Orszag Called Newly Adjusted White House Budget “Unsustainable” In March
Back in March of this year, when both the White House and the CBO put out their budget deficit numbers, we were told that the CBO simply had it wrong and were much too pessimistic about the 10 year budget that the Obama administration was touting.
The head of the White House’s Office of Management and Budget, Peter Orszag, had this to say at the time:
White House budget chief Peter Orszag said that CBO’s long-range economic projections are more pessimistic than those of the White House, private economists and the Federal Reserve and that he remained confident that Obama’s budget, if enacted, would produce smaller deficits.
Even so, Orszag acknowledged that if the CBO projections prove accurate, Obama’s budget would produce deficits that could not be sustained.
“Deficits in the, let’s say, 5 percent of GDP range would lead to rising debt-to-GDP ratios that would ultimately not be sustainable,” Orszag told reporters.
Deficits so big put upward pressure on interest rates as the government offers more attractive interest rates to attract borrowers.
“I think deficits of 5 percent (of GDP) are unsupportable,” said economist Mark Zandi, chief economist at Moody’s Economy.com. “It will lead to higher interest rates to the point where it will force policymakers to make changes.”
Of course, today the White House’s OMB acknowledged that, in fact, the CBO’s estimates in March were indeed correct. OMB has adjusted its deficit estimate up 2 trillion dollars to over 9 trillion. That means that in 2019, the deficit will be 6% of GDP – or to quote Peter Orszag, “unsustainable“.
What does “unsustainable” mean to you, and how does one address such a problem?
Well, it certainly isn’t addressed with increased spending, new entitlements and more debt, is it?
Is there any wonder a sizable majority thinks the country is still on the wrong track despite a change of administrations?
In case the politicians still don’t get it (and after this morning’s awesomely dumb move by Republicans, they need to be reminded as well) — It’s the spending, stupid!