CBO: Obama 2011 budget deficit $1.2 trillion more than predicted

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AP’s Andrew Taylor hits the media cyberwaves with the news that today’s CBO analysis of Obama’s 2011 budget plans would generate deficits totalling $9.8 trillion over the next decade…. $1.2 trillion more than predicted. But just as Harry Reid sluffed off a job loss of 36K last month as “a big day in America” Taylor also attempts to soften the blow.

The agency says its future-year predictions of tax revenues are more pessimistic than the administration’s. That’s because CBO projects slightly slower economic growth than the White House.

The deficit picture has turned alarmingly worse since the recession that started at the end of 2007, never dipping below 4 percent of the size of the economy over the next decade. Economists say that deficits of that size are unsustainable and could put upward pressure on interest rates, crowd out private investment in the economy and ultimately erode the nation’s standard of living.

Ignoring the numbers, and keeping in the spirit of the “hope and change” mantra, Taylor razzle dazzles the reader by saying the budget avoided decisions on Medicare and Medicaid cuts that can’t keep up with the rising costs of providing medical services to the elderly and the poor. Of course, none of this is cured in O’healthcare, BTW…

Additionally Taylor expresses his skepticism that the GOP members of the “deficit commission” Obama created by Executive Order when a supermajority Congress rejected the same entity, would agree to going along with proposed tax increases.


Taylor is also quick to note the cost of extending the cost of the Bush tax cuts… $ 3 trillion over the decade… which Obama wishes to extend to what he defines as “the middle class”.

What seems to be missing in Taylor’s AP report is the increased spending by Congress and this administration…. What is it with the media and their bashing of tax cuts? Why do they insist it’s such a fiscal sin to allow Americans to keep their cash, while silently giving a nod of approval to out of control spending?

It’s a simple solution… keep the tax cuts, and cut Congress’ allowance, fer pity’s sake!

But back to the CBO, and the source of Taylor’s somewhat bizarre interpretation. CBO’s Elmendorf’s letter to Appropriations Committee Chair, Sen. Daniel Inouye has some truly harsh phrasing:

* If the President’s proposals were enacted, the federal government would record deficits of $1.5 trillion in 2010 and $1.3 trillion in 2011. Those deficits would amount to 10.3 percent and 8.9 percent of gross domestic product (GDP), respectively. By comparison, the deficit in 2009 totaled 9.9 percent of GDP.

* Measured relative to the size of the economy, the deficit under the President’s proposals would fall to about 4 percent of GDP by 2014 but would rise steadily thereafter. Compared with CBO’s baseline projections, deficits under the proposals would be about 2 percentage points of GDP higher in fiscal years 2011 and 2012, 1.3 percentage points greater in 2013, and above baseline levels by growing amounts thereafter. By 2020, the deficit would reach 5.6 percent of GDP, compared with 3.0 percent under CBO’s baseline projections.

* Under the President’s budget, debt held by the public would grow from $7.5 trillion (53 percent of GDP) at the end of 2009 to $20.3 trillion (90 percent of GDP) at the end of 2020. As a result, net interest would more than quadruple between 2010 and 2020 in nominal dollars (without an adjustment for inflation); it would expand from 1.4 percent of GDP in 2010 to 4.1 percent in 2020.

The fuzzy math problem? Revenues are down if Obama extends the tax cuts to those with incomes less than $200K for singles, or $250K for couples. The mandatory outlay is up $1.9 trillion over the decade, about 1/3rd of which stems from Obama’s proposed health care changes. The rest is in refundable tax credits and Pell Grants (education).

No doubt about it… Obama’s pipe dream visions of “remaking America” are more expensive than our wallets… and his campaign promises… can fulfill.

In Elmendorf’s letter:

If the President’s proposals would be enacted, the resulting $1.5 trillion deficit for 2010 would be $140 billion more than the shortfall that CBO projects under current law (see Table 1). Those policies would reduce revenues by nearly $60 billion and boost outlays by more than $80 billion relative to the current-law baseline.

In 2011, the $1.3 trillion deficit under the President’s budget would be $346 billion
more than the deficit that CBO projects in its March baseline. The cumulative deficit
over the 2011–2020 period would equal $9.8 trillion (5.2 percent of GDP), $3.8 trillion
more than the cumulative deficit projected in the baseline. Of that difference,
roughly $3.0 trillion stems directly from proposed changes in policy and another
$0.8 trillion results from additional interest on the public debt.

Additionally, Obama’s proposed changes to tax laws also decrease revenues by $1.4 trillion, as well as increasing spending.

What CBO does say is a real revenue getter … sans any real details and taking the admins legislative proposal on faith… is health *insurance* (not cost) reform. That would be the completely unpredictable, and non-existent at this writing, budget reconciliation bill of supposed health insurance (not costs) reform. Or what may be left of it after both CBO and the Senate Parliamentarians take an axe to non-budgetary meaures included.

The President’s budget includes a placeholder of $743 billion in related revenues between 2011 and 2020. Because the Administration did not provide the details of the underlying legislative proposal, for the purposes of this analysis CBO assumed that the policies would have the effect set forth in the budget.

Yet another revenue grabber is fees on financial institutions. The last proposal in the plus, as opposed to the spending column, is a revamping of the ARRA Build America Bonds program…. a subsidy to state and local governments at 35 percent of their interest costs on taxable government bonds issued to finance capital expenditures. The program is to be expanded, but the subsidy lowered to 28 per cent.

Spending? What this admin and Congress do best?

On the outlay side of the budget, the President’s policies would increase spending (relative to CBO’s baseline projections) by $81 billion in 2010 and $2.3 trillion between 2011 and 2020. Outlays would average 24.1 percent of GDP over the next 10 years— well above the 40-year average of 20.7 percent. The Administration’s proposals would boost mandatory outlays by $72 billion in 2010 and by $1.9 trillion from 2011 to 2020.

~~~

The proposal effect with the largest effect on mandatory spending is the one to expand health insurance coverage and make other changes to the health care system. The President’s budget estimates that such legislation would increase mandatory spending by $6 billion in 2010 and $593 billion between 2011 and 2020—about $150 billion less than the added revenues assumed to result from such legislation. As in the case of revenues, that estimate of outlays is a placeholder calculated by the Administration; pending the development of detailed legislation, CBO has incorporated that placeholder in this analysis.

Again we play with figures, based on no real bill and no real legislation. But what we do know is even the optimistic figures provided are way out of the ballpark of reality.

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imagine this only on expected expanses now add up all unexpected expanses to it wow,bye

Why did you put “deficit commission” in quotation marks, as if it did not exist? It does exist. Is that because you oppose having a commission make recommendations on reducing the deficits?

In addition, from The Atlantic, the following: “That was voted down by the Senate Jan. 26, collecting 53 ‘yea’ votes but falling short of the 60 needed to advance to a final up-or-down vote. This was met with consternation, as some of the GOP senators who opposed it had cosponsored a previous effort to create a deficit commission.”

Both the CBO report and the deficit commission are only going to tighten the GOPer noose even further. The GOP has so positioned itself to oppose EVERYTHING Obama does, they are painting themselves into a corner where they will have to OPPOSE a deficit commission recommendation that will reduce the deficit.

Oh, I know, they will say they are opposing it because “it calls for tax increases” or “it takes too many years to balance the budget.” (I am hoping they are not stupid enough to adopt John Boehner’s point of opposition . . . you know, who will chose the chairman of the commission.) But then Obama will say “Well where is your plan, cons?” The response . . . I predict silence and the sound of crickets. Just as their “alternative budget” last year consisted of a PowerPoint presentation with vague talkingpoints.

@BRob,
You are so cavalier about taxes. Do you actually pay any? I mean besides gas, phone, store taxes? Since you find tax increases so unobjectionable, feel free to pay extra – no one will try to stop you.

skat —

I can tell that you are one of those borrow and spend, free lunch conservatives — the ones who got us in this mess by taking a budget surplus and, within one budget cycle, turning it into a deficit. You folks are more than content to use the Chinese Communists as a credit card that my kid’s kid will have to pay, so you can get your tax cut today and STILL suck on the goverment teat at the same time. There is a silliness among conservatives where spending and taxes are concerned. As if the Magic Tax Cut Fairie is going to bring Magic Tax Cut Dollars to fill in the budget gap as revenues fall because you cut tax rates. Did any of you cons notice any states cutting their tax rates because they had deficits? No, you didn’t . . . because the Magic Tax Cut Fairie does not exist!

Yes, skat, I pay taxes. I pay capital gains in a good year, property taxes, income taxes and sales taxes every year. I pay my fair share and I do not cheat. Why? Because there is no free lunch, cons!

The downright lack of seriousness among the cons is best shown when you ask cons “OK, under Bush you guys ran $400 billion deficits about every year. So show me $400 billion in spending cuts for Obama to enact.” You know what you get in response? Silence. Why? Because conservatives NEVER CUT SPENDING. They didn’t under Reagan, or Bush I, and DEFINATELY not under Bush II. If they believed in cutting spending, they would have paid for the 2001 and 2003 tax cuts by cutting spending. They would have paid for the Iraq War by cutting spending or raising taxes. Instead, they borrowed it for my kid’s kid to pay back . . . and none of the cons anywhere (except maybe John McCain, who y’all hate) said a mumbling word. So EXCUSE ME if I find your latter day whining about “excessive spending” during a recession to be a bit nonsensical.

If you are serious about reducing the deficits, there are only four ways to do it: cut current spending, cut future entitlement levels, increase taxes and increase investment income from Social Security. And anyone who thinks you can eliminate the deficit without cutting entitlements and/or increasing taxes is being silly.

I’m not even going to bother with BLOB’s George Soros supplied talking points. It’s all BLAH, BLAH, BLAH “Cons” B.S.

The real story here needs to be put in bold:

Obama’s plans to increase debt
by TEN TRILLION!!!

No phony “deficit commission” will do anything about that.

The fact that spending was not cut in the past could be due to a lot of votes from both sides. It doesn’t obviate the need for cutting spending now. It doesn’t let the Dems off the hook to say the Repubs did it too. And BRob, your generalizations about conservatives are just your own stereotypes based on a limited sample. I never was in favor of borrow and spend. Bet a couple of other fiscal conservatives weren’t either. You are coming in here with the intent of annoying people, either that or you are incredibly stupid, to make such nasty comments about people you don’t even know.

The Dems have been in control of Congress for years. Why didn’t they cut spending sooner? Why do you keep thinking that if you just say “Bush did it” that it means something? Not gonna change history or make you sound any other than like the little boy who says “but he did it.” Grow up. We have a fiscal disaster on hand, and more government commissions to study the problem are not going to go anywhere. Since government unionized employees make more than all us regular stiffs in similar jobs, and don’t produce as much, I don’t think we need any commission at all to tell us that payroll expenses need to be cut.

Mata —

If you are actually in favor of reducing the deficit, then the Senate bill is a good way to start, since the CBO scoring shows that it will save us money. Think “reduce unpaid for medical care to hospitals” and “decrease future Medicare expenditures.”

Tax cuts DO NOT REDUCE DEFICITS! They never have and they never will. They didn’t when Reagan had his tax cuts and they didn’t when Bush II did his. In both cases deficits soared. Indeed, if tax cuts increased revenues, then every state running a deficit would cut taxes, wouldn’t they? But they don’t because it does not work.

I have no idea why Dems opposed the bill. All I know is that GOPers were for a deficit commission before they were against it. And the GOPer opposition was not principaled and you know it. That is why they hemmed and hawed for several days when asked for their reasons for flip flopping on the deficit commission that they had previously supported. And it is why the GOPer leadership is OPPOSING OBAMA’S VERSION, TOO! Need I re-link to John Boehner complaining about “who will chose the chairman”? What utter b.s.! Just tell the truth, Mr. Orange — you don’t want a Dem president to balance the budget . . . AGAIN! Because if Obama creates a path to eliminating the deficit . . . then why do we need cons, anyway? He is already more trusted on terrorism than the GOPers . . . probably because he loves the Predator so much and keeps capping Taliban and al Qaeda folks.

This massive ammount of Deficit increase per budget period adding to the over all National Debt is not healthy, given much so the People’s Republic of China considering in dumping its T-Bills and demanding America to pay up sooner rather than later which will compound the economical problems the Federal Government is facing. The Chinese will only tollerate this situation only so far before considering full military solutions on the United States soil or our Allies like Taiwan to enact a Government equal of reposession actions of a Credit company on clients in bankrupt situations.

Hell, their military high command of China is encouraging the Politicans in the Communist state to drop all of their Federal T-Bills in holding to further compound our budget deficits and cause rampant hyperinflation. This would give a political tool and weapon against the Federal Government of United States of America for the Chinese to move in to troubled States via Chinese businesses and introduce a “stable” currency in contrast to the troubled Dollar for American citizen useage.

And Brob, contrary to being “budget deficit netural.” The Senate Bill will incur an extra 1.5 trillion dollars of spending. This means the Senate will either:

A. Force many States to cut budgets by billiions and collect those monies from all 50 states to scrape up 1.5 Trillion

B. Increase taxation rates onto all businesses, citizens, and propperty at State and Federal Level to scrape up 1.5 Trillion

C. Just borrow from a outside source such as the Chinese.

Given the history of the Federal Government borrowing massively from the Chinese since 1998, the solution will be C and will be the equal of using a credit card to buy a 40,000 dollar car on a weekly income of 150 dollars with an APR of 10 percent on the purchase. It is unstainable and the car will be repoed.

BROB

“Tax cuts DO NOT REDUCE DEFICITS! They never have and they never will. They didn’t when Reagan had his tax cuts and they didn’t when Bush II did his. In both cases deficits soared.”

You may want to do a little better research, of course, that’s like asking my car to get better fuel mileage. One, it’s an inanimate object and as likely to have spontaneous intelligent as you are, and two, it is what it is, just as you are.

In every instance of tax cuts throughout the history of this country, govt. revenue has INCREASED. That is the reality of economics. The more people have to spend, the more they do spend, the more demand for services and goods, companies expand and hire more, and in the end, the loss of tax revenue do to the cuts is more than offset by more paying into taxes and higher tax revenue from expanded businesses. Simple economics.

The reason your liberal view is what it is, is that when those taxes were cut and revenue increased, it wasn’t enough to make up for INCREASED SPENDING by the congress critters. A simple google search will yield interesting points on this topic, and if you weren’t so obtuse in your thinking, I’d take the time to do it for you, however, I won’t because it won’t result in anything more than the rehashing of tired liberal talking points.

Please see my blog in response: http://www.political-bull.com/

Nice site kyle. No fluff, just good reading and topics. BTW, thank you for your service to our great nation. Many of us who served during peacetimes are very thankful for the service and sacrifice of those who did so under war.

@MataHarley:

Of all of the Libtard talking points, this is the most maddening to me. This myth of a balanced budget, as if to say, No really the Democrats are the fiscally responsible ones. First off, Clinton issued 20 and 30 year paper for the first time since Carter. This gave him the cover of moving debt to a far off place hidden from 10 year budget estimates. On Bush’s first week in office, the 20 and 30 year paper was retired, as its usage is somewhat irresponsible in the first place. Secondly, Clinton’s budget estimate was the beneficiary of wildly overstated capital gains. Remember those huge stock market gains of the late 90’s, well they produced unearned revenues to the government. Those windfalls, due to the fact that the increase in wealth was not real or sustainable, not only disappeared during Bush’s first years, but actually turned into capital losses, which in some cases were carried forward for years.

kyle very good reading it was hard times less remembered than good times,i realy enjoyed the knock on the door thank you .

This is madness. By 2020 the Deficit will be 90% or more of the GNP.

We really do need a multiparty system as the current two-party system-both parties really are liberal in their spending-are not fixing the problem.

I with the Tea Party would become a third party.

I would support Sarah if she decided to lead this third party.

I won’t hold my breath though.

Ivan

I don’t think a third party is what is needed. I think the TEA party needs to take over the republican party and bring it back to being a true fiscally conservative party. The problem with talking about a third party is that it will take too long to amass a large enough base to be competitive with the republicans and democrats and in the meantime we will be subject to liberal panderers getting elected and making the entire mess worse than it already is.

IOW, we need to get rid of the RINO’s and support those in favor of curtailing the federal government. I say curtail because many republicans now, similar to you saying they are liberal in spending too, only seek to grow the government at a slower pace than the democrats desire to.

I only needed to see one thing to know the Deficit Commission is just another Obama scam, the appointment of Andy Stern.

I am just going to repeat the main point here so it doesn’t get lost in the latest attempt by BLOB to distract us:

Obama’s plans to increase debt
by TEN TRILLION!!!

@Mike’s America:

If the Zero succeeds in enacting his agenda, We will need something to happen which has never happened before in our nations history. We will need for this monstrosity to actually be undone. I am worried that the Conservative politicians will lack the bravery to do just that. A horrendously unpopular POTUS gave us the useless departments of education, and energy, and those are still here. My one huge complaint about the GOP, (and I believe a lot of others feel the same way,) is that they are content to use their turn in authority to oversee these massive increases in government power rather than reverse the damage. It is time to stop this perversion of the constitution.

I don’t think a third party is what is needed. I think the TEA party needs to take over the republican party and bring it back to being a true fiscally conservative party. The problem with talking about a third party is that it will take too long to amass a large enough base to be competitive with the republicans and democrats and in the meantime we will be subject to liberal panderers getting elected and making the entire mess worse than it already is.

Given that the Republicans are the ones really running the show in the Tea Party, good luck with that.

IOW, we need to get rid of the RINO’s and support those in favor of curtailing the federal government. I say curtail because many republicans now, similar to you saying they are liberal in spending too, only seek to grow the government at a slower pace than the democrats desire to.

Good luck with that. Watch the King of Rino’s, McCain, win re-election in November.
That will tell you how “fiscally conservative” the Republican party isn’t.

@skat:

Why ask BRob any questions? His answers are complete B.S. anyhow. He can pretend to be anything he wants to online. Nobody can prove him wrong. He wants us to believe that he is lawyer, educated at Brown. If he is, he is the first semi-illiterate Ivy League Attorney I have ever met. His arguments are ill conceived and specious at best. His use of logic is moronic. A real attorney would be able to do a much better job than what BRob is able to do. So he will tell you that he pays taxes, but I doubt it sincerely.

Ivan

I won’t argue with you that the leadership in the GOP is fiscally irresponsible and definitely not conservative. I will take issue that the TEA party is really being run by the Republicans though. While many GOPers have tried to co-opt their local TEA party, and some prominent GOP politicians and GOP apologist media commentators have headlined various TEA party events, I still think that at it’s core, the TEA party is as grassroots as they come, even drawing in a large number of self-proclaimed independents and even a number of fiscally conservative democrats. As for McCain, I wish he would drop his personal crusade to become the longest running US senator in the country’s history and just go home. It is because of republicans like him that we are in the mess we are in currently.

The one really effective thing the TEA party can do is to hold all elected politicians accountable for their actions in congress and vote out, at the earliest opportunity, those who do not practice fiscal responsibility and vote out whenever possible, those who fight against the constitution and those who are corrupt.

I will take issue that the TEA party is really being run by the Republicans though. While many GOPers have tried to co-opt their local TEA party, and some prominent GOP politicians and GOP apologist media commentators have headlined various TEA party events, I still think that at it’s core, the TEA party is as grassroots as they come, even drawing in a large number of self-proclaimed independents and even a number of fiscally conservative democrats

I say this as a person who has attended Tea Party rallies with my wife and children: The Republicans are running the Santa Fe Tea Party.

The person who sends us updates on Tea Party events is also the person who sends us Republican event updates.

They’re good people mind you, but from where I sit, I know who’s running the Tea Party. It’s been co-opted.

I would like it if my Republican Party was fiscally conservative, but they’d demonstrated they aren’t.

Look at how Bunning tried doing the right things last week; he didn’t get one ounce of support from the Republicans. He then caved.

EPIC FAIL on the part of the Republicans to be a bona-fide opposition party.