Below The Beltway

I believe in the free speech that liberals used to believe in, the economic freedom that conservatives used to believe in, and the personal freedom that America used to believe in.

The Deficit Problem Could Be Much Worse Than They’re Telling Us

by @ 5:27 pm on August 28, 2009. Filed under Economics, Politics

The Concord Coalition is projecting that the Federal Budget Deficit over the next decade will be twice has big as the government is telling us:

The Concord Baseline makes some key assumption changes to the CBO baseline. CBO is required to assume that congressional appropriations continue increasing only at the rate of inflation for the 10 year baseline. They also extend emergency supplemental at their “current” level plus inflation over the duration of the baseline. For tax legislation, they assume current law will govern–so if there are tax cuts that have sunsets (as the 2001 and 2003 tax cuts have), CBO is required to project revenues assuming the tax cuts expire as written in the legislation. They also project economic growth in a very conservative fashion–they do not try to anticipate major changes in the economy, either recessions or accelerations.

The Concord Coalition takes the CBO baseline and adjusts it to assume appropriations increase at the same rate as the economy (GDP growth). This increase is closer to the historical average rate of increase. We also assume that supplemental appropriations do not continue indefinitely. For recent appropriations for the wars in Iraq and Afghanistan, we include realistic estimates from CBO about how much will be spent under a scenario where troop levels slowly decrease to about one-third of their level at the time of the estimate. For taxes, we assume that all of the major tax cuts will be extended beyond 2010. We also assume the one-year patches to the Alternative Minimum Tax will continue to be enacted, holding the level of taxpayers hit by the tax roughly constant throughout the baseline period. Finally, we include a calculation for the increased debt service (interest payments) that these policies would cause by their increasing the deficit. We do not make any changes to CBO’s economic assumptions.

And, the result isn’t pretty at all:

August09_Conc_Plaus

That would result in a total national debt of over $ 35 Trillion by 2029, an amount which would dwarf the Gross Domestic Product of the United States and which would clearly be unsustainable.

This is reason enough for the government not to be adopting any new multi-year spending projects, “reforming” health care in a manner that turns it into a government-backed entitlement, or engaging in an economically dubious project to fight global warming. We cannot afford it folks.

H/T: QandO

Comments are closed.

[Below The Beltway is proudly powered by WordPress.]