CBO's Long Term Debt Projections Spell Major Economic Disaster

H/T YID With LID for pointing out (and providing the embedded report below his post) the latest Congressional Budget Office's long term debt report which projects unmanageable economic disaster on the horizon for the U.S. unless some painful changes are made now.

CBO’s projections in most of the report understate the severity of the long-term budget problem because they do not incorporate the negative effects that accumulating additional federal debt would have on the economy, nor do they include the impact of higher tax rates on people’s incentives to work and save. In particular, large budget deficits and growing debt would reduce national saving, leading to higher interest rates, more borrowing from abroad, and less domestic investment—which in turn would lower income growth in the United States. (Chapter 2 of the report presents estimates of the economic effects of growing debt and the impact of those economic changes on the trajectory of debt under both scenarios.)

There is much more, go read it there and the report itself is embedded for those that wish to look through the whole thing.


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Obama's Mistaken Calculations: Budget Proposal Underestimated By $2.3 Trillion According To CBO

According to the non-partisan Congressional Budget Office (CBO) Barack Obama underestimated, the 10 year projections of his budget proposal, by $2.3 trillion.

Some will say it was a miscalculation, others may say his administration used creative accounting and still others would call it outright lies.

No matter the spin, the bottom line is the CBO's analysis shows Obama's numbers off by over $2 trillion.

The estimate from the nonpartisan Congressional Budget Office says that if Obama's February budget submission is enacted into law it would produce deficits totaling $9.5 trillion over 10 years -- an average of almost $1 trillion a year.

Obama's budget saw deficits totaling $7.2 trillion over the same period.

The CBO's bottom line from their website summary:

Compared with the Administration's estimates, CBO's estimates of the deficit under the President's budget are lower for 2011 (by $220 billion) but higher for each year thereafter (by a total of $2.3 trillion over the 2012–2021 period). That disparity stems from differences in the underlying projections of what would happen under current law ($1.3 trillion) as well as from differing assessments of the effects of the President's proposals ($1.0 trillion).

The Hill:

The White House also said total deficits over the next decade would be $1.1 trillion more without the recommendations included in Obama's budget.

Marc Goldwein, policy director for the Committee for a Responsible Federal Budget, said that CBO has found the effects to be almost nil.

He explained that the difference between the CBO's $9.5 trillion estimate and OMB's $7.2 trillion estimate comes from two sources: rosy economic growth assumptions by OMB and offsets for the Medicare doc fix as well as transportation spending OMB did not specify in the budget and which CBO will not factor in.

The most important aspect of CBO's analysis is that, while OMB claimed the president's budget "stabilized" the debt at 77 percent of GDP over the 10-year window, CBO estimates the debt will grow throughout the period and end up at 87 percent, he said.

Whether one sees this as a miscalculation on Obama's part or an outright attempt to misrepresent the actual numbers, this is a hell of a huge difference from White House projections when Obama presented his proposal.

You can take a look at the CBO's "An Analysis of the President’s Budgetary Proposals for Fiscal Year 2011" in HTML at that link or in PDF at this link.

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CBO Admits That Repealing Obamacare Would Reduce Net Spending By $540 Billion

Well Well Well, all morning I have seen the left try to highlight a portion of the latest CBO report which stated that repealing Obamcare would increase the deficit by $230 billion through 2021.

A new more detailed report is due to be released over at the CBO's Director's Blog which will clarify a few things.

A letter from the Congressional Budget Office's Associate Director for Legislative Affairs, Edward "Sandy" Davis, shows that repealing the national health care law would actually reduce net spending by $540 billion in the ten year period from 2012 through 2021. Also that the $230 billion increase in the deficit would be the result from taxes not being raised on Americans.

We have been asked to provide the revenue and direct spending components of that total. Extrapolating the estimated budgetary effects of the original health care legislation and accounting for the effects of subsequent legislation, CBO anticipates that enacting H.R. 2 would probably yield, for the 2012-2021 period, a reduction in revenues in the neighborhood of $770 billion and a reduction in outlays in the vicinity of $540 billion, plus or minus the effects of forthcoming technical and economic changes to CBO’s and JCT’s projections.

CBO will post a Director’s blog with this information on the CBO website shortly. Please let me know if you have any questions.

In other words, the $230 billion difference would be monies saved the tax payer because the $770 billion would have been from TAXES levied against Americans.

Democrats solid solution to their overspending is always to tax Americans to pay for it. Then when they cannot raise taxes they accuse the Republicans of raising the deficit?

In the eyes of the left revenues equals taxes.

Ask yourself, how the CBO could assume paying a debt with taxes not even collected yet, then turn around and say by not collecting those taxes, would increase the deficit?

AmSpec explains:

The Congressional Budget Office, in an email to Capitol Hill staffers obtained by the Spectator, has said that repealing the national health care law would reduce net spending by $540 billion in the ten year period from 2012 through 2021. That number represents the cost of the new provisions, minus Medicare cuts. Repealing the bill would also eliminate $770 billion in taxes. It's the tax hikes in the health care law (along with the Medicare cuts) which accounts for the $230 billion in deficit reduction.

'Nuff said.