OMB released the FY 2009 Mid Session Review (MSR) today, and the headlines are blaring that the document revises the White House's projected deficit for FY 2009 upward to $482 billion from February's projection of $407.4 billion. Headline worthy indeed, but a little context here is essential in understanding how OMB reached this figure. Seemingly miniscule changes to assumptions about the economy, Congress, interest rates, etc. can swing the bottom line figure quite a bit, and administrations are prone to jigger these one way or the other for political reasons. The game is usually played such that White House budget forecasters inflate projected deficits so that when the actual number materializes, it will likely be lower than estimated, and the administration can pat itself on the back for being a better-than-expected steward of the budget. We've noted the Bush Administration's particular penchant for this practice in 2005, 2006, and 2007. We'd like you to forget for a second the headlines and focus instead on what the MSR said about FY 2008's likely deficit. In February, the White House projected a deficit of $410 billion for the current fiscal year (FY 2008). Now, it projects that number to be $389 billion. Although today's FY 2009 projection is drowning out any adulation for the administration's deft ability to beat budget projections, we suspect we'll be hearing a round of applause in October when the final FY 2008 deficit figure is released. (click to enlarge)