CBO: Deficit would soar in coming decades despite Obama's health overhaul

[SkinsHokieFan]

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/30/AR2010063003396.html?hpid=topnews

CBO: Deficit would soar in coming decades despite Obama's health overhaul

By Lori Montgomery

Wednesday, June 30, 2010; 3:10 PM

President Obama's overhaul of the health-care system has done little to improve the nation's budget outlook, congressional budget analysts said Wednesday. They also said the president's tax agenda -- including a pledge to extend an array of tax cuts for the middle class -- would only make things worse.

In its latest long-term forecast, the nonpartisan Congressional Budget Office predicted that the national debt, which has surged during the recession, would continue to rise in the coming decades despite cost-containment measures in the health-care overhaul that Obama signed earlier this year.

Government debt held by private investors is projected to hit 62 percent of annual economic output by the end of this year -- the highest since shortly after World War II. It would rise to 80 percent of GDP by 2035 under current law, the CBO said.

The health-care overhaul made "steps in the direction of a sustainable fiscal policy. But they are small steps relative to the journey that will be needed for fiscal sustainability," CBO director Douglas Elmendorf said Wednesday in testimony before Obama's bipartisan commission on the deficit.

The fiscal picture would darken dramatically, however, if Congress moved to short-circuit some of the cost-control measures in the health-care act, as some expect, while enacting tax policies Obama has proposed to benefit the middle class, the CBO said. Those policies include a permanent reduction in the alternative minimum tax and an extension of tax cuts enacted during the Bush administration for families making less than $250,000 a year. The Bush tax cuts are set to expire at the end of this year.

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[NewCliche21]

Well, then FML.

[Lombardi's_kid_brother]

A VAT is coming. It's really the only choice, isn't it?

[PokerPacker]

"despite"?

[Duckus]

The next 20-30 years are going to be interesting times.

[NavyDave]

A VAT is coming. It's really the only choice' date=' isn't it?[/quote']

Spending cuts and tax cuts will hopefully come quick with a new admin in 2012.

I hope not but I did predict that part of the socialist plan was to have the destructive Value added tax to help us suck just like Europe.

[mhd24]

When no one wants to cut Social Security, Medicare, and defense, what do you expect?

[NavyDave]

Heck we are not even talking about the unfunded liabilities which is at 100 trillion and climbing.

[Lombardi's_kid_brother]

Spending cuts and tax cuts will hopefully come quick with a new admin in 2012.

Ahh....The Republican mantra since the beginning of time.

Spending is not going to get cut, because spending cannot get cut. Social Security, Medicare, and Medicaid is 42 percent of the budget. Defense is 23 percent. Interest is 5 percent.

You balance the budget on the 30 percent that is left. Show me how it's done.

[Hersh]

And people want to cut taxes more which will just increase deficits further.

I wonder if these projections assume a never ending war Iraq and Afghanistan.

[NavyDave]

Cutting taxes will not increase deficits.

Cutting taxes and cutting or freezing spending will create jobs and increase tax revenue.

[Lombardi's_kid_brother]

And people want to cut taxes more which will just increase deficits further.

I wonder if these projections assume a never ending war Iraq and Afghanistan.

They'll always be another war.

The defense budget is $685 billion. (Damn Commie pinkos!)

Iraq and Afghanistan are about $100 billion of that.

So...in a Neverland where we are out ouf Iraq and Afghanistan and the damn Commie pinkos are able to "slash" the budget by - say - 10 percent or so.

You are looking at $500 billion or so. The lowest it was during the Clinton years was $300 billion, but I don't think we will ever see it in that neighborhood again.

[The Evil Genius]

Cutting taxes will not increase deficits.

Tell you what Dave. Instead of depositing your paycheck this month, send it to me to spend.

Then tell me if you run a deficit for the month.

[Lombardi's_kid_brother]

Cutting taxes will not increase deficits.

Cutting taxes and cutting or freezing spending will create jobs and increase tax revenue.

Where are you going to cut?

Be specifc. I want to see the NavyDave budget with real numbers since you are such a goddamn expert.

By the way, in real dollars, federal tax collections doubled from 1990 to 2000 - an era of increased taxes.

They grew by around 90 percent from 1980 to 1990 - an era of greatly reduced taxes.

[Lombardi's_kid_brother]

By the way, it's obvious that spending needs to be cut. Only an idiot would think otherwise. The problem is, what can be cut (outside of defense) is so small as to be insignificant.

Cutting spending won't get us out of this alone.

The government needs more revenue and needs to spend less of it.

[Duncan]

Spending is not going to get cut' date=' because spending cannot get cut.[/quote']

Ahh....The liberal mantra since the beginning of time.

[Predicto]

Ahh....The liberal mantra since the beginning of time.

I think Lombardi was speaking of political reality, not what he desires.

Neither political side will take the political heat for cutting Medicare, Social Security or Defense - and those three items make up the overwhelming majority of the budget.

Blaming it on liberals is silly - every politician of every political hue is terrified of the most powerful force in American politics: the AARP. Cranky retirees. They are greedy, they are easily scared, and they don't care if the country goes bankrupt as long as it doesn't happen until after they are gone. They will happily spend 10 million of your tax dollars to get a heart operation that will keep them alive for three more weeks.

And they ALWAYS vote.

[Hersh]

Ahh....The liberal mantra since the beginning of time.

The conservative one as well if you haven't noticed the last 10 years.

[luckydevil]

The problem is' date=' what can be cut (outside of defense) is so small as to be insignificant.

.[/quote']

Uh, no. Entitlement spending can most certainly be cut ( will it is another question). Entitlement spending ( medicare being the major reason) is the reason why we have such a debt problem right now. With that said, I would love to cut military spending. It would be my number one priority. I would gut it.*

*Completely ignore this if you talking about the political realities of cutting programs like medicare/social security/medicaid.

[addicted]

Duh? Who didn't think we were totally screwed in 20 years? And it aint just Obamas fault, those of you giving Jr a break need to wise up. He did just as much damage to the country as Barry has. And as Clinton has. And as Regan has. None of the politicans over the past 40 years have been working for any one outside of the extreme rich and elite. When are you going to get that they all sold out. Every last one of them? Instead you all just sit around picking sides like this is a game and it can be "won". Republican and Democrats are the same damn thing...criminals who sold out what was left of the country and are now just acting as vultures around a dead carcass waiting for the depression they caused to come and wipe it all out. They want burning in the streets but as long as they can still steal our money they are sticking around. They don't give a damn about you or I, hahaha. That's funny to me. They only care about the rich and elite. The only choice any of us got today is what color of bull**** you prefer? The Red kind or the Blue kind? They are all the same, about time you intellectuals got that. Your playing a con mans game. There isn't a correct answer between the two parties because they are both wrong. You can't win a game that is unwinable. The forfathers said the Government should work for you and I. The Government should be afraid of you and I. Where did it all go wrong? Anyone think that those asshats are working for your and my best interests? The only "Yes We Can" that I believe in today is "Yes we can overcome Washington and all of the politicans that screwed this place up". If you still do then God Bless ya. I'm too cynical to think otherwise.

[@DCGoldPants]

when Republicans controlled the House, Senate and White House in 2003, they overcame Democratic opposition to add a deficit-financed prescription drug benefit to Medicare. The program will cost a half-trillion dollars over 10 years, or more by some estimates.

With no new taxes or spending offsets accompanying the Medicare drug program, the cost has been added to the federal debt.

[...]

Six years ago, "it was standard practice not to pay for things," said Sen. Orrin Hatch, R-Utah.

Anybody who thinks EITHER party will cut spending is on crack. Especially Dave....who if his beliefs were in play around the 1770's, we'd all still be British.

Its a matter of figuring out how we can stop spending on stuff not produced here in the good ole' US of A.

Not to sound wavy gravy again...but Industrial (none smokable) hemp needs to be what farmers are growing, and companies are using for products made here at home.

[twa]

It will only soar until the collapse...no worries.:evilg:

[Hubbs]

Where are you going to cut?

Be specifc. I want to see the NavyDave budget with real numbers since you are such a goddamn expert.

By the way' date=' in real dollars, federal tax collections doubled from 1990 to 2000 - an era of increased taxes.

They grew by around 90 percent from 1980 to 1990 - an era of greatly reduced taxes.[/quote']

Well, if you want to pick some random dates, tax revenue increased more after Reagan's tax effects took effect (generally 1983) than it did in the six years before they took effect.

Proves just about as much.

By the way' date=' it's obvious that spending needs to be cut. Only an idiot would think otherwise. The problem is, what can be cut (outside of defense) is so small as to be insignificant.

Cutting spending won't get us out of this alone.

The government needs more revenue and needs to spend less of it.[/quote']

"More revenue" doesn't always mean "higher taxes." See here.

[DieselPwr44]

Of course, when one party proposes a 10% increase in funding for a program and somebody across the aisle says "Instead of 10% how bout 4%?" they immediately run to the camera and scream:

"HOLY MOTHER OF PEARL, THEY'RE CUTTING THE PROGRAM!!! THOSE BASTIGES!!!"

doesn't help one bit,huh?

* Both sides do this*

[gbear]

Hubbs,

An increase in revenue from lower taxes only happens on the right side of the curve. Every study I have ever seen suggests we are on the left.

I point you to the Research Quantification part of your link. It's Wikipedia, but the explanation is pretty much in line with what I have seen...and had to prove to my boss last year after a disagreement about the results of the tax cuts on our revenue.

----------------------------------------------

" 2005 US Congressional Budget Office (CBO) estimates of the effectiveness of tax cuts

In 2005, the Congressional Budget Office released a paper called "Analyzing the Economic and Budgetary Effects of a 10 Percent Cut in Income Tax Rates". This paper considered the impact of a stylized reduction of 10% in the then existing marginal income tax rates in the US (for example, if those facing a 25% marginal income tax rate had it lowered to 22.5%). Unlike earlier research, the CBO paper estimates the budgetary impact of possible macroeconomic effects of tax policies, i.e., it attempts to account for how reductions in individual income tax rates might affect the overall future growth of the economy, and therefore influence future government tax revenues; and ultimately, impact deficits or surpluses. The paper's author forecasts the effects using various assumptions (e.g., people's foresight, the mobility of capital, and the ways in which the federal government might make up for a lower percentage revenue). In the paper's most generous estimated growth scenario, only 28% of the projected lower tax revenue would be recouped over a 10-year period after a 10% across-the-board reduction in all individual income tax rates. The paper points out that these projected shortfalls in revenue would have to be made up by federal borrowing: the paper estimates that the federal government would pay an extra $200 billion in interest over the decade covered by his analysis.[4]

Critics at the Cato Institute have charged that to support these calculations, the paper assumes that the 10% reduction in individual tax rates would only result in a 1% increase in gross national product, a figure they consider too low for current marginal tax rates in the United States.[18]"

---------------------------------

I think I have posted similar posts to this at least a dozen times since Bush first pushed through his tax cuts. Sadly, the evidence hasn't changed only grown. It appears we will be able not lower taxes to increase tax revenue any time soon.