According to the CBO, President Obama’s proposals are projected to reduce the federal budget deficit through 2014. That’s the good news. However, the budget deficit “would rise steadily thereafter.”
It’s not a very pretty sight. As indicated in the chart below, the hole just keeps getting deeper.
Some key highlights of the preliminary analysis from the Director’s blog:
–If the President’s proposals were enacted, the federal government would record deficits of $1.5 trillion in 2010 and $1.3 trillion in 2011. Those deficits would amount to 10.3 percent and 8.9 percent of gross domestic product (GDP), respectively. By comparison, the deficit in 2009 totaled 9.9 percent of GDP.
–Measured relative to the size of the economy, the deficit under the President’s proposals would fall to about 4 percent of GDP by 2014 but would rise steadily thereafter. Compared with CBO’s baseline projections, deficits under the proposals would be about 2 percentage points of GDP higher in fiscal years 2011 and 2012, 1.3 percentage points greater in 2013, and above baseline levels by growing amounts thereafter. By 2020, the deficit would reach 5.6 percent of GDP, compared with 3.0 percent under CBO’s baseline projections.
–Under the President’s budget, the cumulative deficit over the 2011–2020 period would equal $9.8 trillion (5.2 percent of GDP), $3.8 trillion more than the cumulative deficit projected in the baseline. Of that difference, roughly $3.0 trillion stems directly from proposed changes in policy and another $0.8 trillion results from additional interest on the public debt…
–Under the President’s budget, debt held by the public would grow from $7.5 trillion (53 percent of GDP) at the end of 2009 to $20.3 trillion (90 percent of GDP) at the end of 2020. As a result, net interest would more than quadruple between 2010 and 2020 in nominal dollars (without an adjustment for inflation); it would expand from 1.4 percent of GDP in 2010 to 4.1 percent in 2020.
–Revenues under the President’s proposals would be $1.4 trillion (or 4 percent) below CBO’s baseline projections from 2011 to 2020…
The full preliminary analysis from the CBO is available in pdf here.
My analysis is much more straightforward, and it doesn’t rely on budget gimmicks and questionable revenue projections to hide the pain:
–Under the president’s budget proposals, debt held by the public would triple, reaching 90% of GDP by the end of the current decade.
–President Obama’s wealth redistribution scheme is wholly unsustainable, and if left unchecked, the point of no return will be reached before the end of the current decade.
Buckle-up ladies and gents, Jimmy Carter is smiling from ear-to-ear.