CBO: Obama Budget $2.3 Trillion Worse Than Claimed
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The CBO released a preliminary report on Barack Obama's 2012 budget today. Long story short: Obama's budget is overly optimistic, and the deficit will be much higher than he and the executive Office of Management and Budget claimed it would be. The CBO claims that the President's budget projections are off by a wide margin: $2.3 trillion dollars [pdf].
Compared with the Administration's estimates, CBO's estimates of the deficit under the President's budget are lower for 2011 (by $220 billion) but higher for each year thereafter (by a total of $2.3 trillion over the 2012–2021 period). That disparity stems from differences in the underlying projections of what would happen under current law ($1.3 trillion) as well as from differing assessments of the effects of the President's proposals ($1.0 trillion).
A few hundred billion here, a few hundred billion there, suddenly you're short by a few trillion dollars! Anyone could make that mistake. This will have a substantial effect on the debt and deficit. While Obama claims that his budget plan is a way to get the country on the path to a balanced budget, he's really just maintaining the status quo: bloated budgets and soaring debt in perpetuity.
The CBO estimates that ten years of deficits would add up to $9.5 trillion under the Obama plan and by 2021 the debt held by the public would total 87 percent of gross domestic product.
CBO concludes that s, "if all of the President's budgetary proposals were enacted, they would add $26 billion to the baseline deficit for 2011. As a result, the 2011 deficit would total $1.43 trillion, or 9.5 percent of gross domestic product (GDP)."
The scary thing is the amount of debt held by the public and the increasing share of spending that is needed merely to keep up interest payments. The CBO notes "net interest payments would nearly quadruple in nominal dollars over the 2012-2021 period and would increase from 1.7 percent of GDP to 3.9 percent." The debt-to-GDP ratio for the United States, an international signal to investors of the fiscal sanity of the United States government, will be at an abysmal 87%, even under projections of an economic recovery.