Reason TV: This budget won’t “win the future”
posted at 10:55 am on February 17, 2011 by Ed Morrissey
On Tuesday, Reason TV released its response to the budget proposal from Barack Obama this week that has been widely panned across the political spectrum as both pusillanimous and unrealistic. Nick Gillespie gives three reasons why this budget won’t “win the future,” but it’s the second that should get the most attention:
The economic projections of the new budget are, simply put, insane — and not just on economic growth. Andrew Stiles noted the big structural issue on bond rates and the White House assumptions that are not just unreasonably optimistic, they’re contradictory as well:
A quick rundown, by the numbers:
3 percent: Interest rate on 10-year Treasury notes assumed in Obama’s budget for 2011.
3.4 percent: Interest rate on 10-year notes predicted by the CBO last year.
3.65 percent: Actual interest rate on 10-year notes, as of last week.
$1.3 trillion: Amount of debt that CBO forecasts will accrue over ten years for every percentage point the assumed interest rate falls below the actual rate.
That means if the current rate stays at around 3.6 percent for the remainder of 2011, as opposed to the administration’s rosy projection of 3 percent, more than $800 billion will be added to the debt over the next decade. That alone would almost completely undo the $1.1 trillion in deficit reduction projected in the White House budget.
Rep. Mick Mulvaney (R-SC) ripped into OMB Director Jacob Lew for these assumptions, and when Lew said they represent “mainstream assumptions,” Mulvaney told Lew to talk to the CBO:
Somebody’s “whacked out,” and it doesn’t appear to be the CBO or Mulvaney.