CBO warns of fiscal doom, and our president reacts like Alfred E. Neumann.
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Second, there’s the little matter of spending discipline, which Capitol Hill has never exhibited, at least in my lifetime. Discretionary outlays are appropriated every year and thus are the most enjoyable for legislators. The 2011 Budget Control Act established spending caps that “would reduce such spending to an unusually small amount relative to the size of the economy,” 5.8 percent of GDP, below the previous low that occurred back in 1999.
Third is the impact of a rising debt. The CBO doesn’t fall for the “we owe it to ourselves” silliness. Warned the agency: “debt held by the public is projected to be significantly greater relative to GDP than at any time since just after World War II.” And contra Alexander Hamilton, this debt will not be a “national blessing.” Explained CBO: “If the amount of debt held by the public remains so large, federal spending on interest payments will increase substantially when interest rates rise to more normal levels.”
That’s not all, alas. “Because federal borrowing generally reduces national saving, the stock of capital assets, such as equipment and structures, will be smaller and aggregate wages will be less than if the debt were lower.” That is, Americans will be earning less while having to pay more. Such a deal! Finally, “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.”
It would be nice to curb federal borrowing, but a fiscal crisis probably isn’t the best way to do so. Although this analysis is enough to scare anyone, the budget agency isn’t done. For an encore it peers into the more distant future, and it doesn’t like what it sees.
Noted CBO: “Under current law, the aging of the population, the rising costs of health care, and the scheduled expansion in federal subsidies for health insurance will substantially boost federal spending on Social Security and the government’s major health care programs, relative to GDP, for the next 10 years and for decades thereafter.” Without substantial policy changes, “debt will rise sharply relative to GDP after 2023.”
No worries, however. There is no spending problem. The president promises us.
CBO does fine analytic work, but its reports are a bit dry, even arcane. However, the agency’s budget reports have become the scariest pieces of literature around. Read the latest budget outlook and it’s like seeing Freddy Krueger bearing down on you.
But the president says not to worry. There is no spending problem.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
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It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
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