We’ve been told over the last few years that our economy is in a slump but not to worry. It’s temporary. The administration is on it. It’s going to be fixed.
What, we’ve had 5 recovery summers and are heading into our 6th?
Well, the CBO, that office the administration loves to cite when it suits them, has decided that this economy, the Obama economy, isn’t an outlier and we should get used to it:
The part of the past that you deem most relevant can be critical in determining your outlook for the future. And nowhere is that clearer than in the changing economic forecasts that come out of the Congressional Budget Office.
This year’s short-term and long-term economic forecasts are substantially worse than last year’s, even though the economy performed better than expected in 2013. What changed was that the C.B.O. economists essentially decided that they would no longer treat the recent years of poor economic performance as a sort of outlier. They have seen enough of a slow economy to begin to think that we should get used to sluggishness.
They think that Americans will earn less than they previously expected, that fewer of them will want jobs and that fewer will get them. They think companies will invest less and earn less. The economy, as measured by growth in real gross domestic product, will settle into a prolonged period in which it grows at an average rate of just 2.1 percent. From 2019 through 2024, job growth will average less than 70,000 a month.
So, how does it feel? You’ve lived through the “Golden age” and are now relegated to … this. Slow to non-existent job growth. Regulation out the wazoo. Rising health care costs. Taxes eating into earnings and no end in sight.
This is the economy this administration has helped fashion with an insensitivity to the economy and a policy cluelessness that is second to none. The fact that they’re still pushing a raise in the minimum wage in the face of half a million job losses (conservative estimate) says it all.
You reap what you sow, or don’t sow, in this case. What they didn’t sow was economic policies that would get the economy moving, create jobs and keep us in that Golden age. Instead we got ideology first, regardless of the economic consequences.
And this is the result.
As CBO says, get used to it.
A poll came out the other day saying that the majority of American’s first priority is unemployment. And it should be given the incredible low we’re now suffering in labor force participation.
So what bright idea are Democrats pushing in spite of that? Hey, let’s raise the minimum wage?
Result? Well, even the CBO, the Dems favorite “go to” agency to support their ideas (when it actually agrees, of course), doesn’t see this as a particularly bright idea if they’re concerned about the people’s priority:
Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects.
Notice it says reduce “total employment” by 500,000. It also says it is only a projection and that it could actually be higher than that.
But, but … it will help the poor!
The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion, by CBO’s estimate. However, those earnings would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold, CBO estimates.
Or said another way, Democrats are willing to see a half million plus lose their jobs to serve 19% (and that assumes that all of the 19% keep their jobs).
But, but … it will give the poor more to spend!
Moreover, the increased earnings for some workers would be accompanied by reductions in real (inflation-adjusted) income for the people who became jobless because of the minimum-wage increase, for business owners, and for consumers facing higher prices.
Those are facts, folks. Democrats don’t deal in facts, they deal in emotions … and if they can pass a minimum wage bill, they’ll feel wonderful about themselves. And if they can’t, they’ll blame it all on the mean old Repubicans who want you to be able to keep your job or something radical like that.
Remember when Nancy Pelosi, Harry Reid, the Democratic Congress and Barack Obama all told us that the cost of ObamaCare would only be $900 billion? And because of that, Obama said it “saved” us money. He also said that if it had been more than that, he wouldn’t have signed it.
Well, as the critics rightly pointed out, it was always more than that. It was just hidden from view, because of the way Democrats structured the law to hide most expenditures for a few years. That way, the CBO, who was charged with scoring it, would score it below a trillion dollars because the CBO, by law, can only score a law within a 10 year window.
Democrats employed many accounting tricks when they were pushing through the national health care legislation, the most egregious of which was to delay full implementation of the law until 2014, so it would appear cheaper under the CBO’s standard ten-year budget window and, at least on paper, meet Obama’s pledge that the legislation would cost "around $900 billion over 10 years." When the final CBO score came out before passage, critics noted that the true 10 year cost would be far higher than advertised once projections accounted for full implementation.
Today, the CBO released new projections from 2013 extending through 2022, and the results are as critics expected: the ten-year cost of the law’s core provisions to expand health insurance coverage has now ballooned to $1.76 trillion. That’s because we now have estimates for Obamacare’s first nine years of full implementation, rather than the mere six when it was signed into law. Only next year will we get a true ten-year cost estimate, if the law isn’t overturned by the Supreme Court or repealed by then. Given that in 2022, the last year available, the gross cost of the coverage expansions are $265 billion, we’re likely looking at about $2 trillion over the first decade, or more than double what Obama advertised.
“More than double”. We were flat lied too. We’re now stuck with another outrageously expensive entitlement program we can’t afford barring repeal or judicial overturn.
And yet, after the most deceitful, least transparent and most abusive legislative process I’ve ever seen used, you’re going to be asked to trust this guy with another 4 years at the helm.
Speaking of the record compiled under the Obama administration, the CBO provides plenty of ammo for the GOP:
The Congressional Budget Office on Tuesday predicted the deficit will rise to $1.08 trillion in 2012.
The office also projected the jobless rate would rise to 8.9 percent by the end of 2012, and to 9.2 percent in 2013.
That’s because it has revised its previous estimate as the GDP growth numbers for last year were revised down.
Additionally, and reading between the lines, it also means that the administration and Congress has yet to even begin to get a handle on the main problem – spending.
Of course part of that stands to reason when you take into consideration the Democratic controlled Senate hasn’t passed a budget in over 1,000 days.
The Hill, ever the master of understatement, gives you a peek at what should be obvious:
A rising deficit and unemployment rate would hamper President Obama’s reelection effort, which in recent weeks has seemed to be on stronger footing.
“Hamper"?” It should put it in the crapper. Or so you would think. But then there’s the GOP primary going on, huh?
CBO Director Doug Elmendorf told reporters that Congress will have to make important choices this year regarding the supercommittee trigger and tax policy that will have huge effects on the deficit.
While unable to recommend choices, Elmendorf said that addressing the deficit sooner rather than later is easier.
The deficit was $1.4 trillion in 2009, $1.3 trillion in 2010 and $1.3 trillion in 2011. The largest deficit recorded before that was $458 billion in 2008.
Well, of course addressing the deficit sooner rather than later is a lot easier. Haven’t we been saying that for years? Decades?
Anyone think it will be addressed in this next year? Consider what the CBO recommends:
The deficit will be much higher if Congress takes several actions that many expect.
If the Bush tax rates are extended, for example, the deficit would rise.
It would rise if Congress patches the Alternative Minimum Tax, which lawmakers have routinely done to prevent higher taxes from being imposed on middle class taxpayers.
It would also rise if Congress continues to pass the “doc fix” that prevents a cut to Medicare payments to doctors, something that Congress has done on a near-annual basis.
Finally, if Congress does not follow through on cuts mandated by the failure of the supercommittee, the deficit will grow. Lawmakers are already talking about canceling scheduled cuts to the Pentagon’s budget.
So, let’s see – raise taxes, lower taxes, subsidize and cut spending. Or is that last one, cut projected spending?
The “doc fix”, unless passed, will see Doctors leave Medicare in droves. I certainly would if I were in their shoes. Any guesses how that turns out?
And while the Democrats only want the “rich” to pay higher taxes, if the current tax rates (also known as the “Bush tax cut”) are allowed to revert to their prior percentages, taxes will increase 30% on everyone by 2014. Catch 22?
The amount of money the federal government takes out of the U.S. economy in taxes will increase by more than 30 percent between 2012 and 2014, according to the Budget and Economic Outlook published today by the CBO.
At the same time, according to CBO, the economy will remain sluggish, partly because of higher taxes.
You don’t say? Stupid if you do, damned if you don’t? Nice position we’ve gotten ourselves in, no?
And finally, sequestration will “cut” 10% across the board, to include defense which has already taken that sort of a cut. Dangerous.
However, for the rest of the government, I expect the usual accounting tricks with no real cuts in spending if sequestration is enacted.
As for taxes increasing, the increase is fairly dramatic at a time the economy can’t absorb such increases:
The anticipated percentage increase in federal tax revenue is not only large when calculated in dollar terms but also when calculated as a share of GDP. The jump from 15.4 percent of GDP in fiscal 2011 to 20.0 percent of GDP in fiscal 2014 equals an increase of 29.8 percent. The jump from 16.3 percent in fiscal 2012 to 20.0 percent in fiscal 2014 equals an increase over two years of 22.7 percent.
Federal tax revenues have averaged “about 18 percent of GDP for the past 40 years,” according to CBO. So, in the next two years federal tax revenues will rise from a level that is below the modern historical average to a level that is above it.
Again I’m reduced to saying “what a freakin’ mess”. When I say over and over again, “we’ve been ill served by our political class for decades”, it is this to which I point.
Yes, all of this and the never mentioned additional 200 plus trillion in unfunded future mandated liabilities that have been amassed.
Debt limit talks — DC Math and political theater mask the lack of seriousness concerning out-of-control spending
Speaker of the House Boehner’s plan for deficit and debt reduction was shown to be an exercise in “DC Math”. The CBO scored the proposal and determined that the 1.2 trillion “savings” over 10 years actually cut only $1 billion in actual spending next year.
The first installment of $900 billion is contingent on enacting 10 year caps on annual appropriations which the leadership had hoped would save well over $1 trillion. But CBO late Tuesday came back with a report showing the legislation would reduce deficits by $850 billion when measured against the agency’s most current projections for spending.
Yeah, I think we want significantly deeper cuts in spending than that. And of course, keep in mind most Democrats were even opposed to that.
But at least Boehner actually had a plan CBO could score. From Jim Geraghty’s “Morning Jolt” we learn of this conversation in the White House press room (Weekly Standard):
[Chuck] Todd asked Carney about the White House’s reluctance to release its plan to deal with the national debt and raising the debt ceiling. Carney acknowledged the White House was playing games. "We’re showing a lot of leg," he said. When Todd pressed for details — "Why not just release it?" — Carney seemed surprised. "You need it written down?"
What a difference two years makes. In the spring of 2009, with Republicans in the minority in the House of Representatives, the White House and its Democratic allies were demanding specifics. The House GOP had to produce an alternative budget, the White House demanded, in order to show that they were serious about governing.
Geraghty also points to a wonderful rant by Guy Benson over at Townhall concerning the demand for an actual plan:
Yes, actually, we do need "something printed." Since his unmitigated failure of a budget was unanimously defeated in the Senate, this president has refused to offer a specific plan of his own on virtually anything at all. Instead, he talks about "visions" and "contours" and "frameworks" — and tries to blame his opponents when his poor leadership is exposed. Over the last five days, the president has (a)undermined a bargain with John Boehner by introducing an unacceptable eleventh-hour condition, (b) rejected "out of hand" a bipartisan compromise that he found to be politically unpalatable, and (c) delivered a speech that painted his opponents as the intractable extremists. In light of this behavior, it’s entirely reasonable for Americans to wonder what, precisely, Barack Obama’s proposed solution might be. Today, the White House dismissively waived off that question as a GOP talking point and condescendingly inquired if the journalist who dared to ask it was capable of taking notes.
I’ll close with an unsolicited word of advice, and a friendly reminder from the CBO director. The advice: When you’re already plumbing new depths of unpopularity, dialing up your arrogance isn’t a winning strategy. Even David Brooks finds it unseemly.
By the way, Harry Reid’s plan is purported to show about $2 trillion plus in savings by assuming the wars we’re involved in will cost hundreds of billions a year for 10 years, knowing full well that those wars are wrapping up and wrapping up soon (well except for Libya which seems to have shifted from “weeks not months” to “months not years” at this point).
In other words the usual nonsense from Washington DC. Math tricks which say to anyone who is on to them, “these guys aren’t serious”.
Something to keep in mind when President Fiscal Responsibility lectures us all tonight on how important fiscal discipline is and how it is a priority of his to reduce the deficit and debt.
The US budget deficit shot up 15.7 percent in the first six months of fiscal 2011, the Treasury Department said Wednesday as political knives were being sharpened for a new budget battle.
The Treasury reported a deficit of $829 billion for the October-March period, compared with $717 billion a year earlier, as revenue rose a sluggish 6.9 percent as the economic recovery slowly gained pace.
2011 spending isn’t something he “inherited”. It’s his. And the budgets he previously laid out for the next 10 years are not deficit or debt reducing budgets by any stretch.
As we know, last year’s deficit was in the $1.4 trillion range, much closer to the CBO estimate than the White House fantasy. Same with ‘09. Sod disregard the White House spin and go with the CBO’s 2 year track record of being pretty much on the money – no pun intended.
Also note that the deficit is supposed to be under a trillion dollars this year and supposedly hits its lowest point when? Why election year of course. Then it again steadily builds as ObamaCare relentlessly kicks in, approaching a trillion dollars again in ‘19.
This is the White House projected budgets, folks. This is what they see us spending, or plan on anyway. But tonight we’re going to be treated to a “major speech” by the architect of this mess telling us how concerned he is with the deficit and how important it is to him to address it.
Print this chart and keep it handy when he presents his spin.
Oh, by the way, remember the campaign promise to cut the deficit in half by the end of his first term? You didn’t know at the time that $800 billion in the hole would do the trick did you? You didn’t know he planned on a deficit of $1.8 trillion did you?
With the debt and deficit problems our government has managed to accumulate, they’re always looking for new and more inventive ways to get in your wallet. And it seems, technology may be the most productive way to do so.
You see, we’ve been paying taxes at the gas pump that pay for “transportation improvement projects”. But there is a problem. Government mandates that have raised gas mileage standards, hybrids and the possibility of masses of electric cars has suddenly given the tax takers the willies. That may mean much less revenue originating at the gas pump.
What’s a looter to do? Well turn to a different way of collecting that tax – tax total vehicle miles traveled (VMT). Up to now that’s been problematic says the CBO. But fear not, there’s a solution:
"In the past, the efficiency costs of implementing a system of VMT charges — particularly the costs of users’ time for slowing and queuing at tollbooths — would clearly have outweighed the potential benefits from more efficient use of highway capacity," CBO wrote. "Now, electronic metering and billing are making per-mile charges a practical option."
And what government would do is mandate metering equipment be installed on all new cars and trucks:
"Having the devices installed as original equipment under a mandate to vehicle manufacturers would be relatively inexpensive but could lead to a long transition; requiring vehicles to be retrofitted with the devices could be faster but much more costly, and the equipment could be more susceptible to tampering than factory-installed equipment might be," CBO said.
So how would it be collected?
The report added that VMT taxes could be tracked and even collected at filling stations. "If VMT taxes were collected at the pump, each time fuel was purchased, information would be sent from a device in the vehicle to a device at the filling station," it said.
CBO also suggested different VMT tax rates might be assessed to different vehicles because heavier vehicles do more road damage, and rates might change depending on whether miles are driven at peak use times or during less congested hours.
Of course, the obvious solution is to just collect at the pump for others at an ‘average’ rate.
What about electric cars?
Yeah, haven’t figured that one out yet, have they?
CBO did acknowledge that privacy concerns may be a hurdle to implementing a VMT tax because electronic tracking of miles driven might provide too much personal information to the government. However, CBO noted that some have proposed restricting the information that would be transmitted to the government.
Well I feel better already.
Technology is a wonderful thing. It has given us a way of life and benefits that previous generations most likely couldn’t even imagine. But there’s a downside to it too. Especially when government gets its hands on it and uses it as a tool to intrude into your privacy. Another mandate designed to help government better keep track of your travels and ensure you pay your “fair share”? Yeah, no echoes of Big Brother in that at all, huh?
If you thought President Obama was serious about his rhetorical appeals to fiscal responsibility, one only has to look at the latest CBO report to know better. There is nothing in the report to support any such contention by the administration. To the contrary it points to a level of fiscal irresponsibility that is unprecedented in the history of this republic. Obama’s budget would, if executed, double the public debt by 2021 to $20.8 trillion or 87% of the GDP. That is if our economic and financial systems, not to mention the dollar, last that long:
In 2012, the deficit under the President’s budget would decline to $1.2 trillion, or 7.4 percent of GDP, CBO estimates. That shortfall is $83 billion greater than the deficit that CBO projects for 2012 in its current baseline. Deficits in succeeding years under the President’s proposals would be smaller than the deficit in 2012, although they would still add significantly to federal debt. The deficit would shrink to 4.1 percent of GDP by 2015 but widen in later years, reaching 4.9 percent of GDP in 2021. In all, deficits would total $9.5 trillion between 2012 and 2021 under the President’s budget (or 4.8 percent of total GDP projected for that period)—$2.7 trillion more than the cumulative deficit in CBO’s baseline. Federal debt held by the public would double under the President’s budget, growing from $10.4 trillion (69 percent of GDP) at the end of 2011 to $20.8 trillion (87 percent of GDP) at the end of 2021.
Given the outright deceit we’re regularly treated too by Democrats concerning their seriousness in addressing the problems we face, or their outright disinterest in actually doing so (Harry Reid’s recent “see me in 20 years about Social Security” or his whining about defunding “cowboy poets”), it shouldn’t really surprise anyone that we’re in the shape we’re in or that this administration is actually offering these budgets on the one hand while claiming to understand that we can’t continue spending as we are on the other.
We even have Nancy Pelosi claiming Democrats have always been for fiscal responsibility.
It boggles the mind to even consider these numbers and yet we have an administration offering them as the way to go for the future and doing so with a straight face.
Note the chart included here. The “baseline projection” is what we’d spend under current law. CBO claims one of the problems is a decrease in revenues under the President’s proposed policies with, you guessed it, an increase in outlays. And we’d also see – and this isn’t unexpected at all, given the amount of money we continue to borrow – an increase in the percentage of outlays required to service the debt:
In particular, net interest payments would nearly quadruple in nominal dollars (without an adjustment for inflation) over the 2012–2021 period and would increase from 1.7 percent of GDP to 3.9 percent. Total outlays under the President’s budget would equal 23.6 percent of GDP in 2012, decline slightly as a share of GDP over the following two years, and then rise for the rest of the 10-year projection period. They would equal 24.2 percent of GDP in 2021—about 0.3 percentage points above CBO’s baseline projection for that year and well above the 40-year average for total outlays, 20.8 percent.
So if the President’s budgets were enacted, we’d see government outlays – that’s spending for the rest of us – hit almost a quarter of the GDP and the debt in total about 87% of GDP in 10 years.
Meanwhile Democrats continue to fight against almost every cut for the most inane reasons while we see the debt numbers continue to climb. Republicans are at least are making an attempt at cutting spending, no matter how weak, but Democrats have given up all pretense. And all credibility. The President’s budgets are the final nail in the Dem’s faux “fiscal responsibility” coffin.
I’m increasingly leery of the worth of the information put out by the CBO simply because in many cases it seems to fit the definition of GIGO. This would be one of those instances. CBO now claims that the $821 billion “stimulus” money saved or create “between 1.4 million and 3.5 million” jobs.
Really? Can’t narrow it down any closer than that? Well no, because:
This estimate seeks to state the net impact the stimulus had on the number of people employed in the United States as a result of the stimulus, taking into account not only the new jobs believed to be created and the existing jobs believed to be killed by the stimulus, but also the existing jobs that were saved that otherwise would have been lost.
It is all about estimates based on some sort of criteria that isn’t clear to anyone apparently. And it certainly isn’t centered on hard data – not with a range like that.
Here’s how I look at it. The administration said that if we didn’t pass the stimulus, the unemployment rate would hit 8%. If we did, it promised that the unemployment rate would stay below 8%. The stimulus was passed, the money supposedly spent and the unemployment rate went to 10%.
That, in my way of thinking, is stimulus FAIL.
Now they want to argue about how it could have been worse? That it was prudent to spend at least $228,055 per job they believe (because they’re obviously not sure) they may have created or saved?
Yeah, I’m sticking with “stimulus FAIL” and a total waste of borrowed money.
Or so sayeth the CBO. Good thing they waited until today to announce it. Otherwise we might have heard snickering and outright laughter during the SOTU when our deficit-hawk President talked about how serious he was about reducing the deficit and the debt.
The budget deficit is now estimated to have widened this year to $1.5 trillion, the CBO said. That compares to a budget deficit of $1.3 trillion for the fiscal year that ended Sept. 30.
The increase in the deficit would bring it to 9.8 percent of gross domestic product, the CBO said, following deficits of 10 percent and 8.9 percent during the previous two years.
Do you remember how he promised to half the debt by the end of his first term in office? Yeah? Well that means he could run a deficit of $750 billion and keep his word. Funny how that works out, huh?
The CBO’s projections assume that current laws remain unchanged. If the nation continues on its current path, the CBO said, the total national debt will rise from 40 percent of GDP in 2008 to 70 percent by the end of 2011, reaching 77 percent of GDP by 2021.
But hey, this is all the other guy’s fault, remember? Oh, and one more point, those of you on the left having fun with Rep. Paul Ryan’s factual response? Make sure you go find someone who can explain the ramifications of this to you, ‘kay? And have them point out who it is that the CBO agrees with in principle as well:
“To prevent debt from becoming unsupportable, the Congress will have to substantially restrain the growth of spending, raise revenues significantly above their historical share of GDP, or pursue some combination of the those two approaches,” CBO Director Douglas Elmendorf wrote in a blog post announcing the report.
While you’re at it, have them explain the appetite for tax increases. Wait, I’ll save you the question – there is none. See December’s extension of the current income tax rates. Now, given that – try to focus. What does that leave? Yes, they’re left with “substantially restrain[ing] the growth of spending”. As in “no more new spending” and “cut back existing spending”. Precisely what Ryan has been saying, isn’t it?
So when Rep. Ryan makes the point that:
Under the terms of a House resolution passed Tuesday, Ryan is to set ceilings at 2008 levels or less.
He has a good reason, one backed by the facts of the situation and not some meandering mewling from Paul Krugman. This is the medicine for the addiction. America has said and is saying again that the voters are not willing to give you a single nickel more until government proves it can significantly cut it’s spending habit. No cuts, no increased taxes. In fact, if the cuts are indeed significant enough, the perhaps no new taxes are needed at all.
Yeah, I know, living within your means like all the rest of us have to do – what a concept.