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CBO Confirms: Obama’s Current Debt Path Is Unsustainable, Entitlements Must Be Reformed

- September 17, 2013

On The Current Fiscal Path, The U.S. National Debt Would Reach 100 Percent Of GDP By 2038, “More Than In Any Year Except 1945 And 1946.” “The gap between federal spending and revenues would widen steadily after 2015 under the assumptions of the extended baseline, CBO projects. By 2038, the deficit would be 6½ percent of GDP, larger than in any year between 1947 and 2008, and federal debt held by the public would reach 100 percent of GDP, more than in any year except 1945 and 1946. With such large deficits, federal debt would be growing faster than GDP, a path that would ultimately be unsustainable.” (“The 2013 Long-Term Budget Outlook,” Congressional Budget Office, 9/17/13)

  • “The Nonpartisan Congressional Budget Office (CBO) Warned Tuesday That The Long-Term Outlook For The National Debt Remains Dire, Despite A Near-Term Drop In The Deficit That Has Been Lauded By The Obama Administration.” “The nonpartisan Congressional Budget Office (CBO) warned Tuesday that the long-term outlook for the national debt remains dire, despite a near-term drop in the deficit that has been lauded by the Obama administration. Federal debt held by the public is slated to rise from 73 percent of the economy in 2013 to 100 percent of gross domestic product by 2038, the CBO said.” (Erik Wasson, “CBO Projects Dire Debt Level,” The Hill’s On The Money, 9/17/13)

“Because Federal Debt Is Already Unusually High Relative To GDP, Further Increases In Debt Could Be Especially Harmful.” “The structure of the federal tax code means that revenues would also represent a larger percentage of GDP in the future than they have, on average, in the past few decades—but not large enough to keep federal debt held by the public from growing faster than the economy starting in the next several years. Moreover, because federal debt is already unusually high relative to GDP, further increases in debt could be especially harmful.” (“The 2013 Long-Term Budget Outlook,” Congressional Budget Office, 9/17/13)

Unless Changes Are Made, “Additional Spending Would Contribute To Rising Budget Deficits Starting In A Few Years, Causing Federal Debt To Swell From A Level That Is Already Very High Relative To The Size Of The Economy.” “Barring changes to current law, that additional spending would contribute to rising budget deficits starting in a few years, causing federal debt to swell from a level that is already very high relative to the size of the economy.” (“The 2013 Long-Term Budget Outlook,” Congressional Budget Office, 9/17/13)

By 2038, The “Trajectory For Federal Debt Would Ultimately Be Unsustainable.” “CBO projects that, under current law, debt held by the public would rise slightly relative to GDP in 2014 and then, because of smaller deficits, decrease to 68 percent of GDP by 2018. Around 2020, with deficits growing again, debt would begin to rise faster than GDP. By 2038, under the extended baseline, federal debt held by the public would reach 100 percent of GDP (see Table 1-2 on page 11)—nearly equal to the percentage just after World War II and almost triple the percentage in 2007—and would be on an upward path. That trajectory for federal debt would ultimately be unsustainable.” (“The 2013 Long-Term Budget Outlook,” Congressional Budget Office, 9/17/13)

Obamacare Doesn’t Do Our Debt Crisis Any Favors

“Federal Spending For Health Care Will Be Pushed Up In The Future By A Sharp Increase In The Number Of People Receiving Benefits From Government Programs,” Including Obamacare.  “In contrast, federal spending for health care will be pushed up in the future by a sharp increase in the number of people receiving benefits from government programs. That increase can be attributed to two main factors. The first is the aging of the population—in particular, the aging of the baby-boom generation (people born between 1946 and 1964)—which will increase the number of people receiving benefits from Medicare by more than one-third over the next decade. The second is the expansion of federal support for health insurance under the Affordable Care Act (ACA), which will significantly increase the number of people receiving benefits from Medicaid and make other people eligible for subsidies for health insurance purchased through exchanges.” (“The 2013 Long-Term Budget Outlook,” Congressional Budget Office, 9/17/13)

“Unless Substantial Changes Are Made To The Major Health Care Programs And Social Security, Those Programs Will Absorb A Much Larger Share Of The Economy’s Total Output In The Future Than They Have In The Past.” “The unsustainable nature of the federal government’s current tax and spending policies presents lawmakers and the public with difficult choices. Unless substantial changes are made to the major health care programs and Social Security, those programs will absorb a much larger share of the economy’s total output in the future than they have in the past.” (“The 2013 Long-Term Budget Outlook,” Congressional Budget Office, 9/17/13)

  • “Rising Health Care Costs, And An Expansion Of Federal Subsidies … Would Cause Spending For Some Of The Largest Federal Programs To Increase Relative To GDP.” “In addition, the pressures of an aging population, rising health care costs, and an expansion of federal subsidies for health insurance would cause spending for some of the largest federal programs to increase relative to GDP.” (“The 2013 Long-Term Budget Outlook,” Congressional Budget Office, 9/17/13)
  • On The Current Fiscal Path, Spending On Health Care Programs And Social Security Would Reach 14 Percent Of GDP By 2038, “Twice The 7 Percent Average Of The Past 40 Years.” “Federal spending for the major health care programs and Social Security would increase to a total of 14 percent of GDP by 2038, twice the 7 percent average of the past 40 years.” (“The 2013 Long-Term Budget Outlook,” Congressional Budget Office, 9/17/13)
  • Unless Changes Are Made, “Those Programs Will Absorb A Much Larger Share Of The Economy’s Total Output In The Future Than They Have In The Past.” “Unless substantial changes are made to the major health care programs and Social Security, those programs will absorb a much larger share of the economy’s total output in the future than they have in the past.” (“The 2013 Long-Term Budget Outlook,” Congressional Budget Office, 9/17/13)
  • “Health Care Costs Will Continue To Rise More Rapidly Than Taxable Earnings.” “Looking ahead, CBO expects that health care costs will continue to rise more rapidly than taxable earnings, a trend that by itself would further decrease the proportion of compensation that workers receive as taxable earnings.” (“The 2013 Long-Term Budget Outlook,” Congressional Budget Office, 9/17/13)

Obama Has Ducked Leadership In Dealing With America’s Debt Crisis

The Washington Post Editorial Headline: “Mr. Obama Should Not Ignore Entitlements.” (Editorial, “Mr. Obama Should Not Ignore Entitlements,” The Washington Post, 7/27/13)

The Washington Post: “Obama’s Speeches So Far Are Notable Mainly For What They Haven’t Included: A Serious Proposal For Straightening Out The Federal Government’s Long-Term Fiscal Situation.” “Preparing himself and the country for coming budget battles with congressional Republicans, President Obama has embarked on a speech-making tour of the nation, focused on economic issues. week, he gave the first three addresses, lasting a total of about two hours, with the common theme of a ‘better shot’ for the middle class. He made familiar but welcome references to science and research, crucial infrastructure and making college more affordable. The president was on especially strong ground when he called out colleges that fail to control their costs. ‘Families and taxpayers can’t just keep paying more and more and more into an undisciplined system,’ he said. But Mr. Obama’s speeches so far are notable mainly for what they haven’t included: a serious proposal for straightening out the federal government’s long-term fiscal situation.” (Editorial, “Mr. Obama Should Not Ignore Entitlements,” The Washington Post, 7/27/13)

  • The Washington Post: “What’s Rather Less Forgivable, However, Is That, Even Though The President Of The United States Is Well Into A Highly Promoted Series Of Major Addresses On The Future Of The U.S. Economy, Searching The Text Of His Speeches For ‘Entitlement Reform’ Or ‘Entitlement’ Yields Nothing But ‘Phrase Not Found.’” “By the tendentious standards of politics, it was okay for the president to challenge Republicans to come up with better ideas than his, while simultaneously portraying most of them as mindlessly bent on a government shutdown. What’s rather less forgivable, however, is that, even though the president of the United States is well into a highly promoted series of major addresses on the future of the U.S. economy, searching the text of his speeches for ‘entitlement reform’ or ‘entitlement’ yields nothing but ‘phrase not found.’” (Editorial, “Mr. Obama Should Not Ignore Entitlements,” The Washington Post, 7/27/13)

Politico: “President Obama Dodges ‘Hard Choices’ On Entitlements” (Carrie Budoff Brown, “President Obama Dodges ‘Hard Choices’ On Entitlements,” Politico, 1/22/13)

On Entitlements, Obama Is “Not Willing To Give Up Much.” “President Barack Obama insisted four years ago that the nation must make ‘hard decisions’ to preserve entitlement programs. But on Monday, the ‘hard choices’ he spoke of on health care and the deficit came with a major caveat: He’s not willing to give up much.” (Carrie Budoff Brown, “President Obama Dodges ‘Hard Choices’ On Entitlements,” Politico, 1/22/13)

Obama’s Strategy For Shoring Up Entitlement Programs “Remains Hazy Four Years Later.” “Despite the clarity of those early statements, his strategy for shoring up entitlement programs — and challenging not just Republicans but his own party to get it done — remains hazy four years later.” (Carrie Budoff Brown, “President Obama Dodges ‘Hard Choices’ On Entitlements,” Politico, 1/22/13)

 


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