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America on Welfare
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Thursday Is Tax Freedom Day
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The Obama Watch
What, Me Worry?
CBO warns of fiscal doom, and our president reacts like Alfred E. Neumann.
President Barack Obama won his budget pound of flesh in the “fiscal cliff” showdown. Taxes on the “rich” are going up. But that hasn’t solved Washington’s deficit crisis. Nor would approval of the new taxes that he proposed help avoid the impending budget sequester.
The Congressional Budget Office once had the reputation of a bland government bureaucracy, churning out detailed reports that only a policy nerd would read. Today CBO reports have taken over the literary genre of horror stories. The first movie can’t be far behind.
Earlier this month the agency published its latest fiscal update, “The Budget and Economic Outlook: Fiscal Years 2013 to 2023.” The only saving grace for humanity is that the agency’s analysis ends in 2023. Future budget projections would be too horrible to contemplate.
However, the next decade is bad enough. First, as if people hadn’t noticed, the economy remains sluggish, despite trillions of dollars in “stimulus.” Uncle Sam has run $5 trillion in deficits since President Obama first took office, while the Federal Reserve has gone on a funny money binge with “quantitative easing” and much more.
The result? Reported CBO: “the unemployment rate is expected to remain above 7½ percent through next year; if that happens, 2014 will be the sixth consecutive year with unemployment exceeding 7½ percent of the labor force—the longest such period in the past 70 years.” The more people out of work, the lower the tax collections and higher the outlays, making for a bigger deficit.
Second, spending will remain wildly out of control. Only in Washington could people predict devastation and doom from $85 billion in cuts to a budget of about $3.6 trillion. Obviously there isn’t the slightest bit of waste, duplication, fraud, or foolishness in the entire federal budget. Certainly there is not one program that isn’t the federal government’s business or is anything less than absolutely essential. Such is the fantasyland which Washington has become.
But surely the White House and Congress have achieved some deficit savings. In fact, explained CBO, “If the current laws that govern federal taxes and spending do not change, the budget will shrink this year to $845 billion, or 5.3 percent of” GDP. Wow, those radical, draconian spending cuts are having an effect! Alas, this is good news only relative to the awful news of recent years. Noted the agency: “the 2013 imbalance would be the first deficit in five years below $1 trillion.” Obviously cause for celebration. But wait, said CBO: “if the laws that govern taxes and spending do not change, federal debt held by the public will reach 76 percent of GDP by the end of this fiscal year, the largest percentage since 1950,” when the U.S. was carrying debt accumulated from World War II.
The numbers get better in the next couple years, but not because of spending restraint. That would be far too sensible. Instead, observed the agency: “With revenues expected to rise more rapidly than spending in the next few years under current law, the deficit is projected to dip as low as 2.4 percent of GDP by 2015.” But that still would be a hefty $430 billion. Indeed, that was roughly the deficit in 2008—which seemed outrageous at the time—before outlays exploded, first under George W. Bush and even more so under Barack Obama.
And the reduction would reflect the one-quarter revenue increase between 2013 and 2015. Reported CBO: “revenues are projected to grow from 15.8 percent of GDP in 2012 to 19.1 percent of GDP in 2015—compared with an average of 17.9 percent of GDP over the past 40 years. Under current law revenues will remain at roughly 19 percent of GDP from 2015 through 2023.” Indeed, total revenues are expected to more than double between 2012 and 2023. So tax collections already are going up. President Obama just wants them to go up faster.
Of course, the slowdown in piling up red ink presumes that Congress won’t follow past precedent and initiate another spending binge. Even then, the good times end in just two more years. Then the deficit begins another inevitable rise back to $1 trillion.
Explained CBO: “In later years, however, projected deficits rise steadily, reaching almost 4 percent of GDP in 2023. For the 2014-2023 period, deficits in CBO’s baseline projections total $7.0 trillion. With such deficits, federal debt would remain above 73 percent of GDP—far higher than the 39 percent average seen over the past four decades. (As recently as the end of 2007, federal debt equaled just 36 percent of GDP.) Moreover, debt would be increasing relative to the size of the economy in the second half of the decade.”
Don’t worry, however. The president says that we don’t have a spending problem. No, of course not. What could be more obvious? Except for the CBO’s inconvenient budget projections. The agency foresees outlays rising from $3.5 trillion to $5.9 trillion between 2012 and 2023. Expenditures increase every year. Total debt held by the public (which ignore intra-government debt, most importantly Social Security “loans” to the Treasury Department) rises from $11.3 trillion to $19.9 trillion over the same period. Debt as a percent of GDP goes from 72.5 percent to 77.0 percent.
Remember, there’s no spending problem.
However, there’s more to the CBO horror show. The likelihood of these numbers holding true is small, frankly vanishingly small, given past congressional behavior.
First, the deficit will be higher if Congress changes current law. The agency assumes that the automatic spending cuts will take effect, “sharp reductions in Medicare’s payment rates for physicians’ services will occur at the beginning of January 2014,” even though Congress has been putting them off since they were passed in 1997, and “certain tax provisions that have regularly been extended but are set to expire” will be allowed to expire. I am convinced. After all, legislators always choose the most fiscally responsible course.
About the Author
Doug Bandow is a senior fellow at the Cato Institute. A former Special Assistant to President Ronald Reagan, he is the author and editor of several books, including The Politics of Plunder: Misgovernment in Washington (Transaction).
Letter to the Editor View all comments (59) | Leave a comment
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Jack in Wi| 2.14.13 @ 7:33AM
Another great job by Doug Bandow. Mr. Bandow is one of the best writers on the site.
Albert Constantine Jr.| 2.14.13 @ 11:41AM
I would have never known that you felt this way.
Jack in Wi| 2.4.13 @ 3:48PM
Another fine essay by Doug Bandow. He is one of the best writers on the site. It was very informative on this issue.
Jack in Wi| 1.15.13 @ 7:07AM
This is a great essay.
Moe Blotz| 2.14.13 @ 12:39PM
Qui, mi anxious sum?
Moe Blotz| 2.14.13 @ 2:20PM
Correction:
Quid, mi anxious sum?
Jack in Wi| 2.14.13 @ 4:26PM
I wrote the first comment not the others. Someone is back to stealing names again. Name stealers should be banned. I thought you had that fixed on the software?
Albert Constantine Jr.| 2.14.13 @ 6:37PM
I gotta tell you, those name stealers sure were clever (i.e. not only did they say exactly the same thing 10 days before you wrote a nearly identical post, but they did it at the time you normally begin).
Aristocat| 2.14.13 @ 7:47AM
Don't just blame Obama....House Republicans have voted for every dollar of this fiasco. If the House doesn't vote for it, it doesn't get spent.
Al Adab| 2.14.13 @ 8:37AM
Empty suit once again best describes this group. Reality does not match the paradigm of The Left and that is leading to denial in a clinical sense which puts Americans at risk everywhere in the world.
Virtue| 2.14.13 @ 8:39AM
Obama never made a payroll. Clueless. And the Republicans are the Stupid Party on merit.
TLP| 2.14.13 @ 10:53AM
Stories like these, here, and in the Papers, would do a lot more good if we could cut the Orwellian Bullshitt, and start using REAL NUMBERS, for a change.
Is it possible to get the REAL Unemployment Numbers, and not the Numbers from underneath one a those Magic 8 Balls?
Can we all agree that when someone "Drops outta the Workforce" because the unimaginable happened, and they Ran Out of Unemployment Checks, that they are STILL Counted in the Census? That they STILL exist? They STILL live in this Country and should be figured into the Unemployment Numbers?
Can we get the Real Inflation Numbers? If Ground Beef was going for $1.79 a lb. four years ago, and it's $4.79 a lb. now? Can we say that we have Inflation?
If our Gasoline, Fuel Oil, and Heating Oil used to be $2 a Gallon LESS than it is Today? Can we admit that we have Inflation?
I realize that Food, Fuel, and Clothing are not Factored in when determining the Inflation Rate. Does it make ANY sense that the Price of things that we buy the MOST, are left out of the Equation? That's like writing 2 + _ = 4 but you're not allowed to enter 4 into the blank.
This Emperor has no Clothes. His Economic Policies have no Clothes. His Domestic Policies have no Clothes. His Energy, Jobs, and his Foreign Policy have no Clothes. And his Ambassador was RAPED and MURDERED, because he was left Naked.
It's high time that GOOD MEN do something, lest Evil succeed.
Hardcard| 2.14.13 @ 8:52AM
How did Mr. Bandow get my picture?
JimH| 2.14.13 @ 9:04AM
Hello....Newman.
TLP| 2.14.13 @ 11:31AM
I heard he got it from Purp's Car.
Apparently, it was taped to the Sun Visor.
Bob Grant| 2.14.13 @ 11:40AM
Hard,
The question is where did you get that red/gold suit and who cut your hair?
TLP| 2.14.13 @ 3:10PM
Purp.
c. j. acworth| 2.14.13 @ 8:54AM
Reminds me of the old joke about the alcoholic who refused to see he had a problem. "I drink, I get drunk, I fall down. No problem!"
vtwin| 2.14.13 @ 8:58AM
Relax, during the eight years of Bush as a nation we went from peace, prosperity and surpluses to wars, depression, and trillion dollar annual deficits. Obama has in only four years reduced the number of wars turned the economy around and reduced projected deficits to below $1 trillion.
Archie| 2.14.13 @ 9:29AM
Recession, not depression. And Bush had ONE year that can be attributed to him (at least partially) with a $1T deficit. This link is a bit dated, but still useful in illustrating how incredibly off your analysis or memory is.
http://www.washingtonpost.com/.....00104.html
vtwin| 2.14.13 @ 9:55AM
I’m not old enough to have first-hand experience of the Great Depression but I have lived through most of the post WW II recession and the Bush “Recession” was a beast of a different color. And we are still paying today for the bad choices Bush and the Republican controlled House and Senate made in 2001-06.
Goldwater Girl| 2.14.13 @ 10:16AM
Twit,
Let's not forget that Booosh secretly arranged for Al Quaeda to attack the US on Sept 11, or he would have never been able to fulfill his dreams of endless wars. You have such an insight into his character!
vtwin| 2.14.13 @ 11:05AM
Apparently, my insight into Bush character wasn’t as fine as yours as I wasn’t aware of his "dreams of endless wars."
gene| 2.14.13 @ 11:08AM
I have always found the "vast right wing conspiracies" to be very comical. On one hand GWB and other Repubs. are supposed to be morons, idiots, etc. Then when it is convenient, they accuse these same people of incredibly complex, wacko, complicated conspiracies.
Al Adab| 2.14.13 @ 11:32AM
We can only wish that we of the Right were good enough to form the vast conspiracy so many attribute to us.
spike59| 2.14.13 @ 12:36PM
"and then Bush made the water all stinky, and made my frog run away, and made my mommy start drinking..."
grow up, dullard-that load of drivel might play on PuffHo or some other 'tard echo chamber, but it doesn't scan with adults
Moe Blotz| 2.14.13 @ 12:44PM
Forgive the vtwin, his primary chain is loose, clutch is slipping, and he is burning lubricating oil that produces a blue haze from his tailpipe. Maybe his flywheels are out of true and the vibration keeps him from being in tune.
bustunloose| 2.14.13 @ 12:47PM
Like what ? He inherited the Clinton reccession and we got hit on 9-11. He cut taxes and others things and soon we were doing well ? The we had the crises-then we had Obama who I say had an easier task than Bus. He just had to throw money at the problem and manage it well. He has failed. And the damage he has done with other policies exceeds anything in our history. Bush never steered us into a socialist nightmare no matter what THE RIGHT WING HARDONS say. I want the Bush economy back.
Stan Redmond| 2.14.13 @ 9:10PM
We gotta a fevah' and the only cure is more government!
bustunloose| 2.14.13 @ 10:45AM
The unemployment and deficeits of the Bush years would be paradise today. The crisis we faced is fixed-we bailed out the banks. No we shoild be far on our way to something much better than this. The democrats want the stimulus to be part of the permanent budget. And, their crazed regulatory agenda, energy nuttiness and all the rest are killing us. And, by the way-this Clinton surplus going on and on was a fantasy. Anyone with an ounce of honesty knows this.
vtwin| 2.14.13 @ 11:08AM
As would the Clinton years but what had we in between? Oh yea, the Bush years.
bustunloose| 2.14.13 @ 12:41PM
Which were fine prior to collapse-the Clinton years were full of false assumptions-like with no Soviet Union we were at peace forever-please. The military expenditures that relate to those surplus projectios were crazily out of whack with reality-no Iraq-fine-but all the rest 90 per cent of it huge hole blowing in that alledged surplus-and the increased homeland security. Please get over your delusions of Clinton's surplus and balanced budget. Not to mention the prescription drug benefit. Bill always blubbered over the plight of seniors needing help here but even with his surplusses did squat. The benefit seem to be working. I hear the costs are lower than projected. 2 groups hate it. First the union pigs with cushy pensions who runAARP-always carping about the donut hole. And of course RIGHT WING HARDONS who wish to harken back to days when Grannie and Gramps had to cut by half their pill dosage to make ends meet. TOSE WERE THE GLORY DAYS-DONT YA MISS THEM ?
CrackerHound| 2.14.13 @ 1:18PM
That is abosultely the ONLY thing the left has...BLAME BUSH!!
Ohh...that and everytime an existential crisis that they created comes up...shift gears to birth control, gays, guns, womens rights, etc. and then blame Republicans for pushing their social issues.
The nail in the coffin is that the majority of our citizens buy it and are like sheep being lead to the slaughter.
spike59| 2.14.13 @ 12:46PM
"Obama has in only four years sat back and took credit for the process that Bush started in ending the Iraq war, while managing to record 4 straight years of deficits above $1 trillion/year, added more debt than all the previous Administrations combined, leave unemployment near 8% for over 4 years, increased the number of people on food stamps to record levels, wage an air war in Libya without Congressional approval, managed to get his Libyan Ambassador killed (while trying, unsuccessfully, to blame a video that no one has seen) by terrorists, divided the entire nation along sectarian, religious, economic class, and racial lines, and played a record number of rounds of golf, while spending more on vacations than any President in history"
there-fixed it for ya
CrackerHound| 2.14.13 @ 1:29PM
President Downgrade Eye Candy
Stan Redmond| 2.14.13 @ 9:08PM
You are so right!!! And the only thing that can save us is EVEN MORE government!!!
Biff| 2.17.13 @ 10:08AM
...more cowbell?
Minuteman78| 2.14.13 @ 8:58AM
Unemployed person = Democrat voter. No problem.
vtwin| 2.14.13 @ 10:58AM
That explains it; unemployed voters put Democrats in power. Democrats fix the economy the unemployed become employed and vote Republican which intern creates a whole new batch of unemployed voters.
spike59| 2.14.13 @ 12:33PM
'Democrats fix the economy'
----------------------------------
hahahahahahaha........wait, you're...SERIOUS???
oh, then...HAHAHAHAHAHAHA....
Minuteman78| 2.14.13 @ 12:45PM
I didn't think a pile of fertilizer was capable of typing...
But the reality is that Democrat legislators make laws that takes money from people that won't vote for them (most working people) and gives it to people who will vote for them (most unemployed people). For those not on Capitlol Hill, that's called theft. For those that are, it's called "fairness".
Biff| 2.17.13 @ 10:07AM
Nothing I have ever heard, no matter how ignorant or obscene, could be further from the truth. Are there more out there like you? No wonder we're sliding into the abyss...
Pecos Pete| 2.14.13 @ 9:30AM
As always, the CBO projections also include an estimate for revenue in their determination of deficit. Thus, if revenue falls below their estimate, then their deficit projections are too low. Sort of like the funny numbers game played in the state budgets of California, Illinois and New York .
Compound lower revenue with higher interest costs on rising debt and the result is, as everyone knows except socialist/marxist/democrat/RINO politicians (and trolls), a total failure of government resulting in chaos.
Von Mises Jr| 2.14.13 @ 11:21AM
The CBO prepares a Budget Analysis based on the assumptions given to it by Congress. But we know for the last four years every unemployment and GDP report is declared "unexpected." This is because as Joe Wilson said "You Lie." They assume static projections when in fact ObamaCare premiums and FINES like $4-5K for being a smoker kicks in 2014.
If you take all this money out of the private sector and reduce the disposable income of individuals, then demand for goods collapses. So if nobody has money to buy unnecessary items, producers stop building them and tax revenues collapse. Then little barry will be proved correct in "YOU DIDN'T BUILD THAT."
CrackerHound| 2.14.13 @ 12:55PM
The fact that only a handful (relatively speaking) of people realize that all of the numbers are fudged and based on false assumptions is the dangerous aspect to all of this.
I hope I am wrong, but I believe you are correct...chaos is inevitable. There is nothing we can do because once you go over the cliff, there is nothing until the bottom. We are over the cliff now. The point of no return was reached quite awhile ago.
Hardcard| 2.14.13 @ 10:24AM
just another paid troll of georgi soros. bush did it, bush did it !!!!! praise obamao for murder,treason,corruption, and being a born liar!! STFU
N8tivTxn| 2.14.13 @ 10:31AM
But the president says not to worry.
And so the proletariat (low-info voters) go back to their regular programming... Dancing With the Stars, believing that their president, Mr Teflon, will do his utmost to control the injustice the bourgeoisie visits upon them, while completely ignorant that their savior is the best magician since Houdini.
Don't worry, BE HAPPY!
gene| 2.14.13 @ 11:16AM
On this voting business? Michele makes all these public statements about "Voter Suppression". Okay let's look at it. In districts in Philly, Republican Ballot Watchers had to go to court to get Emergency Court Orders after being BARRED from Polling Stations. In some voting districts in Philly, Pres. Obama received ONE HUNDRED PERCENT of the vote and the Main Stream Media insists this is not suspicious. As a child, we would read about elections in Dictatorships/Communist countries etc. and we would laugh when a "candidate" would receive 80, 90, or 95% of all the votes. Now an American President racks up ONE HUNDRED PERCENT in parts of Philly in Pennsyvania, and the rest of the world is laughing,.................... at us. NOW the U.S. of A. is the "Banana Republic" with the fake elections and a Government suffering from "Cranial Anal Insertion". Now we are the Third World Country and being laughed at by the rest of the world. THAT is sad.
Pecos Pete| 2.14.13 @ 2:16PM
gene: May I steal your "Cranial Anal Insertion" comment?
Biff| 2.17.13 @ 10:05AM
...wonder if Obamacare covers that?
Stormzeye| 2.14.13 @ 11:22AM
Doesn't anyone pay attention? HE'S DOING ALL THIS ON PURPOSE! Obama's bound and determined to bring this country down to the level of Bulgaria and Portugal (both of whom had larger standing armies than the U.S. in 1939 according to Michael Korda in his fabulous biography, "IKE"). What he has done and continues to do (thank God for a Republican House of Representatives) has been well thought out and a Marxist's wet dream.
gene| 2.14.13 @ 11:30AM
For decades, certain groups wanted a President who was just out and out Anti-Western Culture, Anti-Christian, Anti-Semetic, Anti-Constitution, Anti-Everything this country has stood for. Now they have it. We will have chaos, food shortages, crime, and a whole lot of other trouble. And the rule book says they will blame it all on the Jews, the Christians, the Conservatives. I do find it hard to believe that most of all this happened during my lifetime. For those of you who believe, the Boss will be returning soon for judgement. For those of you who do not believe? Well then if right, you will cease to exist when your heart stops beating. (I would not bet eternity on the latter)
Who Knows?| 2.14.13 @ 11:29AM
The more things change, the more they remain the same.
All you have to know about Obama and the CBO kabuki dance.
However, what can't continue WON'T.
The bond market will sooner or later see the light---or should I say dark, as in black hole?---and in our day of tight communication, the reaction should be swift.
It's all about when, not if, the tipping point arrives.
Picture a glass, and water being poured into it. Obama is, for a while, able to "grow" the glass, and pour the water = debt into it. But, the flow of borrowed money will soon enough become a trickle, and they interest rates will shoot up, for any more money lenders will risk.
cicero| 2.14.13 @ 11:45AM
The Founders knew that democracy was dangerous. That is why they wanted no part of one. The country went to a democracy in the 1830s and has been on a steady course ever since. At each expansion of the franchise, we got closer and closer to the cliff. We are now there. It is now possible (happened in the Nov. election) for the have nots to vote themselves the treasury. There is no way to stop them.
The goernment will continue to buy votes to stay in power. The have nots and the jealous will vote to keep the ball rolling. This will result in massive inflation, continuing unemplyment figures in unreal (actual unemployment is probably at 14% nationwdie, and 25-39% in the central Dem controlled cities) numbers. The natural outcome will be unrest (riots) in the cities, poverty on the family farms, and fat beaurocrats bunkered in the seats of government, wondering how it all came to this.
Jacob McCandles| 2.15.13 @ 12:57PM
Tis the tyrants of the majority. Like cancer cells, the takers will soon outgrow their blood supply and turn necrotic.
Hardcard| 2.14.13 @ 12:05PM
the suit is from the "Pee Wee Collection" at Big Lots and the hair cut is from Tupperware.
Albert Constantine Jr.| 2.14.13 @ 12:43PM
You've got to straighten out the headline writer with the proper spelling of Alfred E.'s Newman. He's using the German version, as in St. John Neumann.
Ronsch| 2.14.13 @ 1:21PM
So, supposedly the payments made to doctor's will drop, and save money, despite NerObamaCare adding recipients to the program...How is that going to work? Slightly less payments costs with more people added, seems that unless doctor's are paid 50% less per patient, it will never balance out the costs...it will always cost more.
Albert Constantine Jr.| 2.14.13 @ 2:13PM
When I go to the grocery store later today, instead of paying $75 for groceries, I'm going to pay $40, using the Medicare reimbursement formula (because that's what they're worth).
Don't be surprised if the Albert Constantine, Jr. mugshot and police reports are soon featured on The Smoking Gun website.
TLP| 2.14.13 @ 5:21PM
And the Advocate, in the Village.
CALL ME!
Biff| 2.17.13 @ 10:02AM
I think his point would be more effective were Obama to slowly swing a gold pocket watch back and forth while repeating, "there is not spending problem...there is no spending problem..."