The Error of Big Government
The new Congressional Budget Office analysis of the federal budget is full of bad news, but Republican budget experts still fear the report manages to sugar coat the extent of the problem.
The cumulative federal deficits during President Obama's first term will total more than $5 trillion. By 2021, that number is expected to rise by another $7 trillion, according to the report. CBO forecasts that the deficit as a share of GDP will fall to 3 percent in 2015 from 9.8 percent this year. But this progress is highly doubtful, given budget changes that Congress is likely to make between now and then.
The projections assume that all of the Bush tax cuts -- not just those on the rich -- are repealed in 2011. They assume that 25 million more Americans, mostly in the middle class, will have to pay the Alternative Minimum Tax. And they assume that payments to doctors for treating Medicare patients will be severely cut after 2012. "None of that is likely to happen," House Budget Committee chairman Paul Ryan tells me. "We have to cut the entitlements to get these deficits down in the out years."
Other budget hawks complain that CB0 fails to take into account the true deficit impact of ObamaCare, which the agency still officially pretends is a debt reducer. "That's just a complete fantasy," says Doug Holtz-Eakin, a former CBO director. "That forecast is off by hundreds of billions of dollars."
Brian Riedl of the Heritage Foundation recalculated the CBO baseline with more realistic assumptions and found that the 10-year deficits will equal $13.6 trillion through 2021. "Annual deficits never fall below $1 trillion," he writes, "and even that assumes a return to peace and prosperity."
In sum, the Obama deficit and spending blowout in Washington isn't as bad as we're being told. It's worse.
by Stephen Moore
THE WALL STREET JOURNAL ONLINE
Thursday, 27 January 11