Posted on 03/28/2011 12:22:51 PM PDT by SeekAndFind
Obama’s budget credibility took a hit from the nonpartisan Congressional Budget Office this month, when CBO said the administration’s 2012 budget proposal will not deliver the deficit improvement in the coming decade that it promised.
CBO’s analysis said deficits through 2021 would total $2.3 trillion more than those projected in the budget document prepared by the White House Office of Management and Budget (OMB). Instead of falling to 3 percent of GDP by 2017 and remaining near that level through 2021, CBO analysts say the deficit would never go below 4.1 percent of GDP and would begin to rise toward the end of the period, hitting 4.9 percent in 2021.
The analysis will add fuel to the Republican’s fire as the Washington budget battle heads down to the wire — again. In lieu of an official budget, the latest in a series of temporary spending bills that have kept the government operating will expire on Apr. 8. President Obama will have to negotiate a deal with House Republicans who want $61 billion in spending cuts in order to keep the government running until the end of the current fiscal year on Sept. 30. Still, Obama’s bigger challenge will be the hard choices facing the 2012 budget and new pressure to reduce future deficits.
The projected failure to reach 3 percent of GDP is important. At that level the so-called “primary budget,” which excludes interest payments, is in balance. A deficit maintained at that level typically means that debt held by the public is not growing any faster than GDP. The administration’s numbers show public debt stabilizing at about 77 percent of GDP, but CBO projects the White House’s proposals would double the debt by 2021, causing a steady rise to a hefty 87 percent of GDP, up from 62 percent in 2010.
CBO’s projections differ from those of the OMB for two broad reasons. First, there are differences in the underlying forecasts of what would happen without any of the proposals in Obama’s 2012 budget; that is, if current policy was unchanged for the next 10 years. That difference accounts for some $1.3 trillion of the $2.3 trillion disparity, due in large part to the administration’s more upbeat forecast for economic growth. The White House sees growth averaging 3.9 percent per year over the next five years vs. CBO’s 3.3 percent. The other $1 trillion reflects differing estimates of the cost of new programs and savings on existing programs.
Senate Republican Leader Mitch McConnell (R-KY) recently issued a quid pro quo linking GOP support for raising the $14.3 billion statutory ceiling on federal debt to Obama’s agreement to long-term spending cuts that would address the unsustainable path of fiscal policy. The Treasury Dept. says the debt limit will be reached between Apr. 15 and May 31. Economists have warned that market reaction to hitting that ceiling could harm the economy, if holders of U.S. Treasury securities demand higher yields out of uncertainty over the government’s ability to function and meet its obligations.
If McConnell and the GOP are able to bring Obama into a discussion of long-term deficit reduction, the national debate over taxes and entitlement programs will ratchet up several notches. “The policy changes that are needed will significantly affect popular programs or people’s taxes or both,” said CBO Director Douglas Elmendorf at a policy conference in early March. On the revenue side, taxes on individual income and social insurance account for more than 80 percent of all revenues. As for spending, annually funded discretionary programs outside of defense are only 19 percent of all outlays and cannot alone solve the problem, which means mandatory entitlement programs will have to be a part of any solution.
They're counting FICA in the same bucket as income tax revenue. That's fair I guess because that's the way they're spending it. I'd love to see the numbers without FICA figured in the way they have it.
Also...http://www.kchristieh.com/blog/?p=3248
But they all track back to www.politifact.com (which I can’t get to, I get a proxy error message)
I don’t know why anyone would believe any number Obama throws out there anyway. He’s a proven liar - and not just occasionally.
A trillion here, a trillion there. Nothing to see here, move along.
Ever since birth he has hated capitalism, and hence has never been very attentive to economic figures. Thanks SeekAndFind.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.