CBO's "Budget and Economic Outlook: Fiscal Years 2008 to 2017," published yesterday, projects the federal budget deficit to fall from $248 to $172 billion this year, to be replaced by a $170 billion surplus in 2012. This forecast of a sudden surge into the black might be credible, "but virtually nobody ... believes it, says the Washington Post. As we have said, the President's announced goal of balancing the federal budget by 2012 is a ploy at best. CBO's "offical" projections make the President's goal look like slacker's work, but legislatively mandated assumptions force CBO to formulate distortive baseline projections. Here are the three major caveats to the CBO projections:

• war spending: the CBO figures assume spending on war operations in Iraq and Afghanistan will not exceed $70 billion a year -- even though president is expected to send Congress a supplemental war request of about $100 billion next month (CPBB)
• AMT relief: the CBO must base its assumption on existing law, which provides for vast increases in revenues from the Alternative Minimum Tax (AMT) -- and permanent fix for the AMT, at the top of the Congressional taxwriters' agenda, could cost up to $1 trillion over 10 years (CPBB)
• extending the Bush 2001 and 2003 tax cuts: few believe that Congress will permit the bulk of these cuts to expire -- and extending the 2001 and 2003 tax cuts would cost over $250 billion in 2012 alone and $400 billion over 2008-2012 (CQ/$$)

These mandated assumptions leave us with numbers which are of questionable value for policymakers trying to convey and cope with the nation's actual fiscal trajectory. Fortunately, the CBO's 173-page budget outlook includes a chart titled "Budgetary Effects of Selected Policy Alternatives Not Included in CBO's Baseline" that offers budget projections reflecting political reality. But these alternatives don't yield bottom-lines and Post and Times headlines.