubble peak levels. This led them to underestimate the size of the budget deficit over the 10-year budget horizon by more than $400 billion.
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