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Politics : Liberalism: Do You Agree We've Had Enough of It? -- Ignore unavailable to you. Want to Upgrade?

To: Kenneth E. Phillipps who wrote (78325)	1/27/2010 7:34:46 PM
From: TimF	Read Replies (1) \| Respond to of 224884

Realistic Budget Baseline Shows $13 Trillion in Debt over the Next Decade by Brian M. Riedl WebMemo #2780 The new Congressional Budget Office (CBO) 10-year budget baseline provides a sobering picture of a federal government that has committed itself to trillions more in spending than taxpayers can afford. Once the baseline is scrubbed of several unrealistic assumptions that Congress demands CBO use, the more realistic baseline shows that massive spending increases are set to keep the budget deficit to $1.4 trillion in 2010 and drive it to $1.9 trillion by 2020. A Sea of Red Ink The CBO baseline contains two important messages. First, Washington is accumulating debt at an unsustainable rate. After the debt slowly grew to $5.8 trillion through 2008, the more realistic baseline shows the federal government adding an astonishing $16.3 trillion in new debt between 2009 and 2020--$130,000 per household over those 12 years. Budget deficits would average $1.3 trillion annually as the debt climbs to 98 percent of the gross domestic product (GDP) by 2020--and continues growing thereafter. This steep rise in debt would eventually become too large for global capital markets to absorb, potentially triggering a financial crisis, interest rate spike, and gigantic tax increases. The second message is that surging government spending--not low revenues--is driving these deficits. Historically, spending has averaged 20.7 percent of GDP, and revenues have averaged 18.3 percent of GDP, leading to sustainable average deficit of 2.4 percent.[1] Under the adjusted CBO baseline, 2020 spending would surge to 25.9 percent of GDP, while revenues would reach 17.6 percent (still slightly below the historical average), leaving a deficit of 8.3 percent of GDP. This means that 88 percent of the additional deficits would come from higher spending, and only 12 percent would come from lower revenues--and that assumes all tax cuts are extended. Clearly, spending is the problem. Thus, President Obama's spending agenda--which would be unaffordable even in good budget times--is completely unrealistic in this sea of red ink. On top of this baseline, the President would spend trillions of dollars on a new health care plan. This cost would be partially offset by painful tax increases and deep Medicare cuts that, if enacted, would be better spent on meaningful deficit reduction. The President's stimulus did not create 3.5 million jobs as promised, but it did add $1 trillion in new debt.[2] The effect of these policies is to dig the fiscal hole deeper, forcing future lawmakers to choose between even larger tax increases and deeper spending cuts... heritage.org