Tag Archives: CBO Report

More Frightening CBO Forecasts from THE BUDGET AND ECONOMIC OUTLOOK: 2015 TO 2025

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rp_Slide1-300x225.jpgThe following quotes were taken from the CBO’s Jan 15 report, found here. They continue warning America that if our country doesn’t change the fiscal course that it’s on under excessive tax and spend policies, our country is headed for a disaster. We need to stand up, get vocal, vote out the spenders and force our elected officials to balance the federal budget, before the mounting $ trillions that we owe dooms us!

CBO:

  • Beyond 2017, real (inflation-adjusted) gross domestic product (GDP) will grow at a rate that is notably less than the average growth during the 1980s and 1990s.
  • Cumulative deficits over the 2016–2025 period are projected to total $7.6 trillion.
  • Outlays rise-to more than 22 percent in; Four key factors underlie that increase:
    • The retirement of the baby-boom generation
    • The expansion of federal subsidies for health insurance
    • Increasing health care costs per beneficiary
    • Rising interest rates on federal debt
  • CBO projected under current law, debt would exceed 100 percent of GDP 25 years from now and would continue on an upward trajectory thereafter;a trend that could not be sustained.
  • Such large and growing federal debt would have serious negative consequences, and are unsistainable.
  • Interest rates on Treasury securities, which have been exceptionally low since the recession, will rise considerably in the next few years.
  • Outlays for the federal government’s major health care programs will increase by $82 billion (or nearly 10 percent) this year
  • Net interest payments increase from $227 billion, or 1.3 percent of GDP, in 2015 to $827 billion, or 3.0 percent of GDP, in 2025.
  • Gross federal debt is projected to rise by $9.5 trillion over that period and to total $27.3 trillion at the end of 2025.
  • The Long-Term Budget Outlook: Beyond the coming decade, the fiscal outlook is significantly more worrisome,public debt would exceed 100% of GDP by 2039.

The following 3 charts were pulled from CBO’s supporting analysis, and show the Federal Budget’s, and America’s future if significant changes aren’t made to control mandatory spending.

Chart 1

Chart 1

Chart 2

Chart 2

Chart 3

Chart 3

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Obamacare – Exploding Costs, Crashing Results

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The Changing Face of Obamacare Costs, and Failing Promise of #s Insured

The Changing Face of Obamacare Costs, and Failing Promise of #s Insured

A recent weekly standard blogpointed out Obamacare’s exploding cost estimates, see blue bars in the chart, contrasted with the crashing estimate of numbers of Americans who will get insured, shown by the dropping red line. From CBO’s March 2010 estimate, Obamacare costs to taxpayers have more than doubled, to over $2 Trillion over the first decade.

Those cost estimates would surely keep climbing, but the CBO announced after its last assessment in Feb 14, that President Obama made so many unilateral changes to the law that it can no longer score the ACA’s costs. This certainly helps the Administration, since it keeps the severely troubled law out of the news, but stymies the American people, who deserve to know the truth about what their taxes are paying for.

So many problems have been reported on, but the end result, if we don’t repeal Obamacare entirely, is declining health care for all of us, along the path of the chart’s red line and the appalling treatment veterans receive through the VA. What’s the solution once we pull the plug on Obamacare, and it flat lines? Many solid solutions exist, but Dr. Ben Carson endorsed a program that looks very promising. Obamacare didn’t have any brain surgeons involved in it’s creation, but thankfully, Dr. Carson’s plan does. It consists of 5 parts, as explained here.

Latest Obama Care Bad News:

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Frightening CBO Forecasts from THE BUDGET AND ECONOMIC OUTLOOK: 2014 TO 2024

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The following quotes were taken from the CBO’s own report, found here. They tell the very frightening story that if our country doesn’t change the fiscal path that it’s on under the Democrat’s tax and spend policies, our country is headed for a disaster. We need to stand up, get vocal, vote out the spenders and force our elected officials to balance the federal budget, before the mounting trillions that we owe dooms us!

  • “Beyond 2017, CBO expects that economic growth will diminish to a pace that is well below the average seen over the past several decades.”
  • “Such large and growing federal debt could have serious negative consequences, including eventually increasing the risk of a fiscal crisis (in which investors would demand high interest rates to buy the government’s debt).”
  • “Interest rates on Treasury securities, which have been exceptionally low since the recession, are projected to increase in the next few years as the economy strengthens”
  • “Deficits Are Projected to Decline Through 2015 but Rise Thereafter, Further Boosting Federal Debt”
  • “In addition, changes in people’s economic incentives caused by federal tax and spending policies set in current law are expected to keep hours worked and potential output during the next 10 years lower than they would be otherwise.”
  • “Over the next decade, debt held by the public will be significantly greater relative to GDP than at any time since just after World War II. With debt so large, federal spending on interest payments will increase substantially”

In the below chart, also from the OMB report, note that the discretionary items in the budget get squashed by mandatory spending of interest, social security, and major health programs.

OMB Figure 1-2

OMB Figure 1-2

 

Conflicting Arguments, Obamacare vs Comprehensive Immigration Reform

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I’ve written about the Progressive/Democrat tactic of making claims about the intent of their policies and avoiding any analysis of the second or third order affects of them.  I’ve also discussed the hypocritical nature of so many of their policies.  The President and his Democrat Obamacare supporters have now blended these two deceptive tactics in defending two different policies.  First, not even Mr. Fantastic could bend himself into the pretzels needed by Democrats defending Obamacare.

The latest effort involves the recent CBO report, that stated Obamacare would reduce 2.3 million full time job equivalents from the US economy.  That means that Obamacare will shrink our economy.  Our GDP, which Democrats and big spending Republicans need to support their massive spending will be smaller, weaker and provide fewer taxes.  Bad news for America!  Democrats responded with the ludicrous explanation that cutting American workers’ hours is a good thing.  Less work is a blessing, since work is too difficult, and Americans need less work and more free time.  Americans, they say, are too productive.  Tell that to somebody that’s trying to pay their mortgage, rent, heating or water bill.  Tell them that less money is a blessing!  Here’s where the Democrats take a completely opposite position on immigration reform.

Democrats claim that comprehensive immigration reform is needed so that the illegal community can come out of the shadows and work.  They will do the work that Americans won’t do, so Democrats say.  Reform is needed to let these people, who only want to get to work and provide for their families the opportunity to put in long hours in the fields to do so.  Work for them, is a blessing.  Hard work is what we are keeping them from doing with our “unfair” immigration laws.  Make them legal so that they can work.  Why is it fair to make illegal immigrants work long and hard hours, but it’s oppressive to allow American citizens to do the same?

In order to connect these dots I guess Democrats would need to tell these immigrants to stop working full time hours once they come out of the shadows, for then work would be as bad as they say it is for Americans?  Perhaps Democrats are just intent on oppressing immigrants?

All fantasy aside, both Democrat arguments are nothing but smoke screens to hide their real goals.  Obamacare is only an interim step to government controlled healthcare, with emphasis on CONTROL.  Immigration reform is nothing but an effort to get more Democrat voters.

What Our Government Won’t Show Regarding The Debt

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The Congressional Budget Office released a report in September 2-13 (updated in Oct) called the 2013 Long Term Budget Outlook. http://www.cbo.gov/publication/44521

Both Republicans and Democrats heavily quoted the report. Republicans were quick to reference that the report concluded that America can’t sustain the debt path we are currently on. Democrats used a very slight near term improvement to the annual Debt to GDP ratio as great evidence that President Obama and the Democrats in Congress were improving the economy and the US debt picture. As often occurs, the Democrats are stretching the truth to the breaking point. The comparison of spending to GDP, used everywhere in the report, is camouflage for what’s really happening. See a couple of the report’s GDP comparisons by clicking here. Nowhere does the report show the debt in actual dollars. The two charts below expose the truth, extrapolating from the report’s supporting data tables, and proves that fundamentally the US is on a disastrous spending path.

Chart 1 below throws the Debt to GDP ratio away and provides raw constant year 2013 dollars for both Total US National Debt and GDP. Democrats trumpet the minuscule dip of the debt (Red Curve) below the GDP (Green Curve) in the 2018 time-frame as great news. Despite the fact that it was caused by the Republican House, it’s so insignificant that you can barely see it. Unless we control the reckless federal spending tidal wave, the red curve (US real debt) will grow exponentially vs our GDP. US debt will pass $30 Trillion by 2030. At some point in the not so distant future, we’ll cross the point of no return, a cataclysmic debt “event horizon”. The responsible answer involves cutting federal spending.

Government Debt Projections Exposed

Government Debt Projections Exposed

Chart 2 shows two potential futures from CBO’s report. A $2T reduction across ten years reduces the debt growth to the green curve. A further reduction to $4T across ten years dramatically (purple curve) cuts the debt’s growth more, but it does not yet cut the debt. Additional reductions (beyond $400B/yr), along with pro-growth economic policies are critical to balancing, and perhaps dare I say, paying it off.

Only Immediate and Deep Cuts Stabilize Budget Future

Only Immediate and Deep Cuts Stabilize Budget Future

For comparison purposes, the Debt to GDP ratio was added to Chart 2 (dotted blue line). Notice that the Democrat’s touted reduction in Debt to GDP clearly happens at the same time that the Debt itself explodes.

BOTTOM LINE: Significant cuts are essential and need to happen yesterday.

NOTE: Comparisons to GDP are useful to assess one time in history to another. However, our goliath government created a new paradigm that makes the debt to GDP ratio a poor future comparison and pundit “feel good” conclusions based upon them grossly misleading. Why?

Past spending spikes were more “single year” events as opposed to spending baked into the Federal baseline as they are today:

  1. Huge spikes in past Annual Debt to GDP were largely due to military wartime spending, easily reduced after wars ended to return to sustainable spending. See below chart.
  2. Today’s spending, which drives each year’s budget deficit, is increasingly caused by sources that can’t be easily eliminated (unlike the case with wartime spending).
    1. Interest on the national debt. The interest avalanche grows each year, as shown here, and must be paid or the US Government defaults on its obligations. Even Progressives admit that’s a bad thing.
    2. Social welfare programs are the third rail of politics. Democrats use them to buy votes, and bludgeon anybody who suggests responsibly reforming them.

Interest and social welfare programs, which now include Obama Care’s massive costs, will consume the budget, pushing all else aside. That “all else” includes what our Constitution mandates the Federal Government actually do.

From CBO's "The 2013 Long-Term Budget Outlook"

From CBO’s “The 2013 Long-Term Budget Outlook”