National Debt Continues to Explode Under Obama; Updated
This week the Congressional Budget Office (CBO) released their analysis of Obama’s fiscal 2011 budget. David M. Dickson at the Washington Times summarizes:
President Obama’s fiscal 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next 10 years, $1.2 trillion more than the administration projected, and raise the federal debt to 90 percent of the nation’s economic output by 2020, the Congressional Budget Office reported Thursday.
In its 2011 budget, which the White House Office of Management and Budget (OMB) released Feb. 1, the administration projected a 10-year deficit total of $8.53 trillion. After looking it over, CBO said in its final analysis, released Thursday, that the president’s budget would generate a combined $9.75 trillion in deficits over the next decade.
“An additional $1.2 trillion in debt dumped on [GDP] to our children makes a huge difference,” said Brian Riedl, a budget analyst at the conservative Heritage Foundation. “That represents an additional debt of $10,000 per household above and beyond the federal debt they are already carrying.”
The federal public debt, which was $6.3 trillion ($56,000 per household) when Mr. Obama entered office amid an economic crisis, totals $8.2 trillion ($72,000 per household) today, and it’s headed toward $20.3 trillion (more than $170,000 per household) in 2020, according to CBO’s deficit estimates.
That figure would equal 90 percent of the estimated gross domestic product in 2020, up from 40 percent at the end of fiscal 2008.
All of this is unsustainable and will result in an economic disaster if someone doesn’t put a stop to it. These are Banana Republic numbers. Further, the projection that the debt to GDP ratio will reach 90% in ten years is a significant increase over last year’s CBO report, which projected it to reach 82.4% in ten years. For those who think this enormous increase in the projected 10-year debt is simply the result of the fiscal time bomb known as ObamaCare, think again. CBO included the following disclaimer on page 4 of their report:
The baseline estimates contained in this document do not include the effects of the Patient Protection and Affordable Care Act, which was enacted on March 23, 2010. The President’s budget included placeholders for the budgetary effects of health care legislation; CBO used those placeholders in its analysis of the President’s budget.
Translation: Because they didn’t have any specific ObamaCare data to analyze, they substituted phony data provided by the Obama Administration as “placeholders” in their analysis. When realistic ObamaCare data is plugged into the CBO econometric model, the debt will be far higher than projected. The people providing these placeholders to the CBO are the same ones who gamed the CBO score last week to make the unbelievable claim that the government can add a new healthcare entitlement to 32,000,000 people and it will lower the deficit. What could possibly go wrong? Heh!
Obama, of course, has a history of grossly understating the deficits and debt being racked up by his administration. I’ll predict that next year at this time the CBO will project the 10-year debt to GDP ratio to reach 100% of GDP. All the rosy assumptions about economic growth upon which Obama and, albeit to a lesser extent, the CBO depend will never materialize. ObamaCare will only make things worse. Caterpillar and John Deere are already warning investors that the bill will take money out of their capital budgets, along with Verizon. And let’s not forget about the bond market.
All of this points inexorably toward rising business costs and higher long term interest rates. This will result in a weaker economy, fewer jobs, and much higher than expected deficits and debt. Indeed, if the 10-year projected debt to GDP ratio is only 100% next year, we’ll be lucky. If it goes much higher than that, we’ll experience an economic catastrophe. See Greece. Surely the President of the United States would want to avoid such a crisis. But then again…
Update: The CBO has provided this helpful chart which illustrates their the 10-year budget projections. Again, as bad as these numbers look, their underlying assumptions are optimistic.