The Corner

CBO Baseline Shows Staggering Debt

The Congressional Budget Office (CBO) today released a ten-year budget baseline showing $7 trillion in deficits over the next decade. Yet because Congress requires the CBO to include all sorts of unrealistic assumptions (that all tax cuts will expire, that the AMT will never again be patched, that discretionary spending will barely move for a decade), some adjustments must be made.

This more realistic “current-policy” budget baseline reveals a ten-year deficit of $13 trillion. The annual budget deficit never falls below $1 trillion, and reaches $1.9 trillion by 2021. At that point, the $25 trillion debt would exceed the size of the entire economy – and even that assumes a return to peace and prosperity.

These deficits are driven by spending. Even if all the 2001 and 2003 tax cuts are made permanent, tax revenues (historically 18.0 percent of GDP) would climb to 18.4 percent by 2021. Yet federal spending (historically 20.3 percent of GDP) is projected soar to 26.4 percent by 2021. By that point, 100 percent of rising long-term deficits will result from above-average spending. There is no long-term revenue decline.

More sobering notes:

 *  Since 2001, federal spending per household has expanded $21,510 to $31,206 (adjusted for inflation);

 *  Between 2008 and 2021, the annual cost of Social Security, Medicare, and Medicaid is set to rise from $1.2 trillion to $2.2 trillion (adjusted for inflation);

 *  Letting the tax cuts expire for those earning more than $250,000 would close just 5 percent of the budget deficit over the next decade. The $736 billion price tag is a fraction of the cost $21 trillion cost of Social Security, Medicare, and Medicaid over the decade;

 *  Between 2009 and 2021, the national debt would increase by $150,000 per household. By 2021, net interest alone would cost $1 trillion – nearly one-half of all tax income revenues; and

 *  Over what would be President Obama’s eight years in office, baseline budget deficits are projected to total $9.9 trillion— triple the $3.3 trillion in deficits accumulated by President Bush.

These spending and deficit figures are unsustainable. In order to aver a budget crisis, Congress must substantially rein in non-defense discretionary spending, enact multi-year caps, and then begin fundamental Social Security, Medicare, and Medicaid reform. Small budget tweaks and freezes are no longer sufficient.

Brian Riedl is Grover M. Hermann fellow in federal budgetary affairs at the Heritage Foundation.

Most Popular

White House

The Trivialization of Impeachment

We have a serious governance problem. Our system is based on separation of powers, because liberty depends on preventing any component of the state from accumulating too much authority -- that’s how tyrants are born. For the system to work, the components have to be able to check each other: The federal and ... Read More
U.S.

‘Texodus’ Bodes Badly for Republicans

‘I am a classically trained engineer," says Representative Will Hurd, a Texas Republican, "and I firmly believe in regression to the mean." Applying a concept from statistics to the randomness of today's politics is problematic. In any case, Hurd, 42, is not waiting for the regression of our politics from the ... Read More
Culture

Feminists Have Turned on Pornography

Since the sexual revolution of the 1960s, the feminist movement has sought to condemn traditional sexual ethics as repressive, misogynistic, and intolerant. As the 2010s come to a close, it might be fair to say that mainstream culture has reached the logical endpoint of this philosophy. Whereas older Americans ... Read More
Culture

Not Less Religion, Just Different Religion

The Pew Poll tells us that society is secularizing -- particularly among the young -- and who can deny it? That is one reason that the free expression of religion is under such intense pressure in the West. But it seems to me that we aren't really becoming less religious. Rather, many are merely changing that ... Read More
Elections

In Defense of Tulsi

Some years ago, a liberal-minded friend of mine complained during lunch that Fox News was “stealing” his elderly parents. “They should be enjoying retirement,” he said, noting that they live in a modest but comfortable style with attentive children and grandchildren to enjoy. “But instead,” he sighed, ... Read More