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发帖数: 29846 | 1 By: Daniel Horowitz (Diary) | February 5th, 2013 at 04:24 PM |
We’ve all been waiting to see the updated CBO Budget and Economic Outlook
for 2013 and the next ten years. Most of the news articles are focusing
their headlines on the deficit and debt numbers projected in the CBO report.
But remember that the reason why CBO deficit projections always understate
the reality is because they overstate the amount of revenue they expect to
come into the Treasury.
CBO projects the gross federal debt to rise to $26.1 trillion by 2023, just
under $10 trillion more than it is today. However, this fails to tell the
full story. CBO is projecting revenues to climb to 19% of GDP, even as they
predict lethargic economic growth and high unemployment for the foreseeable
future. This is all the result of their ridiculous practice of statically
scoring every dollar of a tax increase as a dollar more earned by the
Treasury. To that end, they are projecting more revenue as a result of the
Obama tax hikes.
This is why it’s important to focus on the spending figures in the report.
The projected cost of the federal government during the 10-year budget
period from 2014-2023 is $47.2 trillion. Spending will rise every year for
every program (except for defense during the first few years), topping out
at $5.94 trillion in annual spending in 2023. That’s a rate of growth of
about 6.7% per year, trouncing the growth of the private sector.
Mandatory spending will comprise roughly $29 trillion of all outlays for the
next 10 years, while discretionary spending will top out at $12.85 trillion
. The big three entitlement programs – Social Security, Medicare, and
Medicaid – will cost $11.15 trillion, $8.07 trillion, and $4.36 trillion
respectively. Spending on other welfare programs (not including Medicaid)
will check in at around $3.3 trillion.
Keep in mind that none of this includes realistic projections of the cost of
Obamacare. CBO admits that it lacks the capacity to estimate the true cost
because there are so many unknown variables at this point. What they are
able to project though is that 7 million workers will lose their employer-
provided coverage as a result of Obamacare.
Also, CBO has historically low-balled the projected cost of welfare programs
, especially on light of the ever expanding loopholes that encourage broader
participation. Here’s what CBO says about their projections of outlays on
entitlements s for the later years of the budget frame:
“projections for the period covered in this report do not fully reflect
long-term budgetary pressures, although upward pressure on the federal debt
is evident in the later years of that period. Under current law, the aging
of the population, the rising costs of health care, and the scheduled
expansion in federal subsidies for health insurance will substantially boost
federal spending on Social Security and the government’s major health care
programs, relative to GDP, for the next 10 years and for decades thereafter
. Unless the laws governing those programs are changed—or the increased
spending is accompanied by corresponding reductions in other pending,
sufficiently higher tax revenues, or a combination of the two—debt will
rise sharply relative to GDP after 2023.”
Obviously, CBO also assumes that the 10-year defense sequester remains in
place and that there are no new wars over the next 10 years. In addition,
they are assuming the treasury rates will remain at record lows for a good
part of the budget frame, enabling us to borrow more money with lower
interest payments. If rates return to their historical averages at an
earlier date, we could easily add several hundred billion more in interest
payments on the debt per year.
When examining a report like this, the key question conservatives must ask
is if government spending will continue to grow faster than the private
economy. The answer is a resounding yes. |
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