Deficits would total $9.5 trillion between 2012 and 2021 under the President’s budget, $2.7 trillion more than the amounts projected in CBO’s March baseline.

Does anyone get it?  I guess I don’t.  Higher and higher deficits, more and more leveraging of the economy and yet not only does spending continue, it increases.  Left leaning economists think all this is no big deal, right leaning economists see a catastrophe on the horizon.  

Who the hell is right?

One thing is clear, nobody knows where all this is going, not the President, not Congress and not the CBO.  Wild eyed assumptions and pie in the sky ideas are driving this spending.  Political maneuvering with an eye on the 2012 elections are more of a consideration than the fiscal certainty of the United States.  Idealists trying to solve every social ill of human beings are dominating over common sense and fiscal responsibility. 

Three things are certain:

1. You can’t trust the assumptions especially projections for ten years or more

2. You can count on Congress to keep acting like politicians, to spend all new tax revenue and not to follow through on projected budget cuts

3. There will be unintended consequences and they will be mostly negative for you.

According to a new report from the Congressional Budget Office deficits would total $9.5 trillion between 2012 and 2021 under the President’s budget, $2.7 trillion more than the amounts projected in CBO’s March baseline. Debt held by the public would rise from 69 percent of GDP in 2011 to 87 percent of GDP in 2021.

And here is more from the CBO report:

 Under current law, payment rates for physicians’ services under Part B of Medicare are slated to decline by 29 percent in January 2012 and by additional amounts in later years. The President proposes to avoid those reductions by freezing payment rates at their 2011 levels for the next 10 years. That policy would increase net outlays by $298 billion over the 2012–2021 period, CBO estimates. Under the President’s budget, the costs of the freeze for the first two years would be offset by various proposals involving Medicare, Medicaid, and the regulation of prescription drugs, which CBO estimates would reduce mandatory spending by a total of $48 billion over the coming decade.  The President’s budget also calls for offsetting the costs of the payment freeze in later years, but it does not provide any policy details about future spending cuts for that purpose. Consequently, CBO did not estimate any savings for such future cuts. 

Updating baseline projections of federal spending on health care programs does not automatically result in a complete reestimate of the budgetary impact of last year’s major health care legislation under the assumptions of the new baseline. However, the costs or savings from some aspects of that legislation can be separately identified in the baseline projections. In particular, the provisions related to expanding health insurance coverage were projected to increase the deficit between 2012 and 2021 by $1.04 trillion, on net, in CBO’s January baseline; they are now projected to increase the deficit by $1.13 trillion over that period. But those effects are only a part of the total budgetary impact of the legislation. CBO’s previous estimate showed that the effects of the other provisions on mandatory spending and revenues, taken together, would reduce the deficit by roughly $1.25 trillion over the 2012–2021 period—meaning that the legislation, as a whole, was projected to reduce the deficit over years. The budgetary effects of all of those other provisions cannot be separately identified in the new baseline.

Related Articles

• CBO: Obama Understates Deficits by $2.3 Trillion – ABC News (news.google.com)
• Obama’s budget would widen deficits: CBO (reuters.com)