CBO long-term budget outlook: The future’s not looking so hot

posted at 5:17 pm on June 22, 2011 by Tina Korbe

Yep, it’s as daunting as the Congressional Budget Office director said it would be. The CBO today released the latest in its series of reports on the long-term budget outlook — and the Office’s nonpartisan projections show the national debt exploding at a mind-blowing pace in either of two scenarios. MarketWatch reports:

The Congressional Budget Office said that under one scenario that adheres closely to laws now in place, total federal debt held by the public will grow from about 69% of GDP this year to 84% by 2035. That scenario assumes that the Bush-era tax cuts and other policies expire.

Under a second scenario that assumes changes to current law, the debt held by the public would reach 190% by 2035.

Importantly, the CBO found entitlements — Social Security, Medicare and Medicaid — and compounding interest payments on the debt to be the key drivers. The report also affirms the federal government’s latest entitlement program — Obamacare — will not lower health care costs. Mandatory federal spending on health care is projected to increase by 86 percent from 5.6 percent of GDP today to 10.4 percent of GDP over the next 24 years.

The American people understand spending cuts and tax cuts are the best way to grow the economy and create jobs — but they still fear changes to entitlement programs, according to a Bloomberg poll out today. The CBO report should remind voters why waiting to grapple with entitlement reform will only intensify the nation’s debt problem. Consider: Entitlement spending will increase from 10 percent of GDP in 2011 to 15 percent of GDP in 2035. As CBO budget director Doug Elmendorf has said, “Fiscal policy cannot be put on a sustainable path just by eliminating waste and inefficiency.”

The report confirms a financial crisis is likely if the administration and Congress do nothing to reverse course.

“Growing debt also would increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage its budget and the government would thereby lose its ability to borrow at affordable rates,” the report states.

Elmendorf will testify about the report at a hearing of Rep. Paul Ryan’s (R-Wis.) House Budget Committee tomorrow — but, so far, the Senate Budget Committee, under the leadership of Sen. Kent Conrad (D-ND), has not called a hearing to ask for additional details about this highly significant report. (Incidentally, Conrad’s press secretary has also not called me back to answer whether Conrad plans to call a hearing in the future.)

Ranking member Sen. Jeff Sessions (R-Ala.) said he finds that shockingly disappointing. His statement:

Today’s long-term outlook from the CBO reveals that [the] situation is even more dangerous than many realize. Our nation’s debt, driven by years of overspending, threatens us with a Greece-like calamity. CBO’s unnerving projections, released 784 days since the Democrat-led Senate has passed a budget, paint a sobering picture of what will occur if we do not act immediately to bring our spending under control. The CBO data also reaffirms that our surging debt is being spurred by excessive spending and insufficient growth—not because Washington isn’t taxing enough—and that excessive government borrowing is already slowing economic growth. …

Today’s report only further highlights the Democrats’ inexcusable refusal to pass a budget in 784 days, during which time we’ve spent more than $7 trillion. Making matters worse, Democrats haven’t scheduled a hearing to discuss this outlook—a hearing the GOP-led House Budget Committee has planned for tomorrow—another stunning decision in a time of fiscal crisis. I hope it’s a decision they will reverse.

Same here.


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Hopey Changey!

crash72 on June 22, 2011 at 5:20 PM

So hey folks, why don’t we waste a bunch of money buying votes!

/Oppressive Left

Chip on June 22, 2011 at 5:20 PM

And in other news, water is wet…

When this entire house of cards comes crashing down it will be a shame that a hearty “I told ya so” will be so beside the point.

And to think that our founders thought treason was such an appalling crime as to put it into the text of the Constitution, and that the very people that are doing this to our country are doing so with full knowledge of the consequences of their actions – and that they have no fear of ever being prosecuted for their crimes against the state.

turfmann on June 22, 2011 at 5:21 PM

What we need is another entitlement program b/c according to Nobel laureate Paul Krugman they “save money”.

aquaviva on June 22, 2011 at 5:21 PM

Confirmed: Modern Liberalism is a failed ideology.

The past 80 years of creeping Leftist economic policy (whether by R’s or D’s) has done terrible damage…especially to the futures of the poor and less fortunate.

Own it Libs. All the way back to the New Deal.

visions on June 22, 2011 at 5:23 PM

Today’s report only further highlights the Democrats’ inexcusable refusal to pass a budget in 784 days, during which time we’ve spent more than $7 trillion.

What’s the over/under on the Dems not passing a budget between now and election day next year? That would be roughly around 1100 days since the last budget if that happens.

Doughboy on June 22, 2011 at 5:26 PM

And we all know the CBO would never downplay a crisis!!
LOL – seriously, take the bad news in this report, multiply it by about five, eliminate the possibility of a peaceful outcome, then Obama’s face all over it and that is the picture of our financial outlook.

abobo on June 22, 2011 at 5:27 PM

Yet today the Senate Dems are asking for more stimulus.

http://www.reuters.com/article/2011/06/22/usa-debt-idUSN1E75L0GC20110622

cpaulus on June 22, 2011 at 5:29 PM

LOL – seriously, take the bad news in this report, multiply it by about five, eliminate the possibility of a peaceful outcome, then Obama’s face all over it and that is the picture of our financial outlook.

abobo on June 22, 2011 at 5:27 PM

Thank you President Obama.

crr6 on May 1, 2011 at 10:45 PM

Del Dolemonte on June 22, 2011 at 5:31 PM

FEAR MONGER!

Opposite Day on June 22, 2011 at 5:32 PM

Could be the cynic in me but…

Isn’t the downgrading of projections before the fact a way to simply bolster Obama if growth exceeds these projections, even just a bit?

I admit, I’m no economist though I have seen those Holiday Inn Express commercials on TV.

Isn’t the pattern to downgrade projections after the initial rosy ‘estimate’ has been played up by the administration and then, a few days/weeks later, downgrade them after no one is paying attention?

I know this may not be exactly analogous…

catmman on June 22, 2011 at 5:33 PM

The surest way to know that the Rubicon was crossed a long time ago is when you hear the government bureaucrat telling you that you’re in danger of crossing it.

When these folks tell you there’s nothing to worry about, be assured that it’s time to start worrying.

Later, when these folks tell you it’s bad, be assured that the reality is far, far worse.

And near the end, when these folks tell you that the time to act is now, be assured that the time to act was quite awhile ago.

Midas on June 22, 2011 at 5:45 PM

Yet today the Senate Dems are asking for more stimulus.

http://www.reuters.com/article/2011/06/22/usa-debt-idUSN1E75L0GC20110622

cpaulus on June 22, 2011 at 5:29 PM

The munchkin Robert Reich has been saying that as well, and has always said that little Bammie’s first stimulus was not big enough.

slickwillie2001 on June 22, 2011 at 5:47 PM

Did you hear that? That strange noise? As if millions of wallets suddenly cried out in terror and were suddenly silenced.

Bishop on June 22, 2011 at 5:48 PM

Wow!!! If crr6 isn’t here, thanking Obama for this…she MUST be in her closet paying homage to the shrine she’s created in his image, and glory. *sigh*

We’re doomed, and so are our kids. :(

capejasmine on June 22, 2011 at 5:50 PM

Yet today the Senate Dems are asking for more stimulus.

http://www.reuters.com/article/2011/06/22/usa-debt-idUSN1E75L0GC20110622

cpaulus on June 22, 2011 at 5:29 PM
The munchkin Robert Reich has been saying that as well, and has always said that little Bammie’s first stimulus was not big enough.

slickwillie2001 on June 22, 2011 at 5:47 PM

It’s like a one track mind, isn’t it? Geeze louise how stuck on stupid are these idiots? Or…..is it a possibility, that they’re helping to destroy the nation, by invoking the same stupid things that didn’t work when they tried them already?

capejasmine on June 22, 2011 at 5:52 PM

It really is time to criminalize liberalism/leftism.

At some point in the near future, Obama/Reid/Pelosi/Frank/et al should be arrested and imprisoned for their lying and treacherous destruction of the liberty and financial freedom and futures of so many citizens. It’s been a storied history of the wanton vandalism and ruination of millions of lives, not only of current but future generations – as sure as if they had done it personally and at gunpoint.

The notion that these folks might simply be able to shrug and say “whoops, my bad” is just unacceptable.

Midas on June 22, 2011 at 5:54 PM

Wait a minute, interest compounds? Crap.

Tim Zank on June 22, 2011 at 5:54 PM

Who actually writes Congressional members checks? If they don’t pass a budget, a constitutional requirement I thought, then could their checks be held?

AshleyTKing on June 22, 2011 at 5:55 PM

Bishop on June 22, 2011 at 5:48 PM

I sense an ominous disturbance in the Schwanz…
(and it’s not Thursday)

Roy Rogers on June 22, 2011 at 5:55 PM

Heard they added a caveat that their report probably underestimates the findings.

marinetbryant on June 22, 2011 at 5:58 PM

“Let this nation, under your influence, be a finer nation. Resolve that the sacrifices by which your great opportunities have been purchased will be matched by a sacrifice, on your part, that will give your children even a better chance.”

Calvin Coolidge

Are you listening, D.C.?

pjean on June 22, 2011 at 6:05 PM

unstinkingbelievable….

make room for us greece, we’ll be there soon…

cmsinaz on June 22, 2011 at 6:06 PM

Yet today the Senate Dems are asking for more stimulus.

http://www.reuters.com/article/2011/06/22/usa-debt-idUSN1E75L0GC20110622

cpaulus on June 22, 2011 at 5:29 PM

The munchkin Robert Reich has been saying that as well, and has always said that little Bammie’s first stimulus was not big enough.

slickwillie2001 on June 22, 2011 at 5:47 PM

It’s like a one track mind, isn’t it? Geeze louise how stuck on stupid are these idiots? Or…..is it a possibility, that they’re helping to destroy the nation, by invoking the same stupid things that didn’t work when they tried them already?

capejasmine on June 22, 2011 at 5:52 PM

That’s the real beauty of National Socialism, it can never fail because they can never spend enough on it or give it enough time to work.

Chip on June 22, 2011 at 6:08 PM

cpaulus on June 22, 2011 at 5:29 PM

hello, mcfly?

cmsinaz on June 22, 2011 at 6:09 PM

This actually can be traced to that clown, Woodrow Wilson. He was the first president to decide the Constitution was a “living” document to be twisted at will.

oldleprechaun on June 22, 2011 at 6:17 PM

The report also affirms the federal government’s latest entitlement program — Obamacare — will not lower health care costs.

OMG! Someone get Nancy the smelling salts!

GarandFan on June 22, 2011 at 6:34 PM

2035? Plenty of time left… borrow, spend, spend, borrow. Who cares about the future. /sarc.

Tuari on June 22, 2011 at 6:36 PM

Welcome to the Loyal Order of the Terminally Boned.

DOOM! It’s not just for Greece anymore.

Steve Eggleston on June 22, 2011 at 6:38 PM

We’re ALL Greeks now!

Actually, we should have known where Ogabe was taking the country when he pranced around in front of a bunch of foam Greek pillars and statues. Greek style Baby!

Ogabe on June 22, 2011 at 6:39 PM

Doesn’t matter to the Left. People don’t want to give up their entitlements. The more people are dependent on govt, the more Leftists will keep getting elected. All part of the plan.

Yakko77 on June 22, 2011 at 6:50 PM

Opa!

cmsinaz on June 22, 2011 at 6:51 PM

Now who let the CBO look at some real numbers?- Soros

Slowburn on June 22, 2011 at 6:51 PM

Chip on June 22, 2011 at 6:08 PM

:( Beauty just isn’t a word I’d use to describe what these maniacs are doing to this country.

capejasmine on June 22, 2011 at 6:57 PM

I’m ashamed that this is the environment my children and grandchildren will grow up in. Political correctness everywhere, can’t say the word God in school, violence and crime everyday. On top of all of this the economy is in shambles and good luck finding a job.

MJZZZ on June 22, 2011 at 7:56 PM

Bernankhe admits he’s “clueless” as to why the economy is struggling:
http://blogs.forbes.com/afontevecchia/2011/06/22/bernanke-admits-hes-clueless-on-economys-soft-patch/

itsnotaboutme on June 22, 2011 at 8:37 PM

Bernanke admits he’s “clueless” as to why the economy is struggling:
http://blogs.forbes.com/afontevecchia/2011/06/22/bernanke-admits-hes-clueless-on-economys-soft-patch/

itsnotaboutme on June 22, 2011 at 8:37 PM

That’s disturbing.

I want a law to freeze all federal government pay and pensions and require them to be paid in US dollars. That way if they destroy the dollar through hyperinflation they will destroy their pensions and savings as well as ours.

slickwillie2001 on June 22, 2011 at 9:06 PM

We are way past the point where another law is going to even approach the problem, much less solve it. I’m afraid the solution is going to have to be Constitutional and not statutory. If all we do is pass a few more laws, no matter how astute and enlightened they might be, we’ll still be doomed to continue stumbling down the path just one election away from catastrophe. We have to change the Constitution to address the gross imbalance of power in the federal system….there is just way too much power at the top of the pyramid, and it is for all practical purposes completely unlimited. That’s the real problem!!!

Lew on June 22, 2011 at 10:05 PM

Yeeha!
Democrats will use this as “proof” that Republicans want to destroy Social Security and Medicare and Medicaide
When Reid and Pelosi, and their ilk, tell you that “It’s all going to be OK!” I just can’t fathom how sane-people can protest and then walk up to the cliff…

shorebird on June 23, 2011 at 2:28 AM

So in carefully crafted political speak the CBO is telling us what we already know.

Failbamanomics destroyed the economy.

Bernanke is talking about the “recovery” hitting a “soft patch”

There was and is no recovery, it was all faked by the failed won and his crew.

We are in serious trouble.

dogsoldier on June 23, 2011 at 6:23 AM

The report also affirms the federal government’s latest entitlement program — Obamacare — will not lower health care costs. Mandatory federal spending on health care is projected to increase by 86 percent from 5.6 percent of GDP today to 10.4 percent of GDP over the next 24 years.

I’m no fan of Obamacare, and I understand the supporters’ claim would be one of annual reductions in spending, but that’s only a 2.62% annual increase. Given the demographic shift we expect over the same time period, that’s either still a pretty good outcome in terms of health care inflation or a completely unrealistic set of assumptions.

DrSteve on June 23, 2011 at 2:19 PM