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

posted at 4:01 pm on June 5, 2012 by Erika Johnsen

Le sigh. 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, or something. Instead of — oh, I don’t know — maybe actually doing something about it.

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. It’s okay though, right? I’m sure that countries, just like banks, can qualify for “too big too fail” status. We wouldn’t let that happen. We’ll just get a bailout from… uh, from… er… uh oh.


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My children are just entering college – God help their futures.

A nation vacant of leadership.

jake-the-goose on June 5, 2012 at 4:03 PM

2037? Are we even sure we will make it to 2037?

upinak on June 5, 2012 at 4:03 PM

I do hope that when Obama is gone….we on the right keep having posts like this….

Because at this point I don’t think it matters who the president is…the spending is already and in place and established.

So there is gonna have to be real reform in washington for that to stop…and I don’t see that happening with Mitt.

MityMaxx on June 5, 2012 at 4:07 PM

Are we even sure we will make it to 2037?

I will be here in 25 years. Country boys survive. Not sure about the nation tho …

MidWestFarmer on June 5, 2012 at 4:08 PM

Bull. We’ve gone from 100% to 104% in a couple of months.

levi on June 5, 2012 at 4:09 PM

2037? Baloney. We’re going to be very lucky if we even make it to 2016.

Obama is totally, utterly out of touch with reality.

Doomberg on June 5, 2012 at 4:10 PM

and by that, I mean that I’d usually wager the real situation is worse than the government projects it to be

i like the new chick

t8stlikchkn on June 5, 2012 at 4:11 PM

The Democrat-controlled Senate has failed to pass a budget in 1,132 days – refusing to even propose a budget the past two years.

Unbelievably sad that Dem voters are OK with this.

visions on June 5, 2012 at 4:14 PM

…BOOM!…here come the trolls!!!!
…Thank you progressives and ‘moderates’!

KOOLAID2 on June 5, 2012 at 4:14 PM

These austerity measures that are being imposed by the far right tea party republicans are killing people. If only if they make the debt 4 time GDP in 10 years over the tiny tiny amount of 2x in 25 year there might be a chance to save people from dying in the street. /Krugman and most on the left.

tjexcite on June 5, 2012 at 4:15 PM

Obamanomics: First the nation, then the world.

Rovin on June 5, 2012 at 4:15 PM

The Democrat-controlled Senate has failed to pass a budget in 1,132 days – refusing to even propose a budget the past two years

…there otta be a law!…oh wait! (and no law-maker is in jail?)

KOOLAID2 on June 5, 2012 at 4:16 PM

Why is it all those charts always show baselines declining just after the present time, but always rising in the past?

Because, where I’m from, we call that bull***t.

Pablo Snooze on June 5, 2012 at 4:18 PM

This should put the vapor lock on any Democrat’s use of CBO data which seems to benefit them. The response has got to be “Did you see the projection for 2037? And that’s optimistic!” This doesn’t benefit anybody and the party and individuals that obstruct Republican solutions to the problems, structural and ephemeral, need to be identified and hounded for a set of solutions, reasonable solutions, that they have in mind.
.
Japan’s debt is at 230% of current GDP, right? Look at their economy… dead! Ø growth in Japan. We also have an aging population so there is going to have to be wonky set of solutions that people try to understand. The Union accusations of “hate the working man” are not going to work.
.
I had an unsettling thought and it involves war but I’ll hold back on that until another time.

ExpressoBold on June 5, 2012 at 4:19 PM

We’ll just have to find a sugar daddy.

Akzed on June 5, 2012 at 4:20 PM

USA! USA!

Chuck Schick on June 5, 2012 at 4:25 PM

o/t, but interesting…

George Soros: Godfather of the Left

http://predicthistunpredictpast.blogspot.com/2012/06/george-soros-godfather-of-left.html

M2RB: Black Sabbath live in Paris

Resist We Much on June 5, 2012 at 4:30 PM

See if you can find that “Mission Accomplished” banner, sweetie.
 
- President Barack H. Obama

rogerb on June 5, 2012 at 4:31 PM

Defeat Democrats. And, defeat Republicans who refuse to get the message. Yes, Utah, we’re looking at you.

MTF on June 5, 2012 at 4:33 PM

HAHA. Clinton just said on CNBC to extend ALL of the Bush tax cuts as “we’re already in recession”.

Holy crap, Obama must be retasking a drone over Billy’s house.

Chuck Schick on June 5, 2012 at 4:38 PM

Please excuse the OT — has anyone here been able to visit the American Spectator’s web site today? I’ve tried several times, but can’t get it to open. http://www.spectator.org Thanks.

KyMouse on June 5, 2012 at 4:41 PM

i like the new chick

t8stlikchkn on June 5, 2012 at 4:11 PM

…yessssssssssss…I’m starting to like her… for her… mind!
(:->)

KOOLAID2 on June 5, 2012 at 4:42 PM

Clinton seems to have decided enough is enough: socialism has never worked, isn’t working and won’t save the country. He doesn’t seem to care a whit about the tradition of past Presidents shutting the hell up.

Amateur hour is just about over, I guess.

MTF on June 5, 2012 at 4:42 PM

Please excuse the OT — has anyone here been able to visit the American Spectator’s web site today? I’ve tried several times, but can’t get it to open. http://www.spectator.org Thanks.

KyMouse on June 5, 2012 at 4:41 PM

Loaded right up. Content blocker at work perhaps?

Chuck Schick on June 5, 2012 at 4:49 PM

Not to worry. The Galactic Empire will bail us out, since they will recognize we are too big to fail, and that we must continue on the path to utopia. Plus, we will have demonstrated by that time our keen survival instincts by spending twice what we make! Guess that would make us too stupid to fail!

djtnt on June 5, 2012 at 4:51 PM

I’ll never see it… the death panels will get me first…

PA Guy on June 5, 2012 at 4:52 PM

Holy crap, Obama must be retasking a drone over Billy’s house.

Chuck Schick on June 5, 2012 at 4:38 PM

.
That had me laughing…. I mean, in an ironic, what a joke, he’s probably a little miffed, sort of way…. not a supportive, suggestive, enabling sort of way… HA HA….. hahahahahahahaha…. I fewl wike Elmewr Fudd

ExpressoBold on June 5, 2012 at 4:54 PM

Let’s all stand back, take a deep breath, and remember that this totally preventable horrific future is brought to us by good intentions of good people to do good things.

Results just don’t matter for these good people, only that they feel good about their intentions.

jukin3 on June 5, 2012 at 4:55 PM

…has Joe Biden been reached for his comments or insights?

KOOLAID2 on June 5, 2012 at 5:00 PM

200 year democracy cycle:
Bondage -> Spiritual Faith -> Courage -> Liberty -> Abundance ->
Complacency -> Apathy -> Dependence -> Bondage

Calif/New York and most big Democrat controlled cities are at the Dependence stage. Only “fly over” country has kept the US back at the Apathy stage.

Murder rate per 100,000 residents in counties won by: Obama: 13.2 McCain: 2.1

kirkill on June 5, 2012 at 5:05 PM

LOL, the Dems are getting ready to double-down on stupid and propose Son of Stimulus, the sequel. They haven’t a clue but they are aces at wasting taxpayer money and spending like there’s no tomorrow. They’re too addicted to creating dependencies by buying their votes with cradle-to-grave ‘entitlements’.

Bob in VA on June 5, 2012 at 5:11 PM

I think the chart is broken.

Looking at “now” and seeing over at the left, we’re at around 65-70% for 2012.

OH, they’re doing the “debt held by the public”. The “debt held by Social Security which is going to be cashing in every year from now to forever” doesn’t count as debt.

I guess because we might decide not to pay it or something… anyone see that happening?

gekkobear on June 5, 2012 at 5:18 PM

Says the Liar in Chief

Schadenfreude on June 5, 2012 at 5:21 PM

I’d usually wager the real situation is worse than the government projects it to be.

Ah, the optimism of youth.

lynncgb on June 5, 2012 at 5:23 PM

…despite the $2.1 trillion in budget cuts…

And by 2.1 trillion in cuts, they mean 25 billion reduction of the amount of increase for 2012 (which has already been violated this year) and future years to be negotiated in the future. I know 25 billion sounds like a lot, but sadly, it is nothing.

Fenris on June 5, 2012 at 5:35 PM

EXIT POLLS SHOW WALKER HOLDING SEAT

By 5

Resist We Much on June 5, 2012 at 5:52 PM

The Day After Tomorrow

I know how we were about to have a climate change planetary disaster in a matter of hours every day since President Bush declined to sign the Kyoto Treaty.

Good thing the major studios let us know how horrible everything was going to be.

Well, despite the prohibition against planetary disaster films while a Democrat inhabits the White House, maybe we need a film about Greece or a financially broken nation.
You think it is funny? Have you seen Hank Fonda in Grapes of Wraith?

Well, Greece is struggling to keep electricity going. To fill prescriptions and heaven help you if you need auto parts or meds from abroad. Well, ok liberals who are always calling me a liar –check this out:

http://www.businessinsider.com/2008-was-a-practice-run-compared-to-what-is-coming-next-2012-6

IlikedAUH2O on June 5, 2012 at 6:21 PM

Obama is totally, utterly out of touch with reality.

Doomberg on June 5, 2012 at 4:10 PM

And there is where you are wrong. He is doing EXACTLY what he said he would do and EXACTLY how he said he wold do it. not a bit of what is going on is accidental; it was the plan Obama/Ayers/etc since before he ran for the Senate. Obama may be a lot of things but stupid is not one of them.

MikeA on June 5, 2012 at 6:22 PM

Le sigh

is about right.

Cleombrotus on June 5, 2012 at 6:40 PM

Murder rate per 100,000 residents in counties won by: Obama: 13.2 McCain: 2.1

kirkill on June 5, 2012 at 5:05 PM

That is frightening.

Steveangell on June 5, 2012 at 6:48 PM

Obama may be a lot of things but stupid is not one of them.

MikeA on June 5, 2012 at 6:22 PM

Have to totally disagree with you on that one.

The group behind Obama is not stupid. But I think Valory Jarret is running things in reality as all Obama does is Campaign and decide who to murder next.

When he is off teleprompter he is a stammering idiot.

Steveangell on June 5, 2012 at 6:51 PM

And there is where you are wrong. He is doing EXACTLY what he said he would do and EXACTLY how he said he wold do it. not a bit of what is going on is accidental; it was the plan Obama/Ayers/etc since before he ran for the Senate. Obama may be a lot of things but stupid is not one of them.

MikeA on June 5, 2012 at 6:22 PM

Little Bammie is dumb as a sack of dirt. He is a Marxist through and through, as well. The two just naturally go together.

slickwillie2001 on June 5, 2012 at 7:12 PM

Little Bammie is dumb as a sack of dirt. He is a Marxist through and through, as well. The two just naturally go together.

slickwillie2001 on June 5, 2012 at 7:12 PM

But so is Romney a Marxist through and through.

So it does not surprise me at all Clinton is moving in Romneys direction Clinton is smart enough to know that you have to be able to move legislation. Romney as a Republican plant can do that as Republicans are so stupid they will select him as their nominee. Romney made no attempt at a second term in Mass. His first term as President will be his only as well. So he will do whatever he wants just like Obama. Unhindered by setting up for a second term.

Steveangell on June 5, 2012 at 7:17 PM

But so is Romney a Marxist through and through.

Steveangell on June 5, 2012 at 7:17 PM

What?

CPL 310 on June 5, 2012 at 7:55 PM

But so is Romney a Marxist through and through.

Steveangell on June 5, 2012 at 7:17 PM

What?

Romneys father George Gov of Michigan made friends with Saul Alinsky because of all the good work he was doing organizing blacks to protest for rights. Eventually George went to North Vietnam and praised North Vietnam up one side and down another he became known as brainwashed George and in his run against Goldwater only took his own State. Mitt Romney was his spokesman during this entire period.

People hide their Marxism these days but Romney has always had high praise for his father. Romney always sought out the furthest left Politicians he could find and ran twice because the Democrat was not enough left Teddy Kennedy being one of them.

Steveangell on June 5, 2012 at 9:58 PM

Steveangell on June 5, 2012 at 9:58 PM

Make sure you leak that and the 25 people who still support our POTUS will desert him.

IlikedAUH2O on June 6, 2012 at 12:27 AM