Obama's budget passes... Debt much greater that expected

Go down

Obama's budget passes... Debt much greater that expected

Post by Grim17 on Fri Apr 03, 2009 11:22 am

This is from the very liberal Boston Globe:

Having led the Democrats out of Oval Office exile, Obama is also soaring - but worries about the cost of his ambitious plans have started to warm the wax of Democratic cohesion. Catalyzing that concern is the Congressional Budget Office's prediction that the president's program will be significantly more expensive than advertised.

The Budget Office foresees a 10-year cumulative deficit of $9.3 trillion - which is $2.3 trillion higher than the administration's estimate. The government will spend an average of 23.7 percent of GDP yearly while taking in 18.4 percent of GDP in revenue during that period, it says.

The bottom line: yearly federal deficits averaging 5.3 percent of GDP - and a budget gap of about $1.2 trillion in 2019...

..."I think the reality is going to settle in that we are going to have to pull back on something," says US Representative Richard Neal, Democrat of Massachusetts, a longtime member of the House Ways and Means Committee...

..."The unvarnished truth is that as we move forward over the next five to 10 years, we are going to have to raise taxes across the board or significantly cut back programs which affect the middle class and the lower class," says Robert Reischauer, former director of the Congressional Budget Office.

"Taxes are going to have to go up at some point," says Bob Bixby, executive director of the Concord Coalition. "One of the mistakes Obama is making is saying nobody under $250,000 is going to be affected. The deficit is just too big, and you can't get it all from families earning more than $250,000."


Here's what the Wall Street Journal has to say:

The CBO baseline cumulative deficit for the Obama 2010-2019 budget is $9.3 trillion. How much additional deficit and debt does Mr. Obama add relative to a do-nothing budget with none of his programs? Mr. Obama's "debt difference" is $4.829 trillion -- i.e., his tax and spending proposals add $4.829 trillion to the CBO do-nothing baseline deficit. The Obama budget also adds $177 billion to the fiscal year 2009 budget. To this must be added the $195 billion of 2009 legislated add-ons (e.g., the stimulus bill) since Mr. Obama's election that were already incorporated in the CBO baseline and the corresponding $1.267 trillion in add-ons for 2010-2019. This brings Mr. Obama's total additional debt to $6.5 trillion, not his claimed $2 trillion reduction. That was mostly a phantom cut from an imagined 10-year continuation of peak Iraq war spending.

The claim to reduce the deficit by half compares this year's immense (mostly inherited) deficit to the projected fiscal year 2013 deficit, the last of his current term. While it is technically correct that the deficit would be less than half this year's engorged level, a do-nothing budget would reduce it by 84%. Compared to do-nothing, Mr. Obama's deficit is more than two and a half times larger in fiscal year 2013. Just his addition to the budget deficit, $459 billion, is bigger than any deficit in the nation's history. And the 2013 deficit is supposed to be after several years of economic recovery, funds are being returned from the financial bailouts, and we are out of Iraq.

Finally, what of the claim not to raise taxes on anyone earning less than $250,000 a year? Even ignoring his large energy taxes, Mr. Obama must reconcile his arithmetic. Every dollar of debt he runs up means that future taxes must be $1 higher in present-value terms. Mr. Obama is going to leave a discounted present-value legacy of $6.5 trillion of additional future taxes, unless he dramatically cuts spending. (With interest the future tax hikes would be much larger later on.) Call it a stealth tax increase or ticking tax time-bomb.

What does $6.5 trillion of additional debt imply for the typical family? If spread evenly over all those paying income taxes (which under Mr. Obama's plan would shrink to a little over 50% of the population), every income-tax paying family would get a tax bill for $163,000. (In 10 years, interest would bring the total to well over a quarter million dollars, if paid all at once. If paid annually over the succeeding 10 years, the tax hike every year would average almost $34,000.) That's in addition to his explicit tax hikes. While the future tax time-bomb is pushed beyond Mr. Obama's budget horizon, and future presidents and Congresses will decide how it will be paid, it is likely to be paid by future income tax hikes as these are general fund deficits.

We can get a rough idea of who is likely to pay them by distributing this $6.5 trillion of future taxes according to the most recent distribution of income-tax burdens. We know the top 1% or 5% of income-taxpayers pay vastly disproportionate shares of taxes, and much larger shares than their shares of income. But it also turns out that Mr. Obama's massive additional debt implies a tax hike, if paid today, of well over $100,000 for people with incomes of $150,000, far below Mr. Obama's tax-hike cut-off of $250,000. (With interest, the tax hike would rise to more than $162,000 in 10 years, and over $20,000 a year if paid annually the following 10 years). In other words, a middle-aged two-career couple in New York or California could get a future tax bill as big as their mortgage.

But you all should take luciano's advice and ignore these stories. There nothing but unpatriotic stories designed to slander the president for partisan political gain.

The truth is, everything is really, really great. The president is truly the new Messiah, and he will use divine intervention to create the money to pay for his socialist heavenly agenda
avatar
Grim17

Male
Sagittarius Dragon
Number of posts : 430
Age : 53
Location : Phoenix, Arizona
Registration date : 2009-01-17

View user profile

Back to top Go down

Re: Obama's budget passes... Debt much greater that expected

Post by PaulM on Fri Apr 03, 2009 11:58 am

I heard on NPR this morning that unless consumers get up off of it and start spending again that we can expect the recession to continue into next year. Well... with this news guess who's not going to be doing any spending this year (or for many years yet to come).
BTW... unemployment is now at a 25yr record 8+%

_________________
Paul
avatar
PaulM

Male
Aquarius Dragon
Number of posts : 577
Age : 66
Location : Kentucky
Humor : Yes
Registration date : 2009-01-14

View user profile

Back to top Go down

Re: Obama's budget passes... Debt much greater that expected

Post by Old Timer on Fri Apr 03, 2009 1:37 pm

PaulM wrote:I heard on NPR this morning that unless consumers get up off of it and start spending again that we can expect the recession to continue into next year. Well... with this news guess who's not going to be doing any spending this year (or for many years yet to come).
BTW... unemployment is now at a 25yr record 8+%

And it is just getting started. I to will not be doing any spending. Our little town is dependent on the tourist trade to survive. Business has been down about 25% here so far and it is going to get worse. A lot of those that depend on the tourists for jobs are leaving becuse there is no work avialable. Our local paper normally would have about 2 to 3 pages of want adds, now there is less than 3/4 of a page and it is getting worse. The construction and the service industries are the hardest hit here. Several businesses including a real estate business have already closed down.

Old Timer

Male
Number of posts : 4718
Registration date : 2009-01-13

View user profile

Back to top Go down

Re: Obama's budget passes... Debt much greater that expected

Post by BluePacific on Sat Apr 11, 2009 11:27 am

"But you all should take luciano's advice and ignore these stories." - Grim17

And why should we take them seriously when the CBO has a history of being full of shit?

In the 1990's, the CBO warned we would have massive deficits, which would grow even larger by the end of the decade. How accurate was that?

Instead of a predicted $357 billion deficit in 1998, we had a surplus.

Then in 2001, the CBO said we would have a $5.6 trillion budget surplus for fiscal years 2002 through 2011.

Where is that surplus?

But now we're supposed to believe them. Is that what you want us to do, Grim? What a joke.
avatar
BluePacific

Number of posts : 18
Location : United States
Registration date : 2009-02-23

View user profile

Back to top Go down

Re: Obama's budget passes... Debt much greater that expected

Post by Old Timer on Sun Apr 12, 2009 9:47 am

BluePacific wrote:"But you all should take luciano's advice and ignore these stories." - Grim17

And why should we take them seriously when the CBO has a history of being full of shit?

In the 1990's, the CBO warned we would have massive deficits, which would grow even larger by the end of the decade. How accurate was that?

Instead of a predicted $357 billion deficit in 1998, we had a surplus.

Then in 2001, the CBO said we would have a $5.6 trillion budget surplus for fiscal years 2002 through 2011.

Where is that surplus?

But now we're supposed to believe them. Is that what you want us to do, Grim? What a joke.

You know what the joke is? It seems like all of the politicians and those that claim to have all of the answers are athe big joke. Oh yeah they have all of the answers alright, problem seems to be that the answers are for all of the wrong questions.

Old Timer

Male
Number of posts : 4718
Registration date : 2009-01-13

View user profile

Back to top Go down

Re: Obama's budget passes... Debt much greater that expected

Post by Sponsored content


Sponsored content


Back to top Go down

Back to top

- Similar topics

 
Permissions in this forum:
You cannot reply to topics in this forum