Posted on 08/25/2007 9:37:44 PM PDT by abc123alphabetagamma
A disappearing budget deficit, if...
The CBO has released its budget and economic outlook update.
One graph from the slides seems to indicate all is well, with the budget balance under current law going to surplus by FY2012.
(Excerpt) Read more at econbrowser.com ...
And the debt we owe China? When does it go away?
It never goes away, and it’s way different than debt we owe to everyone else. (Foreign and domestic alike.) It’s the main thing we should always be worried about in any and ever economic discussion, forever.
Bonds mature as sold, 10 yr, 20 yr, 30 yr.
You do know that debt and deficit are two different subjects. they only overlap inasmuch as interest we pay on debt is a budget item.
CBO forecasts through 2012 aren’t worth much.
I can respect their year-ahead forecast of outlays, those are very good, even if they can be affected by executive decisions mid-way. But they have a very good track record given stable spending scenarios, like in the past three years. Five years out is going to be affected by legislation though, and I wouldn’t trust their forecast. The politicians will get a word in.
Revenue forecasts are uniformly way off, even for a year ahead. They are going to be @$50 billion off (they seriously underestimated revenue growth, again) for this year, and this is a good year as far as their forecasts go. Five years out ? Forget it.
Add the silly assumptions on revenues following the phase-out of the 2001 and 2003 tax cuts - they expect revenues to increase in proportion to the increase in rates, very foolishly.
The Democrat site to which the original link leads, argues that the projection of balance is unrealistic. Under a scenario of moderate growth, permanent tax cuts, and continued presence in Iraq and Afganihstan, it says the deficit recurs with a vengence. A couple points: First, projections imbed many assumptions, not just the stated ones. The alternate projections are really not better. What is important is the commitment to balance the budget through a combination of moderating the growth of government spending and keeping the incentives for economic growth strong. This strategy has brought us to near balance, and will bring us to complete balance in the near term. Second, the CBO continually speaks to the real fiscal problem which we face, which is entitlement programs that threaten to bankrupt the country in the long-run. The Democrat blog of course completely ignores this.
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