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Miss stated Debt, CBO scores a wooping 9.7 trillion more

Posted by on Mar. 6, 2010 at 4:02 AM
  • 2 Replies

 National debt to be higher than White House forecast, CBO says

President Obama's proposed budget would add more than $9.7 trillion to the national debt over the next decade, congressional budget analysts said Friday. Proposed tax cuts for the middle class account for nearly a third of that shortfall.

The 10-year outlook released by the nonpartisan Congressional Budget Office is somewhat gloomier than White House projections, which found that Obama's budget request would produce deficits that would add about $8.5 trillion to the national debt by 2020.

The CBO and the White House are in relative agreement about the short-term budget picture, with both predicting a deficit of about $1.5 trillion this year -- a post-World War II record at 10.3 percent of the overall economy -- and $1.3 trillion in 2011. But the CBO is considerably less optimistic about future years, predicting that deficits would never fall below 4 percent of the economy under Obama's policies and would begin to grow rapidly after 2015.

Deficits of that magnitude would force the Treasury to continue borrowing at prodigious rates, sending the national debt soaring to 90 percent of the economy by 2020, the CBO said. Interest payments on the debt would also skyrocket by $800 billion over the same period.

Obama's tax-cutting agenda is by far the biggest contributor to those budget gaps, the CBO said. As part of his campaign pledge to protect families making less than $250,000 a year from new taxes, the president is proposing to prevent the alternative minimum tax from expanding to ensnare millions of additional taxpayers. He also wants to make permanent a series of tax cuts enacted during the Bush administration, which are scheduled to expire at the end of this year.

"Over the next 10 years, those policies would reduce revenues and boost outlays for refundable tax credits by a total of $3.0 trillion," wrote Douglas W. Elmendorf, the CBO director. Combined with interest payments on that shortfall, the tax cuts account for the entire increase in deficits that would result from Obama's proposals.

Obama is convening a special commission to bring deficits down to 3 percent of the economy, but the CBO report shows that Obama could accomplish that goal simply by letting the Bush tax cuts expire and paying for changes to the alternative minimum tax.

Other policy changes, such as Obama's signature health-care initiative and a plan to dramatically expand the federal student loan program, would have significant effects on the budget, Elmendorf wrote, but they generally would be paid for and therefore would not drive deficits higher.

by on Mar. 6, 2010 at 4:02 AM
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by on Mar. 6, 2010 at 2:32 PM


by Platinum Member on Mar. 6, 2010 at 5:47 PM

 HUh....because I think he could ALSO reduce it by REDUCING SPENDING. His budget FAR EXCEEDS what it needs to be...he's INCREASED spending to impossible heights. CUT government and government jobs and therefore long term retirement plans of said..because THAT is the other 2/3s of the budget ....funny the CBO is 'carrying' Obama's water on the tax issue, basically providing him with an EXCUSE to break his campaign promise. It's called 'reading between the lines here' people. Obama KNOWS he has to raise taxes for the budget HE is proposing..he just needs 'cover', which this report just gave him.

History of CBO accuracy on projections that far out?

On average, the absolute difference (without regard to whether the difference was positive or negative) between CBO's estimate of the federal deficit or surplus and the actual result was 0.5 percent of gross domestic product for the ongoing fiscal year, 1.1 percent for the budget year, and 3.2 percent for the fourth year beyond the budget year, adjusted for the effects of subsequent legislation (see Table 5-1). If those averages were applied to CBO's current baseline, the actual surplus or deficit could be expected to differ in one direction or the other from CBO's projections by about $50 billion in 2002, $130 billion in 2003, and over $350 billion in 2007. 

How quaint..back then they were talking in 'billions'...they could be off that much in EITHER direction and THAT is basically 'eliminating' anything resulting from possible other legislation that they cannot possibly project, in a 5 year window that 'certainty' could be off as much as 300 BILLION in UP or DOWN direction..and it just grows LESS certain from there...

This is nothing but a precursor to Obama raising taxes and blaming the 'CBO' letter rather than thinking we MIGHT consider his OTHER option...not increasing the budget at ALL or spending or the OTHER 2/3s of the budget being considered.


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