Skip to comments.CBO Projects $2.4 Trillion in Debt – And They’re Underselling It
Posted on 05/05/2018 9:18:13 AM PDT by Kaslin
The long-awaited 2018 edition of the Congressional Budget Offices (CBO) Budget and Economic Outlook was released this month. It does not paint a rosy picture of the nations fiscal future, projecting $12.4 trillion in additional debt over the next decade. If past estimates are any indicator, however, that doesnt reflect reality. Without a substantial change to the culture of overspending in Washington, the countrys fiscal situation is likely even worse.
Ten years ago, CBO estimated that Congress would run a $151 billion surplus this past fiscal year. Instead, the country ran a $665 billion deficit. Thats in part because CBO conducts its analysis based on current policy, whereby lots of expensive provisions expire, making the long-term fiscal situation look better than it is likely to be. The economic crisis also bears some blame for the disparity, of course, but by 2009, with the stimulus law already passed, CBO still projected a FY 2017 deficit of only $234 billion.
From 2017 to 2018, CBOs estimate of debt accumulation over the next decade has increased from $9.4 trillion to $11.7 trillion. Some would be eager to place the blame squarely on the tax reform law for this disparity, but that would be a mistake. CBOs 2018 estimate of revenues has dropped by approximately $1 trillion relative to its 2017 estimate, but its 2018 estimate of spending over the next ten years has also increased by around $1 trillion compared to 2017. Even after taking into account likely extensions of current policy, the tax reform law will raise the nations debt-to-GDP ratio by 2027 from 111 percent to 114 percent.
CBOs estimates also frequently fall victim to members of Congress legislating to the score. Because CBO scores the fiscal impact of legislation over a ten-year period, Congress often games the system to ensure that the ten-year score appears lower than it is.
One example of this is so-called tax extenders. Each year, Congress reauthorizes the same set of tax breaks to last another year or two, rarely eliminating or making permanent any of them. The tax breaks are effectively permanent, and should show a ten-year budget impact of well over $100 billion. Yet because taxes are technically temporary, they score out to $10 billion, reflecting only one more years worth after which they are assumed to expire.
Another example of this practice of legislating to the score will have a far greater budgetary impact. The recent Bipartisan Budget Act (BBA) technically only delayed the caps on spending put in place under the Budget Control Act of 2011, even though the reality is that the caps are very unlikely to return. As a result, the CBO scored the BBA as only adding $320 billion to the debt over the next ten years (itself a significant spending increase), not accounting for additional spending that is virtually certain to occur.
The National Taxpayers Union Foundations Demian Brady analyzed the impact of the BBA on the debt, accounting for this and other gimmicks. He found that the real cost of the BBA to taxpayers was $1.66 trillion, five times more than estimated. Unfortunately, such tactics to mislead the public into thinking Congress is spending less than it is are par for the course in Washington.
A number like $12.4 trillion in added debt is a significant and daunting figure. It represents a more than 50 percent increase to the current national debt, which has already blown past $21 trillion. But taxpayers should be aware that it likely does not give the full picture, as budget gimmicks and the inevitable spending increases that each year brings will likely drive that number up even further. This may be the current policy baseline, but Congresss current policy is to spend profligately whenever it pleases.
The Rats figured out long ago that the key to accomplishing the goal of the destruction of the US was to mire us in debt. The GOP have been complicit, knowingly or not.
What Would Happen if the US Defaulted on its Debt?
For how long? Until the national debt decreases from one fiscal year to the next. The last time that happened was the fiscal year ending 12/31/1960.
I dont recall the CBO ever getting anything right. Arent they always dire predictions for Republicans and rosy for Democrats?
Inform Congress and all heads of agencies they will forfeit their paychecks until they cut their budgets 50%.
Static analysis based on faulty assumptions (most likely).
They under projected the deficit under Obamacare so now they are adjusting the deficit to a more realistic number and blaming it on the tax cut.
You hit the whack a mole right on the head. The CBO is a political agency with a Globalist agenda. Spinning the statistics for effect. POTUS is on the path to lower the debt & balance the budget but the Globalists don't want that to happen...so...the sky is falling.
The CBO does have a bad history of being wrong. However, you can view the debt numbers, the current lack of discipline within our government, and the lack of restraint on entitlements and draw your own personal non-CBO conclusion.
Our debt must be addressed and a moral country should recognize the legal, ethical, and fairness of NOT leaving our children to clean up our mess. Trump has the approach to foreign policy and I believe if he is supported by his own party and has two terms he will take the same approach. He has said as much and he understands debt, capital, and how it impacts you down the road far better than any of us.
Sorry...I will never believe a projection...any projection that comes from the CBO.
Could care less about their statistics or “math”...
A broken clock is right more times than the CBO.
CBO scored ObamaCare as a net plus, i.e., would reduce the federal budget in the long run. Need you know more?
The CBO has a long history of underscoring the effects of increased economic conditions. The US economy is improving by leaps and bounds both on Wall Street and Main Street and it looks to continue.. Surely it will offset much of the deficit CBO forecasts.
Tax revenues are up substantially - unfortunately, spending is also - thus the interest on the debt gobbles an ever-larger chunk of tax revenue, which means more borrowing, which means more interest. Pretty soon, tax revenues will barely cover the INTEREST payments.
Not going to happen. We are “too far” down the debt path.
The amount of spending cuts it would take to simply “balance” the budget is unachievable.
That being said - if we were to restore government spending to CONSTITUTIONAL stuff only - the debt could be paid off rapidly...
We need to nationalize the Federal Reserve. Then we would be paying interest to ourselves instead of a private bank.
Isn’t it nice that Americans not yet born will be Trillions in debt and these a-hole political whores will be dead after living the lush life?
Actually, one of the big secrets is that we do pay the interest to ourselves. When the FED buys up bonds to stimulate the economy, the interest on those bonds, minus a fee, goes right back to the treasury. Nice trick huh? It took a lot of digging to figure out how this works. Theoretically, a long term growing economy needs a continuous money supply injection to keep from going into deflation. President Trump could work with the FED to soak up a large portion of the outstanding debt. Not too much though. Why? Because all those bonds around the world create a significant level of security and stability to the the global economy.
...no accountability, no consequences = no MAGA...EVER!
The direct result of a fiat, printed, Federal Reserve currency
The next result is that progressives and oligarchs, those who have first access to newly printed money and government debt and spending, will be able to run their statist social-engineering schemes, and you can’t do anything about it.
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