Beyond the rhetoric on left or right. The facts about the deficit from the CBO.

Listening to the discussions on the talk shows this past Sunday morning you could reach any conclusion you like about the federal deficit; nearly all inaccurate. Cuts in spending have been made; no they haven’t. The deficit is climbing out of control; no it isn’t. We need more revenue; we need to cut spending. We need to address the growth in entitlements; that’s off the table and on and on. It’s quite disgusting dealing with all this spin and misleading information and worse, such misinformation actually forms the basis for important policy decisions. Scary right?

It gets worse, eventually we may deal with the truth.

Clearing the political fog reveals the true nature of the problem. Here is what the Congressional Budget Office says on its website November 8, 2012 … ever wonder why you don’t hear this on the news or from the mouths of politicians?

How Big Are Projected U.S. Deficits and Debt?

Federal debt held by the public currently exceeds 70 percent of the nation’s annual output (gross domestic product, or GDP), a percentage not seen since 1950. Under the current-law assumptions embodied in CBO’s baseline projections, the budget deficit would shrink markedly—from nearly $1.1 trillion in fiscal year 2012 to about $200 billion in 2022—and debt would decline to 58 percent of GDP in 2022. However, those projections depend heavily on the significant increases in taxes and decreases in spending that are scheduled to take effect at the beginning of January. [Which did not happen]

If, instead, lawmakers maintained current policies by preventing most of those changes from occurring—what CBO refers to as the alternative fiscal scenario—annual deficits would average nearly 5 percent of GDP over the next decade, and debt held by the public would increase to 90 percent of GDP 10 years from now and keep rising rapidly thereafter. [Which did happen]

What Factors Are Putting Increasing Pressure on the Budget?

The aging of the baby-boom generation portends a significant and sustained increase in coming years in the share of the population that will receive benefits from Social Security and Medicare and long-term care services financed through Medicaid. Moreover, per capita spending on health care is likely to continue to grow faster than per capita spending on other goods and services for many years. Without significant changes in the laws governing Social Security, Medicare, and Medicaid, those factors will boost federal outlays as a percentage of GDP well above the average of the past four decades—a conclusion that applies under any plausible assumptions about future trends in demographics, economic conditions, and health care costs.