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.
Obama’s policies would produce deficits averaging nearly $1 trillion for the next decade.
Is that blood I hear boiling 8-?
or is it Tea? :-)
Remember: Just a couple of short weeks ago we were being assured of the infinite accuracy and trustworthiness of the CBO.
Stimulus package? What Stimulus Package? This was a huge $ trillion government spending scheme to put us so far into debt that Obama would have all the excuse he would need to tax us out of our brains, thus moving us way down the road to his Totalitarian goal for our country.
We're living in the Orwellian times when they call something the opposite of what it actually is:
- The "Stimulus” package grows government and depresses the economy (a REAL “stimulus package” would be a reduction of taxes instead of more government spending).
- The "Health Care" Bill will make our country sicker politically, culturally, medically, and economically.
So let’s quit playing the game of calling these things what they aren’t :
- It's the Unprecedented Government Spending and Growth Package (not "stimulus").
- It's the Weaken America Bill (not "health care" bill).
We don’t have worry because Obama’s Deathcare is gonna save us money :D
It’s “Working As Designed”.
Evan Thomas [Newsweek Editor] has been sayin’ for like a year that BOTH significant tax increases AND significant budget cuts are the ONLY way that we can pull out of this death spiral ... Anyone who says otherwise is LYING !!!
Charles Krauthammer also posits that a 10% VAT might be on the way ...
No!
You mean we can’t just spend forever?
No!?
You mean we might be facing higher taxes in the future?
Say it ain’t so...
/sarc
Our economy is unsustainable because of out of control spending plus lack of incentives to urge investment and disincentives caused by taxation.
They aren’t announcing this now without reason. Why didn’t they say such things over a year ago before the porkulis? Why not during the healthcare debate?
This is propaganda to prepare people for the VAT, and eventual tax increases. All in the name of “fiscal responsibility”.
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. . .
How exactly is the extension or non-extension of the Bush tax cuts supposed to affect the growth of the listed programs relative to the rest of the federal budget? The relative growth of different categories of expenditure has nothing to do with tax rates. It sounds like the "non-partisan" CBO is using non-sequiturs to argue for not extending the tax cuts.
Of course, a supply-side analysis would show that letting the tax cuts lapse will decrease revenue due to the economic slow-down it will trigger (or exacerbate if the new Obama recession is upon us--let's accept their fake recovery, that way the new downturn is all Obama's not a 'double-dip' in the "Bush recession").
But magically, just a couple days before it passed, they gave it their full blessings - just in time to win over the few fiscally responsible blue dogs to get them to change their votes to "yes".
Congress took out the "Doc Fix" [payments that need to be made to doctors for Medicare reimbursement] from the healthcare bill. This "lowered" the cost of the bill and Congress ordered the CBO to analyze the bill "as is" [without the "Doc Fix"]. It also had to base it on 10 years of revenue in [2010-2020] but only 6 years of payments out [2014-2020].
What the CBO is looking out now is the TOTAL federal budget thru 2020 ...
BTW: The "Doc Fix" is going to be paid for in a separate bill ...
Thanks for the update, I tend to get lost in all that CBO and budget talk...which is probably what this administration hopes all of us will do.
This is propaganda to prepare people for the VAT, and eventual tax increases. All in the name of “fiscal responsibility”.
—
Yup.
Can you say: “Value Added Tax”??
These people have no intention of cutting spending or limiting government in any way.
It’s going to be REALLY REALLY really unsubstainable when the rich hop on their jets out of here and burn their passports in Berne.
Volker has said as much.
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