CBO report: Debt will rise to 90% of GDPI'm just curious where all the outrage is. During Bush's presidency the liberal media was touting Bush's deficit spending on a daily basis. What President Obama is doing makes Bush look down right frugal. To be clear on this it was wrong under Bush as well.
By David M. Dickson
President Obama's fiscal 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next 10 years, $1.2 trillion more than the administration projected, and raise the federal debt to 90 percent of the nation's economic output by 2020, the Congressional Budget Office reported Thursday.
In its 2011 budget, which the White House Office of Management and Budget (OMB) released Feb. 1, the administration projected a 10-year deficit total of $8.53 trillion. After looking it over, CBO said in its final analysis, released Thursday, that the president's budget would generate a combined $9.75 trillion in deficits over the next decade.
"An additional $1.2 trillion in debt dumped on [GDP] to our children makes a huge difference," said Brian Riedl, a budget analyst at the conservative Heritage Foundation. "That represents an additional debt of $10,000 per household above and beyond the federal debt they are already carrying."
The federal public debt, which was $6.3 trillion ($56,000 per household) when Mr. Obama entered office amid an economic crisis, totals $8.2 trillion ($72,000 per household) today, and it's headed toward $20.3 trillion (more than $170,000 per household) in 2020, according to CBO's deficit estimates.This is worth repeating: "...and it's headed toward $20.3 trillion (more than $170,000 per household) in 2020, according to CBO's deficit estimates". I do not have an extra $170,000 lying around to give to Uncle Sam.
It's kind of like loaning a relative your credit card to pay for a night out on the town and when the bill arrives you find out they bought a Lincoln Navigator. Our government is purchasing on OUR credit. We are the ones who will be stuck paying the bill and living in squalor while they live in opulence.
That figure would equal 90 percent of the estimated gross domestic product in 2020, up from 40 percent at the end of fiscal 2008. By comparison, America's debt-to-GDP ratio peaked at 109 percent at the end of World War II, while the ratio for economically troubled Greece hit 115 percent last year.Yes, there is a great example of where we are headed. Greece is watching its fiscal malfeasance come home to roost. Americans should be watching Greece with horror. They would be if they understood that the things that put Greece where it is are the same things we are doing right now.
So what they are saying is the more we spend the more our growth will suffer. So much for Biden's assertion that we have to spend our way out of recession.
"That level of debt is extremely problematic, particularly given the upward debt path beyond the 10-year budget window," said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget.
For countries with debt-to-GDP ratios "above 90 percent, median growth rates fall by 1 percent, and average growth falls considerably more," according to a recent research paper by economists Kenneth S. Rogoff of Harvard and Carmen M. Reinhart of the University of Maryland.
CBO projected the 2011 deficit will be $1.34 trillion, not much different from the administration's estimate of $1.27 trillion. However, CBO's estimate of the 2020 deficit at $1.25 trillion significantly exceeds the administration's $1 trillion estimate.
"The biggest part of the deficit difference is lower tax revenue due to the different economic assumptions," said James R. Horney, a federal-budget analyst at the liberal Center on Budget and Policy Priorities. "The administration assumes GDP and incomes will be higher, and that translates into higher revenues than CBO expects. Relatively small differences in economic assumptions can add up to big differences over 10 years."
While Ms. MacGuineas agreed that "economic forecasts have a large impact on budgetary projections," she cautioned that such differing assumptions, often called the "rosy scenario," could account for just $350 billion of the 10-year, $1.2 trillion difference between the White House and CBO.
Some of the other down sides to such unbriddled deficit spending would include hyper-inflation and the loss of our AAA bond rating. Both of those spell disaster for the average American already suffering in this stagnant economy.
With the loss of our AAA bond rating we would see interest payments on our national debt skyrocket. That would add to the growing economic malaise. A spike in interest rates as the economy is flooded with ever increasing amounts of newly printed dollars will see our purchasing power diminish greatly. The days of $4.00 a gallon gasoline will be nothing but fond memories as prices rise on everything imaginable.
We have to force our leaders to abandon this path to destruction and embrace common sense measures. If we do not have it we can not spend it. Average Americans and businesses are not allowed to run in the red. If you or I tried this the police would be knocking at the door. Why do we allow our leaders to do it with our money?
The chance for meaningful change is coming. This November we need to vote for leaders who are at least sane enough to understand simple economics. If we fail to act we will be leaving our children the smoldering corpse of a once great country. It is unconscionable.