Posted on 04/09/2010 7:52:02 PM PDT by NormsRevenge
Fundamental changes to the federal budget will be needed to rein in unsustainable deficits, Congress’s budget watchdog said Thursday.
“U.S. fiscal policy is unsustainable, and unsustainable to an extent that it can't be solved through minor changes,” Congressional Budget Office (CBO) Director Douglas Elmendorf told reporters at a Christian Science Monitor breakfast.
Spending on Medicare, Medicaid and Social Security, plus defense programs and debt interest, will exceed the rest of the federal budget in 10 years if most of the 2001 and 2003 tax cuts are extended, as President Barack Obama has proposed, Elmendorf said.
“It's a matter of arithmetic,” Elmendorf said of getting record deficits under control.
“Government would need to make changes in some set of the large programs, large parts of the tax code that we think of as the fundamental parts of the budget.”
Elmendorf's remarks come a day after Federal Reserve Chairman Ben Bernanke also called on policymakers to put in place a plan to reduce deficits.
“Unless we as a nation demonstrate a strong commitment to fiscal responsibility, in the longer run we will have neither financial stability nor healthy economic growth,” Bernanke said in a speech Wednesday.
The CBO projects that Obama's policies would produce deficits averaging nearly $1 trillion for the next decade.
The deficit would bottom out in 2014 at a level equal to 4.1 percent of gross domestic product, which is higher than the 3 percent level considered to be sustainable by the White House and independent economists. Deficits would again rise after 2014.
The debt-to-GDP ratio would go from 63 percent this year to 90 percent by 2020, the CBO said. A “select group of countries,” including Greece, which is facing a fiscal crisis, have debt levels that high, which is “worrisome,” Elmendorf said.
Elmendorf cautioned against a fiscal retrenchment that is too quick and could hamper an economic recovery. The deficit levels are expected to drop from 10 percent this year to nearly 4 percent within four years, “the most rapid withdrawal of fiscal stimulus since the Second World War,” he said.
The ideal timing for deficit reductions would be “at some point beyond the next few years,” he said.
I heard on the news this morning that Americans are leaving the US in record numbers, like never before. It has already started.
Obama WANTS revolt so he can impose martial law and take all freedoms away.
The USA went bankrupt when the debt hit 5 Trillion. Solution. Disband all Federal agencies such as EPA IRS OSHA HHS etc. Privatize social security and pay off the old folks over time. Cut government to the bone and start over.
Yep. If I was them, I’d already have a passport from another country in a new name.
I’d have all my money in numbered accounts that have been wired from other numbered accounts that were wired from other numbered accounts.
Including having mortgaged all my assets to convert them into borrowed money.
I wouldn’t bother notifying anybody about renouncing my citizenship. I’d just disappear and take up my new life.
I like the idea of zero dollar budgeting under a balanced budget. This is as opposed to using the previous year’s budget for each program as a starting point.
You’d start with a hard figure for total budget. As in the Contract from America that limits all Federal spending to 20% of GDP.
Then you’d prioritize every item in the budget — with no amounts assigned yet.
Only after everything was prioritized would debate begin on how much each item was going to receive from appropriations.
That way, the supporters of the lower priority items would act to limit the costs of the higher priority items, for fear that there would be nothing left by the time their lower-priority items got their turn to feed at the public trough.
You’d end up with thousands of items of pork and obsolete programs at the bottom that got no funding.
Privatizing SS only works for those that haven’t got much contributed already. And the $2.4T in IOUs in the Trust Fund won’t come close to paying off those already retired, much less those Boomers who actually paid extra into it since 1987 which has built it up to this level.
For those not yet retired but who’ve been contributing for decades, we should annuitize their actual contributions to SS at the same interest rate the Treasury promised to pay when it borrowed from the Trust Fund — averaging around 5%.
Then upon retirement, at whatever age the person wants — not forcing them to wait until 62, 65, or 67 — put that amount into an annuity that pays out over the individual’s lifetime. That would result in no overpayment of benefits in comparison to their contributions, more reasonable benefits for those that have over-contributed, while keeping SS solvent without raising taxes.
Liberals and 0bama voters can't DO arithmetic. Sometimes I think they believe that mathematics was invented by the bourgeois to keep the proles down or some such insanity.
Anyone who thinks tax increases will help us get out of this is deluded. Taxes are already so high that they're strangling the economy's ability to generate wealth. We need to slash spending and increase revenue by slashing taxes and regulations, and inviting entrepreneurs to impale on a spike anyone who tries to reinstate them.
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