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| Budget Issues Trump Cards |
Despite all the consternation about the Obama Administration and Benghazi, the IRS harassment of Tea Party groups and the AP phone records being monitored, we still have a country to run.
Somebody better be paying attention to our spending and deficit/debt problems or else it really won't matter if the Obama White House is lying about any of the above 3 scandals now a-brewing.
They are all important issues of governance or malfeasance, however you want to call it.
But none of them can do the damage to our future that out-of-control spending can cause because our debt gets too high and then, when interest rates return to 'normal'? It either crowds out other essential functions of government or inflation rears its ugly, ugly head and everyone suffers. Especially the elderly, poor and infirm.
Here's some sobering news from Reason magazine about the most recent budget update from CBO.
Despite the brief rosy scenario put out by the evening news broadcasts today, there is not a whole lot of good news to be popping champagne bottles over or preparing for a ticker tape parade to hail President Obama for delivering us from the dangers that lie ahead.
The second paragraph of the CBO summary, which apparently every newscast chose to ignore, reads:
'But even with revenues above their 40-year average as a share of the economy, deficits will increase later in the decade, mostly because of the pressures of an aging population, rising healthcare costs, and increasing interest payments'Here's two salient points to remember when some partisans start bleating about how 'President Obama's policies have cut the deficit in half!' as some are wont to say:
- An increase of $105 billion in tax revenues occurred mostly because of the Obama tax hike...that is for sure. But it was because so many rich people opted to sell assets before the end of 2012 to take advantage of the lower rates before the Obama tax hikes hit. These tax payments became due and were paid on April 15.
- A one-time dividend payment of $95 billion was received from mortgage giants Fannie Mae and Freddie Mac as a result of the TARP deal and is unlikely to ever re-occur again.
That is $200 billion in extra tax revenues this year that will not be repeated. No wonder the deficits dropped by over $200 billion this year!
The Obama tax hikes have not taken full root yet this year so they can be scarcely credited with 'reducing the budget deficits'. And the budget sequester! You could squeeze a turnip with your own bare hands and get more deficit-reduction out of it than the budget sequester has so far.
Read the CBO report and see for yourself. We have a long way to go...and that is not just talking about getting to the bottom of the Benghazi, IRS and AP scandals.The Obama tax hikes have not taken full root yet this year so they can be scarcely credited with 'reducing the budget deficits'. And the budget sequester! You could squeeze a turnip with your own bare hands and get more deficit-reduction out of it than the budget sequester has so far.
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I agree with all you say on this issue. But here is the scariest part of CBO report, which of course was ignored by media.
ReplyDeleteFor the 2014–2023 period, deficits in CBO’s baseline
projections total $6.3 trillion. With such deficits, federal
debt held by the public is projected to remain above
70 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 36 percent of GDP.)
Under current law, the debt is projected to decline from
about 76 percent of GDP in 2014 to slightly below
71 percent in 2018 but then to start rising again; by
2023, if current laws remain in place, debt will equal
74 percent of GDP and continue to be on an upward
path (see Figure 2 on page 9).
Such high and rising debt later in the coming decade
would have serious negative consequences: When interest
rates return to higher (more typical) levels, federal spending
on interest payments would increase substantially.
Moreover, because federal borrowing reduces national
saving, over time the capital stock would be smaller and
total wages would be lower than they would be if the debt
was reduced. In addition, lawmakers would have less
flexibility than they would have if debt levels were lower
to use tax and spending policy to respond to unexpected
challenges. Finally, a large debt increases the risk of 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.
CBO’s estimate of the deficit