WSJ: The deficit is much, much worse than you think
posted at 8:47 pm on August 25, 2009 by Allahpundit
Emphasis on might and slightly.
Many of the current budget assumptions are laughably implausible. Both the White House and CBO predict that Congress will hold federal spending at the rate of inflation over the next decade. This is the same Democratic Congress that awarded a 47% increase in domestic discretionary spending in 2009 when counting stimulus funds. And the appropriations bills now speeding through Congress for 2010 serve up an 8% increase in domestic spending after inflation.
Another doozy is that Nancy Pelosi and friends are going to allow a one-third or more reduction in liberal priorities like Head Start, food stamps and child nutrition after 2011 when the stimulus expires. CBO actually has overall spending falling between 2009 and 2012, which is less likely than an asteroid hitting the Earth.
Federal revenues, which will hit a 40-year low of 14.9% of GDP this year, are expected to rise to 19.6% of GDP by 2014 and then 20.2% by 2019—which the CBO concedes is “high by historical standards.” This implies some enormous tax increases.
CBO assumes that some 28 million middle-class tax filers will get hit by the alternative minimum tax, something Democrats say they won’t let happen. CBO also assumes that all the Bush tax cuts disappear—not merely those for the rich, but those for lower and middle income families as well. So either the deficit is going to be about $1.3 trillion higher than Washington thinks, or out goes Mr. Obama’s campaign promise of not taxing those who make less than $250,000.
In other words, a $9 trillion hole over 10 years is the pie-in-the-sky best-case scenario. Fun fact: Back in March, when the White House was still scoffing at CBO’s $9 trillion estimate, White House budget director Peter Orszag actually admitted that if CBO was right then The One’s budgets would be unsustainable. And now here we are, five short months later. Our options:
“We’ll either need wrenching, wrenching spending cuts, a boom in the economy or a new funding source or some combination to get this fiscal house back in order,” Darda said.
Income tax hikes alone won’t be enough, said Darda. We may need a national sales tax.
“We’re all going to have to have a stake in this game,” Darda said. And we’re all going to have to pay a little bit more and probably get a little bit less.”
Exit question: At what point does the Democrats’ sheer arrogance in pressing ahead with new spending programs during a budget meltdown become an issue unto itself? The fact that they’ve dug us deeper into a hole is one thing; that they refuse to change course now that they know full well how deep the hole’s become is something else entirely. When does the debate over ObamaCare become a debate about the left’s fundamental seriousness in addressing a looming fiscal catastrophe?
Breaking on Hot Air