Debt Wish: Through The Looking Glass
Debt Wish: Through The Looking Glass
This week, the nonpartisan Congressional Budget Office (CBO) released a new report that gives a shocking glimpse into our fiscal future if we continue on our current trajectory. But on the same day, President Obama said that our economy was poised for growth in 2013 as long as we continue to make the right “investments.” So did all this spending really help get our economy back on track, or are we just setting ourselves up for more pain down the road? And will the president detail his plans to cut spending in next week’s State of the Union address?
SPENDING NOT A PROBLEM, WE’RE POISED TO GROW
President Obama: “We began this year with economists and business leaders saying that we are poised to grow in 2013.” (President Obama, Weekly Address: A Balanced Approach To Growing The Economy In 2013, Real Clear Politics, 2/2/13)
President Obama: ”We don’t have a spending problem.” (Stephen Moore, “The Education of John Boehner,” The Wall Street Journal, 1/6/13)
NEW CBO REPORT LESS OPTIMISTIC
CBO: “Economic Growth Is Likely To Be Slow In 2013 …” (“The Budget And Economic Outlook: Fiscal Years 2013-2023,” Congressional Budget Office, 2/4/13)
CBO Warns Entitlement Spending Will Double. “Spending on Social Security and healthcare will double to $3.2 trillion a year over the next decade, threatening a sharp rise in national debt unless Congress acts to avoid the danger, congressional researchers warned on Tuesday.” (David Morgan, “Social Security, health spending to hit $3.2 trillion a year,” Reuters 2/5/3013)
Interest Payments Alone On Debt Set To Overtake Defense Spending. “Accumulated interest payments from 2014 through 2018 are $1.76 trillion under CBO’s new baseline. Interest payments for the second five years are more than double that or about $3.64 trillion. … The end result is that annual interest costs are predicted to have overtaken defense spending by 2020 even allowing for an extra $100 billion annually for overseas contingencies.” (David Rodgers, “CBO: Interest on debt snowballing,” POLITICO 2/513)
DEFICIT PROJECTION ISN’T AS “ROSY” AS FIRST THOUGHT
CBO Predicts Deficit Will Fall to Less Than $1 Trillion in 2013. (“CBO Report: Deficit Will Fall to Less Than $1 Trillion in 2013,” C-SPAN, 2/5/13)
…But Only If We Follow Through With the Sequester. “…The deficit reduction is based on assumptions, many of which may never come to pass. For instance, the roughly $1.1 trillion in spending cuts Obama is trying to avert — the so-called ‘sequester’ — are factored into CBO’s projections… Yet there’s no guarantee that will happen — lawmakers already temporarily delayed the onset of the first $85 billion in cuts scheduled to take effect this year when they passed a bill averting the so-called fiscal cliff.” (Deborah Solomon, “Hidden Thorns in CBO’s Rosy Deficit Report,” Bloomberg, 2/5/2013)
And By 2017, Our National Debt Will Be Nearly $20 Trillion. “The government’s debt is $16.4 trillion and is slated to reach almost $20 trillion by 2017, according to financial analysis by the non-partisan Congressional Budget Office.” (Neil Munro, “Credit-Rating Agency Threatens Downgrade If Obama Spending Isn’t Curbed,” The Daily Caller, 1/15/2013.
By 2023, Debt Will Equal 77 Percent of GDP. “By 2023, if current laws remain in place, debt will equal 77 percent of GDP and be on an upward path, CBO projects.” (“The Budget And Economic Outlook: Fiscal Years 2013-2023,” Congressional Budget Office, 2/4/13)
The CBO Says That A Large Debt Poses An Increased Risk. “Moreover, such a large debt poses an increased risk of precipitating a fiscal crisis, during which investors would lose so much confidence in the government’s ability to manage its budget that the government would be unable to borrow at affordable rates.”(“The Budget And Economic Outlook: Fiscal Years 2013-2023,” Congressional Budget Office, 2/4/13)
And Right Now We Are Underperforming.
(Neil Irwin, “The Most Depressing Graph in the New CBO Report,” Washington Post, 2/6/13)
BankruptingAmerica.org is an educational project of Public Notice, an independent, nonpartisan, non-profit, 501(c)(4) organization dedicated to providing facts and insight on the effects public policy has on Americans’ financial well-being.