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

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 20162025 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

Where are Your Tax Dollars Going?

Do you ever wonder where your tax dollars go? The Office of Manpower and Budget (OMB) uses accounting buckets to aggregate programs and spending. It calls large program groupings “Superfunctions”. The below chart clearly exposes that Superfunction monster. The blue line is the Superfunction named “Human Resources”, and it’s growing at an frightening rate.

US Federal Budget - Human Resources dwarfs the rest of the budget, including National Defense!

US Federal Budget – Human Resources dwarfs the rest of the budget, including National Defense!

The Human Resources Superfunction consists of a number of smaller program groupings called “Functions”. The Functions within it are:

  • Education, Training, Employment, and Social Services
  • Health (Including Obamacare)
  • Medicare
  • Income Security
  • Social Security
  • Veterans Benefits and Services

My next Blog will break out those Functions in another chart, to show the magnitude of each Function. If we are going to solve our unsustainable spending, we all need to understand where the money is going.

Note: The purple line, which is the Superfunction “Interest” (on the National Debt), is growing at nearly the same unsustainable rate as Human Resources.

America’s Federal Spending Future In Pictures

CBO Projected Spending: The Budget and Economic Outlook

CBO Projected Spending Feb 2014: The Budget and Economic Outlook

The series of slides in this blog are modified from the Congressional Budget Office’s (CBO) February 2014 report “The Budget and Economic Outlook: 2014 to 2024”. The above slide shows federal spending broken out by major spending category. Note the vertical red dotted line showing where we are today.

CBO Projected Spending Net Interest

Explosive Interest Growth – American Taxpayers On The Hook

The above slide highlights the growth in Net Interest, an increase of 1.9% of our GDP vs current spending levels. This is the largest area of growth projected in the budget, and is like the interest you pay on you credit card. America’s interest payments are just starting to accelerate, having been masked the last few years by historically low interest rates. If the actual interest rates exceed what CBO projects, roughly 5%, the costs of Net Interest will grow.

CBO Projected Spending Other Mandatory

Other Mandatory Spending – Only “Mandatory” Spending Projected To Decrease

Other Mandatory Spending decreases relative to GDP by -0.3%, and is the only Mandatory Spending category that isn’t protected to consume even greater portions of the GDP.

CBO Projected Spending Non Defense Discretionary

Nondefense Discretionary Shrinks Relative To GDP

Non-defense discretionary decreases by nearly 1% relative to GDP. This category, minus the Defense Department, includes most of the federal government’s agencies such as the Department of Homeland Security, NASA, National Science Foundation, Environmental Protection Agency, Departments of Justice, Labor, Agriculture, State, Transportation, Interior, HUD, Commerce…

Slide1

Defense Shrinks Dramatically vs GDP To Levels Not Seen Since The Interwar Years Of The 1930’s

Defense Discretionary, partly due to reductions instituted by Secretary Gates, and partly due to Sequestration, is projected to continue it’s decline relative to GDP. It is projected to drop to levels not seen since the 1930s, and as shown by the red circle and arrow, is projected to drop below interest spending by 2021. Interest spending is projected to begin dwarfing defense spending there on out. The increased cost of interest, along with health care and social security will dominate federal spending.

CBO Projected Spending SS

Social Security If Projected To Continue Eating Ever More Of The Federal Budget – And Cause Ever More Borrowing

Social Security, now that the baby boomer retirements are well underway, continues to swell. Reforming it, in order to save the program from pending collapse, is essential. Despite it’s growth of 0.7% relative to GDP, that increase comes in third behind Interest and Health Care spending.

CBO Projected Spending Maj Health Care

Major Health Care Programs Constitute The Largest Part Of The Federal Budget, Eclipsing Social Security In 2014.

Major Health Care Spending, thanks to the passing of Obama Care, or the “Affordable Care Act” is now the largest part of the federal budget, and is projected to eat an additional 1.3% of America’s GDP by 2024. Combined with Social Security, Interest and Other Mandatory Spending, they are projected to eat 17.2% of GDP. The rest of the federal budget gets the scraps.

Global Warming vs The National Debt

Weatherman Al Roker interviewed President Obama on Tuesday in response to the recently released National Climate Assessment Report. During the interview Obama said

“But the truth of the matter is that if we don’t do more, we’re going to have bigger problems, more risk of … extreme weather events that can result in people losing their lives or losing their properties or businesses. And we’ve got to have the public understand this is an issue that is going to impact our kids and our grandkids unless we do something about it.”

It’s a real tragedy that he is so fixated on global warming when he should make precisely the same warning about our national debt. Let’s look at the reality of the mounting debt, as opposed to the invented 100 year global warming crisis.

1. “If we don’t do more, we’re going to have bigger problems.”

Yes Mr. President, you got that right. In a few short years at your current rate of dangerous spending, debt interest payments alone will exceed a Trillion dollars each year. That’s far greater than the defense budget, and billions of that interest will go to China, so that they can build up their military as we dismantle ours.

2. “Events that can result in people losing their lives or losing their properties or businesses.”

Right again Mr. President. The massive debt will result in rapidly rising interest rates, and is unsustainable according to the Congressional Budget Office. Businesses will go under, and Americans will lose their jobs, properties and homes when they can’t pay their mortgages due runaway interest rates and rampant inflation bound to come. Long before the ocean swallows New York City, our debt will swallow America.

3. “And we’ve got to have the public understand this is an issue that is going to impact our kids and our grandkids unless we do something about it.”

Mr. President, no more accurate statement could be made than that we are foisting an impossible debt burden upon our kids and our grandkids. Their future America will be crippled by the excessive spending you, your administration and reckless Democrats and Republicans created. You will go down in history as the greatest debt creator in all of human history.

Given his statement on saving American’s future, however wrong global warming is, it’s clear that President Obama can think strategically, with an eye on the future. Why, why, why then can’t he use the same foresight to address our debt? Why aren’t there democrats screaming with a global warming-like fervor to stop the destruction of our economy? Why indeed?