At a House Budget Committee hearing on Tuesday, freshman Rep. Mick Mulvaney (R., S.C.) lambasted OMB director Jacob Lew for the “unreasonable assumptions” regarding growth, GDP, revenue, interest rates, and just about everything, contained in the White House budget. “That is the reason that this is not a credible document,” he said.
His point about interest-rate projections was particularly devastating. A quick rundown, by the numbers:
3 percent: Interest rate on 10-year Treasury notes assumed in Obama’s budget for 2011.
3.4 percent: Interest rate on 10-year notes predicted by the CBO last year.
3.65 percent: Actual interest rate on 10-year notes, as of last week.
$1.3 trillion: Amount of debt that CBO forecasts will accrue over ten years for every percentage point the assumed interest rate falls below the actual rate.
That means if the current rate stays at around 3.6 percent for the remainder of 2011, as opposed to the administration’s rosy projection of 3 percent, more than $800 billion will be added to the debt over the next decade. That alone would almost completely undo the $1.1 trillion in deficit reduction projected in the White House budget.
Lew contented that the budget reflected “mainstream assumptions” about growth and interest rates, etc.
Mulvaney’s response: “Well then you need to walk over to the CBO and tell them that their numbers are whacked out.”
Mulvaney: “I can’t believe the numbers … and until we can get numbers that we can agree on, or at least in the middle of the assumptions, it’s going to be very difficult to focus on policy. … We should be here talking about policy, we should be here talking about what the president wants to do to fix the country and what we want to do to fix the country … and when you give us numbers that are simply not credible, it really prevents us from doing that. I expect better out of you and … I expect better from us. When you see our budget you’re not going to see unreasonable assumptions.”