Free Markets, Free People


CBO: Debt will be 90% of GDP by 2020

I’m sure this is a CBO report (the “gold standard” remember) that Democrats and the administration will try to ignore.  Especially since adding to the debt so significantly with ObamaCare.

President Obama’s fiscal 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next 10 years, $1.2 trillion more than the administration projected, and raise the federal debt to 90 percent of the nation’s economic output by 2020, the Congressional Budget Office reported Thursday.

In its 2011 budget, which the White House Office of Management and Budget (OMB) released Feb. 1, the administration projected a 10-year deficit total of $8.53 trillion. After looking it over, CBO said in its final analysis, released Thursday, that the president’s budget would generate a combined $9.75 trillion in deficits over the next decade.

Of course that’s a static assessment that assumes nothing changes over the next few years.  Or said another way, if left to their devices, this is precisely what Democrats and this administration plan for our future.  And all the denial in the world won’t change that.  This is a plan for fiscal ruin.

To put it in a more easily understandable context:

The federal public debt, which was $6.3 trillion ($56,000 per household) when Mr. Obama entered office amid an economic crisis, totals $8.2 trillion ($72,000 per household) today, and it’s headed toward $20.3 trillion (more than $170,000 per household) in 2020, according to CBO’s deficit estimates.

That figure would equal 90 percent of the estimated gross domestic product in 2020, up from 40 percent at the end of fiscal 2008. By comparison, America’s debt-to-GDP ratio peaked at 109 percent at the end of World War II, while the ratio for economically troubled Greece hit 115 percent last year.

So, is it time to demand those calling the path we’re on “unsustainable” (i.e. Timothy Geithner, Barack Obama  and the Democratic Congress) to put up or shut up?  As usual, we continue to hear Democrats blather on about PAYGO, but we continue to see them ignore it in legislation they pass.  It appears, given the budget numbers, they also plan to ignore it in the future – wouldn’t you say?

Look at that per household figure from 2008.  It was already outrageous and yet within the next 10 years they plan on tripling it to $172,000. 

Anyone have any idea of the effect such debt will have on our economy?

For countries with debt-to-GDP ratios “above 90 percent, median growth rates fall by 1 percent, and average growth falls considerably more,” according to a recent research paper by economists Kenneth S. Rogoff of Harvard and Carmen M. Reinhart of the University of Maryland.

Hey, when you have the fiscal policy of Greece or Argentina, what do you suppose the end result might be?

~McQ

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37 Responses to CBO: Debt will be 90% of GDP by 2020

  • Wait – isn’t this the SAME CBO that said that The Clown’s™ Deathcare bill would cut the deficit? That CBO?

    So much for getting the numbers right. My bet is that CBO wanted to say that DeathCare 2010 would be a killer for the economy but Botox Nancy threatened them with lawsuits and prison to force them to make things look good for her gang of thieves.

    BTW, those numbers for The Clown™ are starting to look rather poor, and rather ominous…wouldn’t anyone agree?

    http://politicalticker.blogs.cnn.com/2010/03/26/cnn-poll-obama-tied-in-hypothetical-2012-matchup/?fbid=gqDGtaajx80

  • Hey, when you have the fiscal policy of Greece or Argentina, what do you suppose the end result might be?

    >>>> To blame George W. Bush?

  • If CBO is projecting 90% by 2020, it’s likely to be over 100%.

  • If the “Progressive-Left’s” ultimate goal is the destruction of a Capitalistic Republic, then I guess this is “Mission Accomplished”, Aye?

  • This is really scary stuff, but I am reminded of the CBO projections from 1992 when Clinton took office. The  CBO warned the Clinton administration that the deficit would remain stuck near $300 billion until 1997, and then soar to $653 billion by 2003. Obviously this was not the case. Sure, we had better than expected economic growth, and should not count on anything like that in the near future, but we also should not expect static growth.

    You have been saying, and I have beenn agreeing, that our elected officials are going to have to make some hard choices in future, and that future is almost here. I say almost here because during a recession, talk of real spending cuts is just that, talk, it’s not going to happen. In fact, as with every recession, when tax revenues are down, and needs are up, spending will do nothing but increase. Whether true or not, austerity programs during times of recession are considered the kiss of economic death. But we will soon see economic growth, albeit is with high unemployment. But regardless, when Obama can say on national TV that the recession is over, the hard choices are going to have to start.

    The problem is that the vast majority of our federal budget spending is on political dynamite. Anyone can propose spending cuts to eliminate spending for research on dung beetle mating habits, and that $300,000 should be saved, but really does nothing to address our problems. While I think that SS and Medicare defecits with vanish for the short term with an improved economy, they are still anchors around our collective neck and will eventually drag us under. And there is the other political minefield of defense spending, expected to be almost a trillion dollars in 2010.

    You lose elections when you propose cutting any of those, so no one does it.

    Republicans have won elections by offering tax cuts with no real spending cuts, Democrats have won elections by promising stuff, but generally defecit neutral stuff because they don’t have a base that is genetically predisposed to vote against any tax increases.

    My suggestion for addresing the defecits would be to take on all three of those monster budget items.
    1. Medicare – Enact universal healthcare, expanding Medicare to year zero and increase payroll taxes for Medicare to 7%, and health insurance premiums to zero. The fed currently takes on the highest risk and highest cost insureds in the country, as a pool of insureds, it’s a huge loser. But, if you expand the pool to include the lowest risks, the overall pool would be come positive and our overall healthcare costs will go down. I know, socialized medicine, yada, yada, yada, but as I explained during the election, it’s already here, with the nearly 60% of healthcare spending passing through the government in some form or another. Private delivery, public insurance is the best model for healthcare in the world. We could reduce the healthcare spend as a fraction of the GDP from 16% to as low as 1o% or 11% instead of watching it balloon to 36% in the next 25 years. Hard choices, remember.

    2. Social Security – Kill it as an insurance program and redesign it as a needs based program. Phase it out over 30 years, paying full benefits to current recipients, and eligible recipients for the next 10 years in full, the next 20 years in part, and at 30 years it would be paid on a needs assesment. At the same time, reduce the payroll taxes over time to 2% paid into the SS fund, and the balance paid into private accounts. We will see periods where private accounts are hammered by market conditions just as retiress would beging to take income. They may become eligible for the needs based payments during these periods. Most of time, people would be able to pay themselves far more than SS would, or could. I don’t think this is a hard choice for people in this forum, but I could be wrong.

    3. Military spending – redesign the miltary as a lean, mean, fighting machine, capable of handling the kind of fights that are likely, but not designed to be ready for WWIII on a moments notice. Develop a plan to raise a massive military force quickly, we have done it before with great success, we can do it again. It’s not like the other guys have forces standing at the ready for that kind of major global conflict. In fact, they don’t suck nearly the kind of resources out of their economies that we do, choosing instead to reinvest in the real theatre of the 21st century conflict, economic power. Hard choices, remember.

    Conservative ideals, liberal ideals, libertarian ideals all have a place, but if you put any one of those ideologies in place across the board, we would fail as a nation.

    Be for what works, not in what fits into your ideological box.

    Of course any politician that ran on doing what I suggested above would pretty much insure that the base of both parties would vote against them, which is why we may be fooked. But don’t blame the liberals, at least no more than you blame everyone else.

    • We’re equal opportunity blamers/condemners here – NCLB and Medicare part D along with many other spending measures passed by the GOP were condemned here. But it is now the turn of the liberals — and it is their budget being discussed so they get the blame (and yes, Barack Obama is a liberal ideologue). It speaks to a mindset that believes that government is the answer and the answer always involves massive amounts of spending – even when we don’t have it.

      Paygo my @ss.

      Certainly, as I noted in the post, CBO assessments are static and assume nothing changes over the scoring period. What’s clear is that the budget cited is what the administration plans on executing. So they’re rightfully the target.

      One thing that will change now is health care reform costs will be added in running the numbers even higher. You know as well as I do Democrats gamed the CBO on that one and it will end up on the deficit side as soon as the real spending kicks in (and the doc fix they left out is added on). SS is in the red. Medicare has trillions in unfunded future benefits and is essentially broke. Service on the debt is real, rising and eating up more and more of the budget. And our credit standing is most likely going to be downgraded and as we just witnessed, selling our debt is getting harder ande more expensive. States (many of which have to have balanced budgets by law) are in budget deficit and have just had new unfunded mandates shoved down their throats. Jobs are still being lost at a very high rate, the housing market continues to slide and consumer confidence isn’t so confident.

      There’s absolutely nothing of substance being done to address any of that. Instead, the liberal agenda gets priority, new entitlements are passed, new economy crippling taxes are contemplated (cap-and-trade) and more spending is always the answer. How do you suppose an economy already in trouble will react to all of that?

      We might pine for a “lost decade” in 50 years.

    • Captain Dumbtastic, we will not “soon see economic growth”, we are headed down the tubes. Some pretty big taxes are going to kick in automatically at the end of the year and they will squelch any sort of growth we might have, but I doubt we will see any to speak of.
      You three ideas are silly as they have no possibility of being enacted. We have a bunch in Washington who have no desire to fix anything, they only have a desire to increase their raw political power and reward their special interest groups.
      That should be obvious now to anyone without ideological blinders on.  And speaking about ideology, you have a lot of nerve to say that libertarian ideology could never work, it has never been tried, so we don’t know do we?

  • McQ - Hey, when you have the fiscal policy of Greece or Argentina, what do you suppose the end result might be?

    Um… We’re f*cked?

  • PAYGO is a joke.  At this point PAYGO is the equivalent of talking about putting in a sprinkler system while throwing kerosene on your burning building.
     

  • We won’t know who is right for a while, but I think Obama will address the deficits better than Bush didn’t.

    We’ll see how the BFD does, I see your point, and you are right on some elements.

    I disagree on the “Doc Fix”, that had no place in the budget numbers for this bill, since this bill does not create that particular issue. It needs to be addressed, certainly, and it needs to be included in healthcare budget numbers, but to suggest that CBO should include Doc Fix costs as part of the cost of this bill is just a disingenuous attempt to make this bill seem more expensive than it is. The cost of the Doc Fix exists with or without this bill.

    We all know what is wrong, but can anyone come up with a politically viable solution to the underlying problems? I came up with solutions, but I don’t think they are politically viable. The left would slaughter me for gutting SS, the right would slaughter me for socialized medicine, and everybody would slaughter me for gutting the military.

    So how do you stop spending when the bulk of the spending is holy ground?

    • The bill was about “comprehensive” health care reform – and the doc fix is as much about that as extending heath insurance to the uninsured. It was included in early versions of the bill, but when the numbers went south Democrats chose to not include it. That’s a fact, not conjecture.

      Obama has no desire or interest in addressing deficits. None. He’s all about expanding government and redistribution – and addressing deficits is at crosspurposes to that.

      Solutions have been on the table for decades. Both parties have ignored them. When the GOP addressed Social Security, the Dems pitched a fit. It is now in the red. When they tried to address Medicare, the Dems misquoted Gingrich saying he wanted it to “die on the vine” and fought reform tooth and nail. Etc. So while I see fault with both parties, the party in the crosshairs right now is the Democratic party and parituclarly their liberal leadership. They’re selling us all down a river of no return if they’re given enough time and they need to be stopped. Now.

      As for holy ground – it’s becoming a lot less holy as we run out of money isn’ t it? How holy will it be when taxes go over 50%? 65% are saying “take this health care monstrosity to court”. That includes 61% independents – Democrats have lost them Cap.

      It seems it is clear to the majority that it is time to start cutting back. We can do it slowly and in stages or we can delay and let the situation finally dictate massive cuts instead when we run out of money because no one will buy our debt. It’s not a matter of “if” anymore – it’s a matter of when. And smart pols will figure that out and begin laying the groundwork to cut this all back. Maybe they’ll do some of what your suggest. But if we continue to put it off it’s not going to end up being done with a scalpel, but with a meat clever. It won’t be surgery, it will be butchery and it will test social cohesion – but it is something that is going to have to be done.

      The present administration, given the budgets it has produced, shows no interest in slowing anything down – and speaking of politically viability, we’ll see how viable this massive expansion of government and spending track is come November.

      • When the GOP addressed Social Security, the Dems pitched a fit.

        So did Republicans.  This HCR has reminded me a lot of what happened in 2005…
        Polls were against it, many members of the majority party were against it.  ‘Cept this time, the President got what he wanted.
        Don’t act like it was merely Democratic obstructionism that killed the SS reform.  Much like you don’t act like it was merely Republican obstructionism that tried to thwart HCR.

        Cheers.

        • That wasn’t the point of the comment. The attempt was made by GOP leadership to address the Social Security problem. Democrats took up the “party of no” position. Who killed it or why it died isn’t the focus of the comment – the fact that they had an opportunity to address the problem and chose to pretend like there wasn’t a problem is all in their lap. And now it runs red.

  • “Obama has no desire or interest in addressing deficits. None. He’s all about expanding government and redistribution – and addressing deficits is at crosspurposes to that. ”

    You lost me there. I don’t participate in debates about what a person’s unstated interests and desires are, ie motivation.

    I take people at their word on their stated intentions, and then judge it based on their actions. This country desperately needed healthcare insurance reform, this bill doesn’t do enough, but I disagree that it will increase the federal deficit, in any case, it’s not a monstrosity, it’s 4 months in Iraq every year.

    Remember, Clinton was accused of being precisely what you accuse Obama of, and it did not turn out that way at all.

    If you decided empirically, that we would could reduce healthcare costs as a fraction of GDP without significant sacrifice of quality and availability, would your ideology still preclude you from considering that option?

    • I’d have to be at least be convinced emperically (but would likely maintain that health care isn’t the business of government). He and the Democrats gamed the numbers. So for him it wasn’t about empircal proof, was it? It was about ideology and damn the numbers, find a way to make them fit.

      They did. So please, save the lecture about “unstated interests and desires” and open your eyes. You watched this whole corrupt process that ended in this monstrosity of a bill play out in front of you just as I did. If, from that, you’re not able to discern “unstated interests and desires”, you have no business in a serious discussion about politics or the future of this country.

      Love the comparison with Iraq. Truly a poor analogy (but a favorite of the left). War’s end. Entitlements never end unless repealed.

      And you keep bringing up Clinton. Obama is no Clinton – and that will become patently obvious after the midterms when he’s faced with either compromise – a lot of compromise – or lame duck status.

      • He also chose very carefully to say he’d cut the deficit by 50%. Sounds great until you realize that just having growth eventually come back would do most of the work, and that the more he spent in that year in one off stimulus, the easier his goal would be reached.
        I also doubt he will actually achieve that goal. His track record on promises are not that good. Maybe he will steal from McCain and Hillary’s plans like he did with HCR after belittling them on the campaign.

      • I’m still looking for the “exit”strategy from the “War on Poverty”

  • By the way, I think Cap and Trade is dead for the foreseeable future. Maybe in Obama’s second term, if he gets one.

    • Well you better alert Obama and the New York Times then:

      President Obama’s top aides huddled yesterday with Senate Majority Leader Harry Reid and Democratic committee leaders to map out a strategy for cobbling together 60 votes on a comprehensive energy and climate change bill once lawmakers return next month from their spring break.

  • I am not saying they don’t want to do it, I am saying they won’t. The political climate is so hot now that even Lindsay Graham will treat any big Dem bill like the political poison it will be for them. Zero chance of 60 votes, and they are unlikely to be able to push this thing through a reconciliation process.

    • Again – don’t tell me, tell Obama and Reid they “won’t” try. Seems, per NYT, that they have every intention of trying. Succeeding is a completely different thing.

  • “You watched this whole corrupt process”

    All legislation is corrupt, IMHO, because of the way we finance elections. But moving away from that, there was nothing more, or less, corrupt in this process than any other.

    I told you guys 2 years ago this was going to happen, and I begged you to particpate rather than just say no. The group in here roundly voted for the “just say no” approach, and the Republicans in Congress did the same.

    So you got a bill that looks like a bill that conservatives had little input in, don’t act surprised or disappointed, or angry.

    A big by the way, the whole individual mandate idea was a Republican idea from the start. It was the ONLY possible alternative to an employer mandate or government run insurance, designed to have universal healthcare, but through private industry.

    Look up “Mark Pauly”

    If Republicans had to reform healthcare, this is pretty much exactly how they would have done it.

    Len Nichols, of the New America Foundation, says he’s depressed that so many issues that used to be part of the Republican health agenda are now being rejected by Republican leaders and most of the rank and file. “I think it’s a sad testament to the state of relations among the parties that they’ve gotten to this point,” he said.

    • Good grief – when are you going to realize that this isn’t a GOP blog? I don’t care if the individual mandate was the idea of Ronald Reagan, I’d fight it tooth and nail. The government, or at least the government most Americans thought we had, has no right at a federal level to mandate we buy anything from anyone. Mark Pauly was wrong. And Obama and the Democrats are wrong. Clear enough?

      Secondly, 2 years ago we were against government intrusion into health care and surprise, we’re still against it.I’m not sure how you missed that. In this case the GOP ends up being our natural ally.

      As for your belief that the whole thing wasn’t corrupt – of course you don’t. You got what you wanted – what a surprise. If you inspect it too closely you might see the rot and we wouldn’t want that, would we?

  • “Obama is no Clinton”

    Clinton was no Clinton, until he was. He was roundly accused of being a socalist, tax and spend liberal who was going to run the deficits through the roof.

    This is not something we can really debate, since only time will tell, but you have staked your position, I have shared mine, and we’ll see.

    I don’t know why you argue, you know I’m never wrong. ;-)

  • “When are you going to realize that this isn’t a GOP blog?”

    Uh, when it stops looking like one.

    You may not intent to look like a GOP blog, but when 99% of the time you either come down in support of the GOP or on the right of both (defaulting GOP), then I’ll believe it is not a GOP blog.

    The fact that you consider a libertarian left an impossibility pretty much puts you squarely in the GOP corner.

    All the Libertarian (or is it still Neo-Libertarian) moniker buys you is cover when Republicans screw up, but unless it allows you to support anyone to the left of Olympia Snowe, you are a defacto Republican blog. When you start opposing Republicans in favor of Democrats, I’ll review that statement.

    But don’t worry, that’s what I like about it. You avoid the painful insanity of defending the completely stupid, so you get to skip that and mostly focusing on attacking pretty much everything, but in the end, pulling levers for Republicans.

    • 99% of the time we’re talking about fiscal matters or the usurpation of freedom/liberty by the state. If the GOP is the only entity at least making the appearance of fighting that and they’re stating the same goals as we are, then perhaps that is the reason for supporting them and not just the fact that they’re the Republicans.

      As for a “libertarian left”, you tell me Cap – where are they on this health care monstrosity, hmmm? And if you claim to be a part of that “libertarian left” and support this thing, you’ll have to excuse me while I laugh outloud and point out that there is absolutely nothing libertarian about this piece of garbage which is now law.

      And, finally, if you’re talking about actually pulling levers for GOP candidates, you’re at the wrong place. Didn’t happen, hasn’t happend, and won’t happen. Neither of the two major party candidates received my vote – although I did vote. Whether or not my vote was “thrown away” doesn’t cause me a bit of concern. However, I’m forced to side with those who are fighting for my rights and liberties. If the left ever manages to do that, I’ll tout their cause and support it. But, presently, when it comes to fiscal policy, taxes, expansion of government intrusion, control and centraliztion and the like, the only game in town with the power to oppose that is the GOP.

      If you can’t figure that out, that’s not my problem.

  • I heard a talk by a couple of experts from Heritage. Just as a point of reference, they said that most civilizations fall apart when Debt is 70% of GDP. So . . . we’re not far.

  • I am going to mix up a Black and Tan and a Half and Half.

    I know I like them both, but have never compared them side by side.

    This should get broad bi-partisan support.

    • Not from me it won’t.
      Why on earth would anyone foul a good Irish stout with an English ale is beyond me.
      If I had any parliamentarian tricks up my sleeve to force you to reconsider, I’d play ‘em.  ;)

      Cheers.

  • Adding a third massive entitlement to two massive entitlements already on the fast track to bankruptcy and saying that the third massive entitlement will “lower the deficit” is a lie worthy of Josef Goebbels. It’s the ultimate in big lies because if flies so immediately into the face of reality. It’s like telling Mrs. Jones, as she stands at the checkout counter, that the thousand dollar charge you’ve just put on her card will show up on her monthly statement as just one hundred dollars. And Mrs. Jones believes it because the guy at the register has such a sonorous voice.

    “This is what change looks like.”

    It’s what fascism looks like.

  • Sarastic Fool: stop calling this bill health care reform.   It’s “Medical Care Control”.