Thursday, June 7, 2012

CBO report: U.S. debt will be 2x GDP by 2037

Yet another study pointing to imminent fiscal calamity, while Obama & friends busy themselves trying to convince everyone that the Obama administration hasn’t actually increased spending all that much.

The new CBO report warns that increased entitlement spending driven by the retirement of the baby boomers and insufficient revenue is making the long-term outlook for the national debt increasingly dire.

Under CBO’s most likely scenario, in which lawmakers extend current tax rates and fail to curb entitlement spending, debt held by the public would reach 109 percent of the economy by 2026, and it would be almost 200 percent of GDP by 2037.

Many economists have warned that if debt held by the public approaches 100 percent of GDP, it can bring on the kind of fiscal crisis being felt in European countries today, in which governments must suddenly slash spending and lay off workers in the face of rising interest rates caused by spooked investors.

CBO’s latest prediction is roughly similar to its 2011 report, despite the $2.1 trillion in budget cuts enacted in last August’s debt-ceiling deal between the White House and Congress.

I take pretty much all government ‘estimates’ with a grain of salt — and by that, I mean that I’d usually wager the real situation is worse than the government projects it to be. The CBO report hints that current policies, especially including, ahem, the Bush tax cuts, are what’s bankrupting us, and that getting rid of said tax cuts would be a big help in bringing down the deficit — a point Democrats will assuredly use in arguing for their “balanced approach.”

But the CBO’s more dire scenario also assumes higher “outlays,” which is by far our biggest problem; the effects of the tax cuts are only a small piece of the puzzle here. The best, most effective, long-term way to boost revenue is to foster robust economic growth. Higher taxes in no way ensure correspondingly higher revenue. Maybe we should try not ignoring necessary reforms to our current entitlement programs, not sticking with policies that have our growth rate gasping for air, and then not turning around and making it rain taxpayer dollars with brand new entitlements like ObamaCare.

Here’s what House Budget Committee Chairman and all-around fiscal guru Paul Ryan had to say on the subject this morning:

“On the heels of last week’s dismal jobs report, today’s CBO report on the deteriorating fiscal situation underscores the obvious: The President’s policies are not working. The sobering reality of our economic challenges require leadership and action. The President and his party’s leaders have failed on both counts. The President’s own Treasury Secretary recently told the House Budget Committee: ‘We’re not coming before you today to say we have a definitive solution to the long-term problem. What we do know is we don’t like yours.’ The Democrat-controlled Senate has failed to pass a budget in 1,132 days – refusing to even propose a budget the past two years.

“Americans deserve better than the European-style austerity offered by the President’s broken promises and bankrupt policies. Repeating Europe’s mistakes, the President’s policies call for job-crushing tax increases and harsh disruptions for beneficiaries of government programs as the debt spirals out of control. House Republicans refuse to accept this diminished future. The House of Representatives passed a budget – The Path to Prosperity – that responsibly averts the looming debt crisis detailed in today’s CBO report. The House continues to advance solutions that foster a better environment for economic growth and job creation. CBO’s report is the latest is a series of warnings for policymakers to advance principled solutions that responsibly confront our generation’s most pressing challenges.”

The United States has the largest nominal GDP in the world by a long shot, and the thought of a having a debt twice that big is just a little daunting. After all, countries, just like banks, can qualify for “too big too fail” status.


Ducky's here said...

You're assuming that we continue with an austerity policy that blunts growth and permit the disgrace of a for profit health care system to grow along with the current education racket.

There is no reason we can't improve quality of life and increase savings. No reason at all. First we have to educate the right wing loons.

Lisa said...

'There is no reason we can't improve quality of life and increase savings. No reason at all. First we have to educate the right wing loons.'

Look at Ducky. Meanwhile we have the most under qualified president running the country and a republican congress trying to make some real policies to fix the mess and he says "First we have to educate the right wing loons"

Such an educated answer.

How’s that Hopey-Changey Thing Working Out for Ya? said...

All I can say is that I won't be happy until the Kenyan and the Moocher move back to the trailer that they came from.

Z said...

DUcky, I love your silly assumptions. I guess we're all supposed to say...
"Hey, GEE, I never THOUGHT of improving quality of life and increasing savings"! :-)

Sad that you can't really address the posts, you just have to insult in any way you possibly can.
By the way, your first sentence doesn't even make sense. man.

Joe, Ryan is excellent but the Left's already calling him such names that many Americans don't even ask for the truth....this is Alinsky at its best, as you know. 'Kill the messenger, maybe the folks won't hear the message'..

scary, really.

Lisa, excellent point.

Xavier Onassis said...

What a crock of nonsense!

There isn't an economist in the CBO or anywhere else that can tell you with any certainty what state the economy will be in come the election just a few months from now.

And we're supposed to believe that they can accurately predict what the economy will be doing a quarter of a century from now??

Gimme a break!

Take a look back 25 years to 1987. Most of the things driving our economy today didn't even exist 25 years ago.

This is just a steaming pile of crap meant to frighten the simpletons. Apparently it worked.

Ducky's here said...

z, when I say increase the quality of life I mean everyone's not just The Ladies Who Lunch

Ryan is a low functioning Randoid loon.

Joe said...

Ducky: "Ryan is a low functioning Randoid loon."

Keen retort. Totally in keeping with your level of intelligence.

And very indicative of the general level of brilliance of liberals.

You must make XO proud.

Lisa said...

'This is just a steaming pile of crap meant to frighten the simpletons. Apparently it worked'

Speaking of a steaming pile of crap meat XO- we can't all have brains from heaven like the President does with his Economics degree..
God knows we were all so desperate and in need of the "cool" guy and all the Hope and Change he brought us. The only thing he brought us was more desperation.

Apparently if you're a cool black dude that qualifies you to be president.

Xavier Onassis said...

Lisa - "...we can't all have brains from heaven..."

Apparently not.

Jarhead said...

What a pile of crap is right ...Xavier Onassis
Your Crap!

Xavier Onassis said...

Jarhead - Did you perhaps mean "you're" crap instead of "your" crap?

So hard to tell with you Marines.

They don't exactly select you for your intellectual and grammatical prowess, do they?

Lisa said...

XO "Your Crap" fits the context of Jarhead's comment.
I love the way liberals think they are smarter than conservatives,yet support the the most uneducated amongst us.
Know what I'm sayin'?