Last Week the Congressional Budget Office (CBO) released it’s Long Term U.S. Budget outlook. The outlook they paint is pretty Bleak to say the least.
CBO report —-
Over the Last 40 Years Total Federal Spending has Averaged 18.5% of the Gross Domestic Product (GDP). The total of the Federal spending on Health Care Programs and Social Security is about 10% but will increase to 15% over the next 25 years. It may not sound like much but it is a huge amount and will push federal spending up by, today’s dollars $750 Billion. And that’s only if current laws continue.
Also, a little reported new stat, for the federal deficit was the previous report that the debt would rise to 62% of the entire GDP by the end of this year rose to 69% in this report and up to 84% of GDP by 2035 if tax rates are allowed to rise to pre-2001 levels. Interest rates on the debt would certainly explode and cause even more Debt problems.
The CBO also used an “Alternative Fiscal Scenario” to look at the long term budget outlook. This scenario was much worse. Under this scenario, the CBO used the “18%” historic revenue average to figure out how this would affect the budget. In other words tax rates would not be increased by allowing the Bush tax cuts to expire. In essence, no tax increases. The public debt would soar above 100% of GDP by 2021 and to 109% by 2023. By 2035 it would be close to 190% of GDP.
In other words, the annual deficit would be almost twice the entire gross national product of the United States for one year by 2035.
This is unsustainable. Congress MUST resist the calls for higher taxes however. The increase in taxes, would cripple this economy further and decrease long term revenue. Spending has to be cut dramatically.
To make matters even more precarious, the Leftist economists, led by the likes of Paul Krugman, want another government spending “stimulus” arguing that the last one was way too small. He says we need one that is at least $2 Trillion to $3 Trillion, deficits be damned. The last one did not work and actually unemployment went up. So they want the same thing only more of it? Typical Left Wing logic. If it doesn’t work try the same thing again only more of it.
We must return fiscal sanity to this country. We must avoid the huge iceberg before it is too late. The Left only wants to increase the speed of the ship to hit it sooner.