CBO: US to add $7 trillion more in debt in next decade

posted at 11:21 am on February 6, 2013 by Ed Morrissey

The good news from yesterday’s CBO report is that we may actually end up with a sub-trillion-dollar deficit this year.  The annual deficit for FY2013 will come in at $845 billion, the first time in five years that it’s been less than the 13-figure mark.  However, that depends on keeping the law at the status quo — including the sequester:

CBO forecast that the deficit for fiscal 2013, which ends September 30, will shrink slightly to $845 billion after four straight years above $1 trillion. The reason is an improving economy and higher taxes paid by wealthy Americans.

The CBO analysis, which will feed into Congress’ bitter debate over how to tame deficits, assumes that $85 billion in automatic spending cuts will launch as scheduled on March 1. … It forecast a $616 billion deficit in fiscal 2014 and a $430 billion deficit in fiscal 2015, equivalent to 2.4 percent of U.S. gross domestic product at that time, a level that many economists view as sustainable.

And that’s about the extent of the good news, too, and even that’s qualified.  Those figures assume that Congress will not pass any more “doc fixes” and cut Medicare/Medicaid reimbursements substantially, as current law requires.  If Congress passes more delays in already-scheduled cuts in reimbursements, those deficits will grow significantly.

By the way, that’s the bad news.  Deficits will grow substantially anyway:

But deficits will rise steadily from mid-decade, nearing $1 trillion again by 2023, according to the forecast. The 10-year cumulative deficit is forecast at $6.958 trillion.

“Deficits are projected to increase later in the coming decade, however, because of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt,” the CBO said in the report.

Again, that’s assuming we don’t pass any more “doc fixes,” which are the only thing keeping providers in the Medicare/Medicaid business at all.  Meanwhile, the economy will remain stuck in stagnation, and joblessness will get worse, too:

It said the fiscal tightening from these across-the-board cuts and from higher taxes will slow economic growth to an anemic 1.4 percent by the end of 2013, causing the unemployment rate to edge higher to 8.0 percent by then from about 7.9 percent currently.

Nor was that the only bad news from the CBO yesterday.  Remember those federal subsidies that will fuel ObamaCare’s push to make health insurance universal?  The ten-year cost for that program jumped by nearly a quarter-trillion dollars:

The Congressional Budget Office on Tuesday quietly raised the 10-year cost of ObamaCare’s insurance subsidies offered via the health law’s exchanges by $233 billion, according to a Congressional Budget Office review of its latest spending forecast.

The CBO’s new baseline estimate shows that ObamaCare subsidies offered through the insurance exchanges — which are supposed to be up and running by next January — will total more than $1 trillion through 2022, up from $814 billion over those same years in its budget forecast made a year ago. That’s an increase of nearly 29%.

The CBO upped the 10-year subsidy cost by $32 billion since just last August.

In part, this jump is because more people will get insurance via the exchanges than it had forecast. Where the CBO had seen 22 million enrolled in an exchange in 2022, it now figures 25 million will be.

That explains only part of the cost hike. The rest is largely the result of the CBO’s sharp increase in what it expects the average subsidy will be.

Take a look at the chart from IBD:

ibd-ocare-subsidies

The calculation of average subsidy has risen 38.7% in three years — and we haven’t even implemented the system yet.

Think about that, and now think about what amount of debt we’ll really be adding in ten years.


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I don’t care. Gimme my free stuff.

Common Sense Floridian on February 6, 2013 at 11:28 AM

But if just one life can be saved, its worth it.

BobMbx on February 6, 2013 at 11:31 AM

I hope this isn’t done assuming 3-4% economic growth anytime soon because we aren’t gonna even get close to that with this clown the next 4 years. I think $7 trillion is low-balling it.

gsherin on February 6, 2013 at 11:31 AM

The good news from yesterday’s CBO report is that we may actually end up with a sub-trillion-dollar deficit this year. The annual deficit for FY2013 will come in at $845 billion, the first time in five years that it’s been less than the 13-figure mark. However, that depends on keeping the law at the status quo — including the sequester:

We will never again see a sub-trillion dollar deficit, and if you dig into that report you will see that after the first few years of fake Obama numbers, the “new normal” is a structural $1 T+ deficit from now until the currency collapses. That’s under Obamas based-case scenario projections.

In the real world, clearly republicans and democrats don’t care about collapsing our currency and are doing everything they can to make it happen as quickly as possible.

But Ed, I’m sure you also believe that Obamacare would save us money — the CBO said it would!

Timin203 on February 6, 2013 at 11:32 AM

Ok, so now we have confirmation that the CBO is full of BS. What’s the end game here? We know that the economy (see GDP) is dependent upon about $4TT in Fed spending, almost half of which is financed by debt, which is only feasible because of Benny’s perpetual ZIRP policies. We also know that there is no political (or financial for that matter) to curb Fed spending so here’s the question: what is the tipping point whereby the .gov has to pull back, either because of rising rates or because the torches and pitchforks come out? $25TT, $30TT? At what point do we become Greece and what could logically follow at that point? Karl Denninger over at market-ticker.com in his column today called it the “financial singularity”. Any other ideas about a tipping point and relatedly and basic timeline or events that portend either?

volnation on February 6, 2013 at 11:33 AM

What difference does it make?

Let. It. Burn.

Grab your scissors!

LoganSix on February 6, 2013 at 11:34 AM

Thomas Sowell: CBO is really bad at predicting almost anything. 7 trillion is extremely optimistic.

http://www.nationalreview.com/articles/339901/how-not-learn-mistakes-thomas-sowell

gwelf on February 6, 2013 at 11:37 AM

As long as I’m getting my $400 from unemployment I’m doing my part!

tomas on February 6, 2013 at 11:37 AM

I bet we add another $7 trillion before Obama’s term is up.

ButterflyDragon on February 6, 2013 at 11:38 AM

Awesome. /s

totherightofthem on February 6, 2013 at 11:39 AM

Seven trillion in the next ten years is a wildly optimistic estimate.

farsighted on February 6, 2013 at 11:39 AM

I hope this isn’t done assuming 3-4% economic growth anytime soon because we aren’t gonna even get close to that with this clown the next 4 years. I think $7 trillion is low-balling it.

gsherin on February 6, 2013 at 11:31 AM

The CBO numbers are like the hurricane predictions — no one knows what the real number will be, but its a pretty safe bet that it will definitely NOT be whatever they project.

In 2003, the CBO projected we’d have a $2 Trillion surplus in FY 2013.

Timin203 on February 6, 2013 at 11:39 AM

So,the next President is going to *Inherit*,
Hopey/Copeys Mess,er,**Failures**!!!!
(sarc)

canopfor on February 6, 2013 at 11:41 AM

Think about that, and now think about what amount of debt we’ll really be adding in ten years.

It will be at least ten trillion and probably substantially more.

farsighted on February 6, 2013 at 11:41 AM

I doubt it will be that low… At least 10 trillion dollars deficit for the next decade… The CBO predictions are very weak and inaccurate as you can see from this CBO prediction of deficit from 2009 to 2019…

Check table 4 on page 15 of the CBO projection of the deficit from 2009 to 2019 (page 29 of the pdf file)… The CBO projected $ 703 billion deficit in 2010, $ 498 billion deficit in 2011, and $ 264 billion in 2012… For all these 3 years the deficit was over a trillion dollars in each of them… In other word the CBO predictions were very wrong…

http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/99xx/doc9957/01-07-outlook.pdf

mnjg on February 6, 2013 at 11:46 AM

Which means $14 trillion.

rrpjr on February 6, 2013 at 11:46 AM

$25TT, $30TT? At what point do we become Greece and what could logically follow at that point? Karl Denninger over at market-ticker.com in his column today called it the “financial singularity”. Any other ideas about a tipping point and relatedly and basic timeline or events that portend either?

volnation on February 6, 2013 at 11:33 AM

The pitchforks won’t come out until after the spending stops. Getting back to the 47% and the low info voters, etc etc. There is NO political will to fix this, and frankly, it’s beyong fixing at this point.

SS, Medicare / Medicaid, and interest already account for 100% of the money brought in by the federal government. Those numbers will continue to grow exponentially year over year no matter what happens with discretionary spending.

Realistically judging by the the last 2 D presidents and the last R president, all spending will continue to grow exponentially, as will regulations and taxes (which will bring in less and less money in revenue since the economy will not grow).

Our growth has been totally artificial for 20+ years, a series of bubbles created by the feds monetary policies and DC’s fiscal policies. The logical conclusion? Huge, painful, correction at some point.

Timin203 on February 6, 2013 at 11:47 AM

Think about that, and now think about what amount of debt we’ll really be adding in ten years.

None, Ed. Because the United States of America will no longer exist. And that’s not some paranoid theory. It’s simple math. We cannot afford to keep piling on that kind of debt without destroying the economy. And once that happens, what’s left to hold this thing together?

Doughboy on February 6, 2013 at 11:48 AM

what a going joke…

keep voting democrat!

tom daschle concerned on February 6, 2013 at 11:48 AM

canopfor on February 6, 2013 at 11:41 AM

oh but the Obama apparatchiks will never let any Republican successor complain about problems they inherited. they will still claim it’s all Bush’s fault. They are about as divorced from reality as you can get.

gsherin on February 6, 2013 at 11:48 AM

None, Ed. Because the United States of America will no longer exist. And that’s not some paranoid theory. It’s simple math. We cannot afford to keep piling on that kind of debt without destroying the economy. And once that happens, what’s left to hold this thing together?

Doughboy on February 6, 2013 at 11:48 AM

Each generation thinks that the US and the world will end at their watch… As always each generation is wrong… We are not worse than the 1930′s… Not even close…

mnjg on February 6, 2013 at 11:51 AM

Now that SS is cash-negative and has to redeem bonds from treasury (who in return issue new bonds to the federal reserve — monetizing the debt–), and with medical costs continuing to grow, and a new entitlement (o care) about to be implemented, PLUS the dramatic increase in discretionary spending, I think we will see 2 Trillion + deficits in the next few years which will continue to grow.

Within, say, 10 years, we will be looking at 5-10 trillion dollar annual deficits easily. We will look back on the days of $1 T deficits as an era of fiscal responsibility.

Timin203 on February 6, 2013 at 11:51 AM

…to be adjusted!

KOOLAID2 on February 6, 2013 at 11:52 AM

The troll free threads just keep a coming.

Bmore on February 6, 2013 at 11:53 AM

It forecast a $616 billion deficit in fiscal 2014 and a $430 billion deficit in fiscal 2015.

LOL. A fantasyland projection.

The CBO just runs the numbers the politicians and other government bureaucrats give them. The CBO is nothing but a calculator. The numbers do not necessarily have any basis in reality. Garbage in, garbage out.

Case in point — Obamacare cost forecasts past and present. Where the “past” forecast is the most optimistic one made before it was passed by Congress. The “present” forecast is significantly higher than that. And it is going higher every time they run new numbers that cannot be faked or favorably guesstimated.

farsighted on February 6, 2013 at 11:53 AM

Guess s&p won’t be down grading the US again now that holder/team are hauling them to court? The US should be down to junk by now the way bho/dc bunch spends? If just might be before bho leaves office, if he ever does?
L

letget on February 6, 2013 at 11:54 AM

This is why we need Christie/Baldwin 2016. Don’t laugh, stranger things have happened.

bloggless on February 6, 2013 at 11:54 AM

My 2 cents:

1. What can’t go on, won’t.

2. Enjoy the decline!

Bruno Strozek on February 6, 2013 at 11:54 AM

Each generation thinks that the US and the world will end at their watch… As always each generation is wrong… We are not worse than the 1930′s… Not even close…

mnjg on February 6, 2013 at 11:51 AM

Well, America as it was founded basically ended in the 1930′s. As for which is worse? way way way way worse now then it has ever been.

The big difference between today and the 1930s? Full-on fiat currency, unpayable debts, and world wide central bank collaberation to continue with this Keynesian madness.

We are approaching WW2 emergency-level spending right now as just a structural feature of our annual spending. We CANNOT deleverage like we did after WW2, and we cannot repeat the post-war economic boom unless we plan on destroying the infrastructure of every other manufacturing country in the planet again.

So while the currency may not collapse in your lifetime, it will in mine. Until then, we’ll see no real economic growth, loss of buying power, and the steady creep of inflation continuing to “tax” people out of their savings.

Timin203 on February 6, 2013 at 11:56 AM

Happy days are here again! I mean have you seen all the traffic jams??

Gatsu on February 6, 2013 at 11:56 AM

Each generation thinks that the US and the world will end at their watch… As always each generation is wrong… We are not worse than the 1930′s… Not even close…

mnjg on February 6, 2013 at 11:51 AM

Thats because each generation decided to kick the can down the road. And now, we can see the end of the road. There is nowhere to kick the can.

It is simple math, but the overlords hide it with gobbledy-gook and double speak.

Your reference to the 1930s…..what occurred to make the 1930s economy better? Higher taxes? Universal healthcare? Unlimited immigration? Nope…it was WWII. ~70 million people died.

How many will have to die to pull the world out of this mess?

BobMbx on February 6, 2013 at 11:56 AM

Each generation thinks that the US and the world will end at their watch… As always each generation is wrong… We are not worse than the 1930′s… Not even close…

mnjg on February 6, 2013 at 11:51 AM

In what regard do you mean that we are better off than those were in the 1930′s? Serious question here – do you mean that the presence of our current social safety net will keep most from starving (for a time at least) or that we have another 80 year economic run in us, like those in the 30′s had?

volnation on February 6, 2013 at 11:58 AM

And a collapsed currency doesn’t necessarily mean a collapsed country — just that you’ll be broke.

Timin203 on February 6, 2013 at 11:58 AM

The CBO projected $ 703 billion deficit in 2010, $ 498 billion deficit in 2011, and $ 264 billion in 2012… For all these 3 years the deficit was over a trillion dollars in each of them… In other word the CBO predictions were very wrong…

mnjg on February 6, 2013 at 11:46 AM

LOL. Hey, they were only 50-300+% off, with all of their forecasts on the low side.

Based on this empirical evidence of the accuracy of their forecasts we will add somewhere between 10.5 trillion and 21 trillion to the national debt in the next decade.

farsighted on February 6, 2013 at 11:59 AM

Your reference to the 1930s…..what occurred to make the 1930s economy better? Higher taxes? Universal healthcare? Unlimited immigration? Nope…it was WWII. ~70 million people died.

How many will have to die to pull the world out of this mess?

BobMbx on February 6, 2013 at 11:56 AM

Great point – not to mention that the industrial capacity of the world (literally) had been converted to dust. We were the only game in town.

volnation on February 6, 2013 at 11:59 AM

Old and busted: Bend it like Beckham!

New hotness: Spend it like Obama!

ghostwalker1 on February 6, 2013 at 12:00 PM

Each generation thinks that the US and the world will end at their watch… As always each generation is wrong… We are not worse than the 1930′s… Not even close…

mnjg on February 6, 2013 at 11:51 AM

The difference between the 1930′s and now is that we didn’t have $100 trillion(or the inflation-adjusted equivalent) in unfunded liabilities back then. We didn’t have 16 1/2 trillion in debt already on the books. We didn’t have to worry about industrial powers on the rise such as China or India. We didn’t have to worry about an aging population with fewer people having kids. And frankly we didn’t have as dumb of an electorate, a political class as corrupt, and a mood shift of the public so extreme that it’s left bedrock principles of America such as hard work and personal responsibility totally out of the mainstream.

I’m not saying we can’t solve the problems that ail this nation. But the deck is stacked extremely high given our current fiscal, social, and political realities.

Doughboy on February 6, 2013 at 12:00 PM

canopfor on February 6, 2013 at 11:41 AM

oh but the Obama apparatchiks will never let any Republican successor complain about problems they inherited. they will still claim it’s all Bush’s fault. They are about as divorced from reality as you can get.

gsherin on February 6, 2013 at 11:48 AM

gsherin:Good point,the Democrats will have that as,”GrandFathered In
sumpin..sumpin…yup,..back to Bush!:)

canopfor on February 6, 2013 at 12:01 PM

Great point – not to mention that the industrial capacity of the world (literally) had been converted to dust. We were the only game in town.

volnation on February 6, 2013 at 11:59 AM

That and the fact that any recovery analogous to the post-WWII boom will have to deal with tiny fish in a pond that might be endangered because somebody wants to build a factory, a road, or siphon off the water for human use.

We’ve legislated and regulated any hope of a recovery out of the realm of possibility.

BobMbx on February 6, 2013 at 12:04 PM

Has the CBO ever been right about any projected cost?

Curtiss on February 6, 2013 at 12:04 PM

Each generation thinks that the US and the world will end at their watch… As always each generation is wrong… We are not worse than the 1930′s… Not even close…

mnjg on February 6, 2013 at 11:51 AM

If you read enough history you will see that the world as we know it came very close to ending in 1940-42. Things could have easily turned out very differently.

That it all worked out so well for the US seems inevitable now looking back, as long as you don’t look too closely at all of the things that had to go just right or just wrong for that to happen.

farsighted on February 6, 2013 at 12:05 PM

Your reference to the 1930s…..what occurred to make the 1930s economy better? Higher taxes? Universal healthcare? Unlimited immigration? Nope…it was WWII. ~70 million people died.

How many will have to die to pull the world out of this mess?

BobMbx on February 6, 2013 at 11:56 AM

Great point.

farsighted on February 6, 2013 at 12:06 PM

This would be the CBO that told you that OCare is going to reduce the deficit.

Horse Pucky.

The US is on track to add 70 trillion in the next 10 years.

CorporatePiggy on February 6, 2013 at 12:10 PM

The CBO analysis, which will feed into Congress’ bitter debate over how to tame deficits, assumes that $85 billion in automatic spending cuts will launch as scheduled on March 1. … It forecast a $616 billion deficit in fiscal 2014 and a $430 billion deficit in fiscal 2015, equivalent to 2.4 percent of U.S. gross domestic product at that time, a level that many economists view as sustainable.


The CBO forecast is the most unreliable forecast provided on a regular basis and should be castigated as such, Ed.

How about adding some more pizazz to your columns by linking in graphics that underscore just HOW unbeievable the CBO forecast actually is?

- GDP is about to soar! It’s going to grow at more than double the current rate! Happy days are right around the corner. The economy is going to experience a period of sustained economic growth – and it’s going to star in just ten-months! Wow!
- Debt is not a problem any longer. Don’t worry about it any more. After shooting up the past five years, the Debt to GDP is going to flatten out, starting really soon.
Unemployment will be no problem. The rate is going back to 5.5% in a couple of years, and it is going to stay low for the remaining 7-years. There is Zero, repeat Zero (as in nada, no-way-no how) chance for a recession over the next decade. I find this very comforting.
- Inflation is not going to be an issue. Not too cold, not too hot – the CPI will average less than 2% for well into the 2020’s. No chance of inflation picking up – it’s silly to worry about inflation risks – really, it’s a non issue for at least a decade.
- There is even good news for savers. Interest rates will be going up very sharply. By 2015 the 10-year T-bond will be back to 4.5%, more than double where it is today. This backup in interest rates will have no consequence to the economy at, in fact the higher interest rates will help propel the economy higher. Not to worry about this asumption, interest rates don’t matter any more..

.
http://brucekrasting.com/cbo-everything-is-going-to-be-really-really-great/

But Bruce saves the most stupefying of the CBO stupidity for last:

You can argue with me all you want about those CBO estimates. The fact is, no one really knows what will happen. But the CBO is using one assumption that is almost certain to be proven wrong. It is a very critical assumption: What will labor’s role be in the economy of the future?

- Labor income, as a percent of GDP, has been in a multi-decade decline (rise of the robots). The CBO is anticipating that the trend will not only stabilize, but will substantially reverse.

.
Click on the link, please. Go over and see the graph’s that underscore the surreality of government forecasts.

PolAgnostic on February 6, 2013 at 12:12 PM

We’ve legislated and regulated any hope of a recovery out of the realm of possibility.

BobMbx on February 6, 2013 at 12:04 PM

This.

Barring some unforeseen virtual miracle in which the US electorate comes to its senses and begins electing fiscally responsible politicians who actually understand and support free markets and who will reduce the size and scope of government, the very best we can hope for is to limp along with 8+% unemployment, a flat GDP, and a steadily slowly declining lifestyle. That’s an optimistic scenario for the future.

I challenge any lefty to present a better scenario and back it up with facts and realistic projections.

I think the fact is the smarter Dems and socialsists (redundant, I know) realize this and do not care as long as they stay in power and can continue their social engineering experiments using the US population as their guinea pigs.

farsighted on February 6, 2013 at 12:16 PM

And a collapsed currency doesn’t necessarily mean a collapsed country — just that you’ll be broke.

Timin203 on February 6, 2013 at 11:58 AM

.
A collapsed RESERVE currency means ALL countries will be broke, trade will drop to subsistence levels for a long period of time and countries who feel other countries owe them a lot of money will do what they have historically done … start a war

PolAgnostic on February 6, 2013 at 12:17 PM

I hope this isn’t done assuming 3-4% economic growth anytime soon because we aren’t gonna even get close to that with this clown the next 4 years. I think $7 trillion is low-balling it.

gsherin on February 6, 2013 at 11:31 AM

Funny you should ask that question. The CBO is anticipating 13 consecutive quarters of annualized real GDP growth of over 3.0% starting in the second quarter of 2014, something that Sean Trende notes has only happened twice since 1947 (1Q1983-1Q1986 and 2Q1996-4Q1999 for 15 quarters). Annualized GDP growth over 3.0% also happened only 13 times in the 52 quarters since the end of that second run, with an additional 2 quarters at a rounded 3.0%.

Steve Eggleston on February 6, 2013 at 12:17 PM

Has the CBO ever been right about any projected cost?

Curtiss on February 6, 2013 at 12:04 PM

Keep in mind the CBO can only score the information that is provided by Congress. They are not allowed to forecast the effect of any legislation (the unintended consequences).

If Congress sends a bill that says the cigarette tax will be increased to $5.00 per pack to pay for Program X, and 5 billion packs are sold annually, CBO can only multiply 5B by $5.00.

They can’t forecast the reduction in cigarette sales caused by the higher tax, which of course leads to higher deficits to pay for the costs of Program X not covered by the new tax.

BobMbx on February 6, 2013 at 12:19 PM

A collapsed RESERVE currency means ALL countries will be broke, trade will drop to subsistence levels for a long period of time and countries who feel other countries owe them a lot of money will do what they have historically done … start a war

PolAgnostic on February 6, 2013 at 12:17 PM

Yeah, absolutely. Not to mention the fed is propping up virtually every other central bank and foreign bank. It won’t be pretty. But the US might still exist when we come out of it. Probably won’t be recognizable though.

Timin203 on February 6, 2013 at 12:20 PM

Some party forecasted all of this in ’09…MSM making any mention of it?

hillsoftx on February 6, 2013 at 12:24 PM

But the US might still exist when we come out of it. Probably won’t be recognizable though.

Timin203 on February 6, 2013 at 12:20 PM

We’ll end up somewhere between “The Postman” and “Escape From New York”, I think.

BobMbx on February 6, 2013 at 12:26 PM

Ride the decline.

rogerb on February 6, 2013 at 12:35 PM

We’ll end up somewhere between “The Postman” and “Escape From New York”, I think.

BobMbx on February 6, 2013 at 12:26 PM

The director’s cut will include added drone kill footage.

Lily on February 6, 2013 at 12:36 PM

Those figures assume that Congress will not pass any more “doc fixes” and cut Medicare/Medicaid reimbursements substantially, as current law requires.

Hahahahahahaha!!!!!!!!!

As long as JugEars is in the White House, WE’RE SCREWED!

GarandFan on February 6, 2013 at 12:36 PM

Regarding the new 10-year “baseline”, math and I have some “good” news and some bad news:

- “Good” news: If one assumes that Global War on Terror spending will follow the track everybody except the CBO assumes it will (decreasing significantly as we exit South Vietn…er, Afghanistan) and SuperPork Sandy isn’t repeated each and every year, the 10-year FY2014-FY2023 deficit would be “only” $5.9 trillion, after reaching a low of $383 billion in FY2015 and then skyrocketing back up to $815 billion in FY2023.

- Bad news: Even after doing that adjustment, that means the FY2013-FY2022 deficit will be $5.9 trillion, $1.5 trillion more than the $4.4 trillion target set by the 2011 SuperDuper Debt Committee. OOPS!

- “Good” news: The Doc “Fix” is “only” supposed to add $167 billion to the deficits through FY2023.

- Bad news: Taxes are expected to suck out of the economy roughly 19% of GDP once the economy recovers, which depending on how one calculates the average, 0.5 points to 0.9 points above the post-WWII average.

Bonus bad news – Spending on Social Security is on track to surpass all discretionary spending no later than 2024.

Steve Eggleston on February 6, 2013 at 12:42 PM

BobMbx on February 6, 2013 at 12:19 PM

Actually, on the budget, the CBO generates its own numbers independent of either Congress or the Administration.

Steve Eggleston on February 6, 2013 at 12:43 PM

Now that SS is cash-negative and has to redeem bonds from treasury (who in return issue new bonds to the federal reserve — monetizing the debt–), and with medical costs continuing to grow, and a new entitlement (o care) about to be implemented, PLUS the dramatic increase in discretionary spending, I think we will see 2 Trillion + deficits in the next few years which will continue to grow.

Within, say, 10 years, we will be looking at 5-10 trillion dollar annual deficits easily. We will look back on the days of $1 T deficits as an era of fiscal responsibility.

Timin203 on February 6, 2013 at 11:51 AM

Monetization of the SocSecurity “Trust Funds” is included in the CBO’s estimate of deficits. While substantial, it won’t result in $5 trillion-$10 trillion annual deficits anytime because the primary/cash deficits of the combined funds are expected to be just under $5 trillion (in current dollars) through fund exhaustion in 2033.

On the other hand, assuming the federal government decides to continue tapping whatever source of funding it comes up with to monetize the “trust funds” after exhaustion, SocSecurity will eventually result in $10 trillion deficits. Somewhere between 2060 and 2080, just the deficits in Social Security will be a larger share of GDP than all discretionary spending is now.

Steve Eggleston on February 6, 2013 at 12:53 PM

That should be “…it won’t result in $5 trillion-$10 trillion annual deficits anytime soon…”.

Steve Eggleston on February 6, 2013 at 12:53 PM

A reminder:

The last budget passed by a Republican House, Republican Senate, and Republican President was passed in 2006 for Fiscal Year 2007, and resulted in a deficit of less than $161 Billion.

Data Source: Budget numbers directly from the White House Office of Management and Budget

Republicans held majority control of Washington, D.C. (holding 2+ of the House, Senate, and Presidency) for 12 straight years, from January 3, 1995 to January 3, 2007, and were primarily responsible for the budgets for FY 1996 – 2007.

Over those 12 years, Republican majorities increased the Total National Debt
from $4,973,982,900,709.39 on 09/29/1995
to $9,007,653,372,262.48 on 09/30/2007.

Then, after five continuous years of Democrats having majority control of spending, the total national debt was
$16,066,241,407,385.89 on September 30, 2012.

Republican majorities increased the Total National Debt by $4 Trillion over 12 years. An average of $336 Billion per year.

Democrat majorities increased the Total National Debt by over $7 Trillion in just 5 years. An average of over $1.4 Trillion in new debt per year.

Consider all of the debt accumulated over all of the budgets up to and including Fiscal Year 2007. Nine Trillion Dollars. Then consider that Democrat majorities increased that total national debt by Seven Trillion Dollars, an increase of over 78%, in just five years.

The CBO estimate of a current year deficit under $1 Trillion is, as Ed notes, based on the assumption that the sequester going through, even as Obama is trying to delay or stop that sequester.

It does not impress me to claim a deficit just under $1 Trillion as some sort of accomplishment.

If you want to impress me, get the deficit down to where it last was under Bush and the Republican Congress: under $161 Billion.

And if you really want to impress me, fulfill Nancy Pelosi’s promise of “no new deficit spending”:

After years of historic deficits, this 110th Congress will commit itself to a higher standard: pay-as-you-go, no new deficit spending. Our new America will provide unlimited opportunity for future generations, not burden them with mountains of debt.

- New Speaker Nancy Pelosi, 01/04/2007

ITguy on February 6, 2013 at 12:55 PM

Each generation thinks that the US and the world will end at their watch… As always each generation is wrong… We are not worse than the 1930′s… Not even close…

mnjg on February 6, 2013 at 11:51 AM

Probably has nothing to do with the fact that we keep spending money we don’t have to keep up with the hand outs to the looters so they don’t have to realize the stupidity of putting President Sippy Cup and crew back in charge for another for years.

BigWyo on February 6, 2013 at 1:00 PM

Repeating for emphasis:

Republican majorities increased the Total National Debt by $4 Trillion over 12 years.
An average of $336 Billion per year.

Democrat majorities increased the Total National Debt by over $7 Trillion in just 5 years.
An average of over $1.4 Trillion in new debt per year.

What happened to the Democrats’ promises?

And if you really want to impress me, fulfill Nancy Pelosi’s promise of “no new deficit spending”:

After years of historic deficits, this 110th Congress will commit itself to a higher standard: pay-as-you-go, no new deficit spending. Our new America will provide unlimited opportunity for future generations, not burden them with mountains of debt.

- New Speaker Nancy Pelosi, 01/04/2007

===

“The problem is, is that the way Bush has done it over the last eight years is to take out a credit card from the Bank of China in the name of our children, driving up our national debt from $5 trillion for the first 42 presidents – #43 added $4 trillion by his lonesome, so that we now have over $9 trillion of debt that we are going to have to pay back — $30,000 for every man, woman and child. That’s irresponsible. It’s unpatriotic.

- Barack Obama July 3, 2008

Bush with a Republican majority passed budgets for Fiscal Years 2002-2007. Over those 6 years, the Total National Debt rose from
09/30/2001 $5,807,463,412,200.06 to
09/30/2007 $9,007,653,372,262.48
——————————————–
An increase over 6 years of $3,200,189,960,062.42
(not the “4 Trillion by his lonesome” that Obama falsely claimed that Bush added to debt)

Average new debt per year of Bush with a Republican majority: $533,364,993,343.74

Obama with a Democrat majority passed budget for FY 2009, then failed to pass a budget since.
09/30/2008 $10,024,724,896,912.49
09/30/2012 $16,066,241,407,385.89
——————————————–
increase over 4 years $6,041,516,510,473.40
Average per year of Obama with a Democrat majority: $1,510,379,127,618.35

Again,
Average per year of Bush with a Republican majority: $533,364,993,343.74
Average per year of Obama with a Democrat majority: $1,510,379,127,618.35

Obama with a Democrat majority FY 2009-2012 added to the national debt at a rate that was
($1,510,379,127,618.35/$533,364,993,343.74) = 2.83
times the rate at which Bush with a Republican majority (FY 2002-2007) added to the national debt

Nearly THREE TIMES the rate of deficit spending.

“The problem is, is that the way Bush has done it over the last eight years is to take out a credit card from the Bank of China in the name of our children, driving up our national debt from $5 trillion for the first 42 presidents – #43 added $4 trillion by his lonesome, so that we now have over $9 trillion of debt that we are going to have to pay back — $30,000 for every man, woman and child. That’s irresponsible. It’s unpatriotic.

- Barack Obama July 3, 2008

On the day Obama said that, July 3, 2008, the Total Public Debt Outstanding was $9,492,245,770,798.70 (under $9.5 Trillion)

Now, on 10/17/2012, the total national debt is $16,193,100,189,055.25 … nearly $16.2 Trillion.

So, if $9 Trillion was irresponsible and unpatriotic (in Obama’s own words), then what is $16 Trillion? By HIS OWN STANDARD, Obama is much more irresponsible and unpatriotic than George W. Bush.

Nearly three times more irresponsible and unpatriotic!

ITguy on February 6, 2013 at 1:01 PM

As for the effect of the sequester, the CBO estimates that if it were removed, it would add $42 billion to the FY2013 deficit (taking it up to $887 billion), a total of $1.13 trillion in deficits between now and the end of FY2022, and another $141 billion to the FY2023 deficit.

Steve Eggleston on February 6, 2013 at 1:01 PM

The once great land, now in the majoiryt mooching fools, deserves full demise.

All who brung/kept Obama, from all sides, may he destroy you and your, in full. YOU deserve NO less.

Schadenfreude on February 6, 2013 at 1:08 PM

Somewhere between 2060 and 2080, just the deficits in Social Security will be a larger share of GDP than all discretionary spending is now.

Steve Eggleston on February 6, 2013 at 12:53 PM

And in what year will SS and Medicare outlays alone exceed total Treasury revenue? 2045. So way before 2045, the only option is to increase federal borrowing each year to pay for the basics. And by 2045, the government will be borrowing every dollar it uses for everything except entitlements.

There won’t be a GDP to measure in 2080.

BobMbx on February 6, 2013 at 1:13 PM

Continuing the “It’s the spending, stupid” theme, the top two deficit-increasing alternate policy options the CBO scored are of the increased spending variety. Increasing the rate of regular discretionary spending at the rate of inflation, rather than either going through sequestration or simply stopping sequestration, would add $1.82 trillion to the deficit.

Steve Eggleston on February 6, 2013 at 1:17 PM

And in what year will SS and Medicare outlays alone exceed total Treasury revenue? 2045. So way before 2045, the only option is to increase federal borrowing each year to pay for the basics. And by 2045, the government will be borrowing every dollar it uses for everything except entitlements.

There won’t be a GDP to measure in 2080.

BobMbx on February 6, 2013 at 1:13 PM

Closer to 2050 using that model since the government is expecting to suck 19% of the GDP, but otherwise the point is well-noted. In reality, I expect that date to be closer to 2037.

Steve Eggleston on February 6, 2013 at 1:21 PM

To all of those who think that we are worse than 1930′s I can say that you need to read more, much more… Get back to me when the unemployment rate is at 30% and a large number of people were one meal away from starvation as it was in the 1930′s… Get back to me when the top earners pay 90% of their income as they did in 1930′s… Get back to me when FDR the worst President of all times and by far was creating one socialist program after another and assuming dictatorship power that make Obama looks like an amateur… Get back to me when Obama try to increase the number of Supreme Court justices to have total control over the Supreme Court as FDR did… Talking about different electorate let us keep in mind 1930′s & 1940′s electorate elected the worst President in history not twice, no trice, but four times and they may have elected him few more times if he did not die in office… Get back to me when you can tell you or your children or your grandchildren have to go hungry at night as many did in the 1930′s and rather than worry about the next electronic gadget you want to buy…

mnjg on February 6, 2013 at 1:33 PM

mnjg on February 6, 2013 at 1:33 PM

Those are fair points some of which I’d forgotten. The main difference in my mind however, is that many of the societal ills which we’ve “solved” in today’s world are the direct result of deficit spending which will eventually kill us. Our capacity to borrow, absent a financial “reset” is drawing to a close, historically speaking. That’s the difference.

Aggressive, organic GDP growth (ex fed spending) is a thing of the past because of over regulation and the negative effect it has on one’s ROI and ultimate desire to take on additional risk. Without real economic growth to justify (or offset) the massive deficits, eventually borrowing slows due to rising rates and in short order we’re Greece without an IMF to rescue us. That’s my concern.

I agree that the 1930′s was a much more frightening time politically (how anyone ever voted for Roosevelt I’ll never know) but IMO our credit card is about be to declined and that credit is the only thing that’s kept things together to date.

volnation on February 6, 2013 at 2:25 PM

Next decade? More like next 4 years.

The Rogue Tomato on February 6, 2013 at 3:12 PM

volnation on February 6, 2013 at 2:25 PM

I totally agree that our debt is a super major disaster and we must resolve it, no quesiton asked… The important thing is that we should not give up and keep fighting the communists and their voters… We are Americans, if any nation in the world can overcome against most odds and win the day, it is us…

mnjg on February 6, 2013 at 3:24 PM

CBO: Debt Spiral Deepening, Health Costs Soaring, Historically High Unemployment, and Anemic Growth

Obamanomics hits the “quad-fecta”!

Resist We Much on February 6, 2013 at 3:49 PM

The reason is an improving economy and higher taxes paid by wealthy Americans.

EXCUSE ME! I just read the report of how the Economy was TANKING in the last Quarter, how more people [100,000] were getting Food Stamps, and the rise in Unemployment. Energy prices are up which will cause the stock market to tank AGAIN and food prices to increase. How does that play into defining an improving economy?

Did anyone let them know how the Democrats pulled their ‘Sophies Choice’ which defunds the Food Stamps Program to the tune of OVER 14 BILLION Bucks In 2014? Who is going to pay for that?

Since when has it become politically incorrect to do actual math?

DannoJyd on February 6, 2013 at 4:42 PM

The CBO is missing a key component in ALL of their projections, INTEREST RATES!

In the 1990′s, the charter of the Federal Reserve was changed to allow the Fed to ‘temporarily’ hold treasuries. Ben Bernanke is now using what was supposed to be an overnight manouver to MONETIZE LONG TERM debt.

Congress needs to ELIMINATE this exception and return the bond markets to reality.

This one action will force ALL politicians to address the deficit spending and end the insanity of currency destruction we are now performing.

Freddy on February 6, 2013 at 5:23 PM

No ses, no lost, Hmmm…….

Bmore on February 6, 2013 at 5:35 PM

The reason is an improving economy and higher taxes paid by wealthy Americans.

The fact that they think higher taxes paid by wealthy Americans will reduce the deficit tells me how much the CBO prediction is worth.

tom on February 6, 2013 at 7:16 PM