In case you missed it, the Congressional Budget Office (CBO) just released its 2010 Budget Outlook, its yearly look at the health of the federal budget. CBO's director, Doug Elmendorf, provides the basics of the report:

CBO projects, that if current laws and policies remained unchanged, the federal budget would show a deficit of $1.35 trillion for fiscal year 2010. At 9.2 percent of gross domestic product (GDP), that deficit would be slightly smaller than the shortfall of 9.9 percent of GDP ($1.4 trillion) posted in 2009.

WaPo's Federal Eye (AKA Ed O'Keefe) reported this morning that the House Committee on Oversight and Government Reform is investigating whether the Office of Management and Budget (OMB) is threatening inspectors general (IGs) for reporting to Congress insufficient FY 2011 budget levels.

While most of the nation's attention seems to have been focused on health care and budget issues as of late, the Office of Management and Budget has been hard at work on the Recovery Act recently. With the start of the second recipient reporting cycle rapidly approaching, on Friday OMB put out a new Recovery Act guidance, this one specifically addressing job creation estimates and data quality issues. These two areas have been huge problems for OMB and the Recovery Act in general, with many of the story lines from the last cycle focusing on terrible data quality and suspect job creation estimates. With the new guidance, OMB is hoping to head off some of these stories for the coming reporting cycle.

When discussing the federal budget deficit, I should be clear that reducing it right now is absolutely the wrong policy to pursue. It will likely strangle the meager recovery that's underway, and attention should primarily be focused on reducing the growing cost of health care. Having said all that, if deficit reduction must be addressed right now, it's important to first understand its composition.