CBO Gently Reminds America of Coming Budgepocalypse

"Daunting." "Unsustainable." These are the sort of adjectives the Congressional Budget Office—about as calm and reserved an office as exists in Washington—uses when it reports on the country's fiscal future. Given the agency's penchant for cautious understatement, you might translate the gist of its big-deal budget reports something like this: "Budget-wise, we're probably screwed."

But at least we'll have lengthy CBO reports to burn for warmth (and roast marshmallows over!) after the budgepocalypse. Today, the CBO released yet another detail-packed mega-report on the country's budgetary outlook, covering the period from 2010-2020. And as the cowboys say in cartoon Westerns, it ain't purdy. "Under current law," the report reads, "the federal fiscal outlook beyond this year is daunting."

Key findings include:

  • Projected average yearly deficits of about $600 billion for each of the next 10 years. That's around $6 trillion total, $1.35 trillion of which we'll see just this year.
  • Significantly higher debt, fueled by those high deficits. By the end of 2020, public debt is expected to equal 67 percent of GDP—up from 53 percent in 2009.
  • As a result, the report says, "interest payments on the debt are poised to skyrocket." According to CBO projections, annual spending on interest payments will triple.

Complicating the picture is that CBO's projections, as a rule, have to assume that current law will stay in effect, and unchanged, for the duration of the projection period. That means that, for example, the projections include revenue generated from tax cuts that supposedly expire but are widely expected to be renewed. The report also assumes that appropriations spending will rise in line with inflation rather than with GDP. The result, as the report states explicitly, is that "baseline projections understate the budget deficits that would arise under many observers' understanding of current policy." Or, to put it another way, if everything goes the way everyone expects everything to go, things will actually be even worse than we're predicting. 

Combine this with the office's summer 2009 report on the long term budget outlook, in which CBO director Douglas Elmendorf called the country's long-term budgetary path "unsustainable," and you get a fairly unsettling picture of a country hurtling towards, if not actual disaster, then some serious fiscal pain. As the summer report noted, the options for righting the course are limited: raise taxes or cut spending, and soon. I know which one I think is more likely, given the current state of affairs, but neither's exactly an easy sell. And knowing how willing politicians typically are to do either, I'd say that's a daunting outlook, indeed.

Official summary of today's report here. Read my long feature on the CBO's history here. 

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  • Rahm Emanuel||

    "Under current law," the report reads, "the federal fiscal outlook beyond this year is daunting."

    Hey, maybe martial law will ameliorate the outlook.

    Show of hands?

  • Captain Murphy||

    I hereby declare Martian law!

  • ||

    Aren't you bizarro Captain Murphy?

  • jester||

    Budgepocalypso- Attila the Hun, Roaring Lion, Lord Invader, and Lord Kitchener- they're all coming to get you.

  • ||

    This feeling I'm having...

    It's what I'm supposed to feel for global warming, right?

  • Jeffersonian||

    When I ran for Congress in 1994 on the LP ticket, I was saying things that were almost verbatim what the CBO is saying now. For my trouble, I was deemed a crackpot and an extremist. I'm positively mainstream now, much to my dismay.

    When everything comes apart, it's going to happen fast, and it's going to happen ugly.

  • ||

    Cut spending with a large claymore. Reduce taxes, but keep adequate revenue to pay down debt. Avoid inflation. Demonstrate fiscal responsibility, likely including a balanced budget amendment.

    Get to work, people! The era of big government is over! Again!

  • Nancy and Harry||

    Get to work, people! The era of big government is over!

    We're on it already!

  • ||

    You're going to love libertarianism. Really. It's very, um, liberating.

  • ||

    Don't forget to actually and literally shrink the size of the state. Otherwise, it's just a a holding pattern while the weather clears up.

  • Congress official||

    (blank stare)

    ...BWAAAHAHAHAHHAHAHA! That's a good one!

    Seriously though... we really need to hold an emergency closed-door session to figure out how we can spin this so that it's someone else's fault.

  • NeonCat||

    Obviously it's the American people's fault for not being bipartisan enough. American people, why do you hate America?

  • ||

    When everything comes apart, it's going to happen fast, and it's going to happen ugly.

    Everything tried to come apart - fast - back in fall of 2008. By replacing the housing bubble with the one bubble left to inflate (money itself) the government has buried the problem for the time being (though no one's happy about it). In that context all this financial tinkering and stimulating has been effective.

    But burying the problem just will let it build up enough pressure to blow through sovereign finances, interventions and credit-ratings, rather than the mere big-bank versions of those things that went kaboom in 2008.

    Right now the U.S. financial system is like Terry Schiavo; it should be dead...but it holds on because nature's course has been dashed with artificial interventions. In that metaphor, the Bank of China is the Medtronic stack our Terry Schiavo is plugged into, and as soon as the Chinese unplug us...it will be tough to watch us starve to death. But maybe the sooner the better at this point. Release the pressure now instead of let it continue to build up and up and up and up...

  • ||

    Terry Schiavo is dead.

  • ||

    ...and Ben Bernanke is Bill Frist. "How can you say her brain is liquefied?! Her eyes tracked the pen I was waving back and forth, I swear!"

  • Hank||

    F-F-F-F-F-F-F-F-F-F-Fair Tax. Anyone?

  • Barack Obama||

    Excellent idea, Hank!

    We'll start with the Maryland State Fair, and move gradually to the World's Fair.

  • Hank||

    +15 billion (dollas)

  • H.F. Wolff||

    For politicos everywhere Other People's Money (OPM = Opium) is a drug, and since when have drug addicts voluntarily cut back on their habit????

    Years ago I wrote an essay on this topic that addressed this and other problems with western "democracies".

    For elections I opined that the voter should vote for that person with the smallest election budged since this person would be the least obligated to big business.

  • Steve Chaos||

    The use of images + alt tags like this just remind me of why I ♥ Hit and Run so.

  • ||

    Do you think there's a market in post-apocalyptic products? Kind of like we had during the Cold War? You know, shelters, survival gear, exploding gas tanks, tight leather body armor, hockey masks?

  • ||

    Uh . . . have you tried to buy any ammo lately?

  • ||

    Stop being such a bunch of hysterical alarmists; I have it on good authority that the President is about to issue an Executive Order directing federal employees to conserve paper clips.

    Problem solved.

  • ||

    Nah, he's going to ban the Republican Party. That'll solve everything. 'Cause opposition to Hope is a problem.

  • Hank||

    I don't git the feelin' them CBO fellers have heard nothin' 'bout that new Green Economy. That strikes me as suspicious!

  • Dr. Obama||

    Here comes the scalpel, yo!

  • 2010 Voter||

    And here comes the hatchet!

  • Dr. Obama||

    McCain, cut that shit out. Not funny.

  • Chad||

    Cut all spending by 10%. Raise all taxes by 10%. Implement pay-go, and enforce it even during war.

    That pretty much solves everything.

    Next?

    OK...I am being facetious. Instead of raising all taxes 10%, we should rather implement a 5% VAT, a $30/ton_CO2 carbon tax that rises inflation+2% for the rest of the century, and triple the gasoline tax. Then we can cut the corporate tax to 25% (to better match other nations), but raise capital gains up to 20%, and institute a 3% FICA tax on both capital gains and income above the current limit of ~$100k. For cuts, we need to wind down the wars as fast as we can, then hold military spending flat for twenty years, until it has shrunk to about half its current size relative to GDP. We should implement a single-payer national health care scheme, and raise the Medicare tax to cover whatever shortfalls result. Social Security needs a bit of a haircut, probably via means testing it more strongly than the current formula does. Discretionary spending is chump change, and actually should be increased by 20%, and income taxes hiked to cover it. It wouldn't amount to much. In particular, we need to boost spending for education, R&D, and infrastructure. Much of the latter can be funded with the heightened gasoline tax.

    That sounds about right. Ahh, would that I be king.

  • jester||

    Getting everyone to 'put out': is it good to be the king?

  • Freedom||

    I just puked. Somebody get that garbage off the screen.

  • Omission||

    I just puked, too, but I'd rather look at lunch again.

  • Old Mexican||

    Chad-ese to English.

    Chad-ese,

    Instead of raising all taxes 10%, we should rather implement a 5% VAT, a $30/ton_CO2 carbon tax that rises inflation+2% for the rest of the century, and triple the gasoline tax. Then we can cut the corporate tax to 25% (to better match other nations), but raise capital gains up to 20%, and institute a 3% FICA tax on both capital gains and income above the current limit of ~$100k.

    Translation:
    Just destroy the economy while we're at it, since I hate productive people.

    For cuts, we need to wind down the wars as fast as we can, then hold military spending flat for twenty years, until it has shrunk to about half its current size relative to GDP.

    Translation:
    I prefer facile solutions to simply preferring to have the government obey the Constitution for a change.

    We should implement a single-payer national health care scheme, and raise the Medicare tax to cover whatever shortfalls result.

    Translation:
    I have no knowledge of basic economics, and it shows.

    Discretionary spending is chump change, and actually should be increased by 20%, and income taxes hiked to cover it.

    Translation:
    Government knows how to spend the money better than the people that actually make it for a living.

  • ||

    I have a better translation

    "In regards to my ideology being completely discredited in the next few years i have decided to forgo reality and embrace a non-existent utopia that doesn't even work on paper"

  • bmp1701||

    And would that I be Lee Harvey Oswald.

  • Mount St. Helens||

    Your CO2 tax is going to bankrupt me.

  • nobody special||

    Hasn't the US forgiven foreign debt over the past 50 years?

    Maybe it's time for them to hook us up in return?

  • ||

    It will be hard to forgive ourselves for all the off-book debt in the retirement/health schemes.

  • JD||

    "Under current law, the federal fiscal outlook beyond this year is daunting."

    Left unsaid: "Therefore, we're going to change the law, and then everything will be hunky-dory!"

  • ChrisO||

    But at least we'll have lengthy CBO reports to burn for warmth (and roast marshmallows over!) after the budgepocalypse.

    So, you're saying that I should go all in on marshmallow stocks?

  • ||

    No reform will take place until we have a crisis, so we might as well resign ourselves to that. We have massive middle class entitlements while the truly needy suffer. We voted for the individuals who put us into this mess, so I guess we deserve what we're getting. I just wish there would be a politician who would talk to the American people like they are adults, and be honest about the tough choices we face.

  • wizard of oz books||

    With many new announcement about the wizard of oz movies in the news, you might want to consider starting to obtain Wizard of Oz books series either as collectible or investment at www.RareOzBooks.com.

  • LifeStrategies||

    The more things change, the more they stay the same. Those who don't learn first time round are doomed to repeat it...

    The politicians still haven't learned their lesson, and so there's yet more brinkmanship over government spending and the debt limit...

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