President Obama's Debt Plan? More Debt.

President Obama’s 2012 budget proposal is primarily a political document—built to highlight the president’s priorities and outline a vision for the country. No one expects it to pass.

But here’s what would happen if it did, according to the Congressional Budget Office: The 2012 deficit would be $1.3 trillion—8.2 percent of gross domestic product and $82 billion higher than the current budget baseline. Next year, the deficit would decline, but still clock in at $977 billion, meaning that federal borrowing would account for more than 6 percent of the country’s total economy. In the following years, deficits would continue to decline, but will still be higher than the budget office baseline by between 1.4 and 1.9 percent of GDP each year.

All told, the nation would wrack up roughly $6.4 trillion in federal deficits by 2022. Federal debt held by the public would increase by half, rising from $10.1 trillion to $15.2 trillion in 2017, and $18.8 trillion by 2022. That’s compared to a baseline scenario in which debt reaches $15.1 trillion in 2022.  The debt mountain is huge no matter which of the two scenarios you pick, but it’s larger under Obama’s budget proposal. Politico’s write up of the report ran with the headline: “Exploding debt under Obama policies.”

Of course, as the president’s defenders might point out, the budget office baseline isn’t exactly a likely scenario either. It’s based on a strict interpretation of current law, in which Medicare payments to physicians are cut sharply, income tax rates return to Clinton-era levels, and the alternative minimum tax is unchanged, hitting more and more families.

It has become popular to point out that in this do-nothing scenario—the current law baseline—debt and deficit levels are more manageable in future decades. But policies we aren’t going to follow aren’t very helpful, especially since the baseline scenario keeps the deficit down by letting tax rates rise along with spending. And this scenario simply isn’t going to happen: both parties have committed to extending most if not all of the Bush tax cuts as well as overriding Medicare’s physician payment reductions.

That’s why the CBO also uses an alternative baseline. The CBO’s alternative projects our nation’s budgetary future using a more plausible set of assumptions: "temporary" tax cuts will be extended, Medicare payments to doctors will not be sharply cut, and so forth. It offers something approaching reality when compared to the baseline scenario’s fantasy.

The president’s scenario manages to better the alternative debt scenario—but that’s not saying much. Instead of letting federal debt held by the public stretch past 90 percent of GDP, as in the alternative scenario, the president’s budget plan would hold it down to 76 percent of the economy. (See graph below.)

This is hardly an inspiring picture of the country’s budgetary future. And in the long term, it’s even worse: The budget proposal does not deal with the budget-swallowing U.S. commitments to health spending. As Treasury Secretary Timothy Geithner recently admitted, in the long term, those commitments remain “unsustainable.” It is telling that in an election year, given the freedom of knowing in advance that his budget was certain to go nowhere, President Obama chose this framework, and this timid-at-best-approach, to highlight his vision for dealing with America’s debt.

Previous coverage of the budgepocalypse: The budgepocalypse is nighBudgepocalypse 2012! Heading off the budgepocalypse

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  • ||

    "Let me be clear: in a minimum of 10 months or a maximum of just under 5 years, this will no longer be my problem."

  • inb4||

    inb4 a gazillion comments

  • clarification||

    Just to clarify - the "alternative" scenario used by the administration assumes an end to the Bush tax cuts?

  • Peter Suderman||

    No, the CBO's current law baseline assumes the Bush tax cuts will end for everyone (as called for by current law, but as supported by neither party). The CBO's alternative scenario more realistically assumes that all of the tax cuts will continue. (President Obama and many Democrats have said they support ending the Bush tax cuts for top earners only.)

  • Suki||

  • And from a girl named Suki!||

    RACIST!

  • Suki||

    Praise of monkey is not bad.

  • Joe M||

    But my liberal friend told me Obama wants to cut spending more than the Republicans.

  • Suki||

    Keynesianism worked like magic in a regime they dare not name.

  • ||

    I'm Sold.

  • Contrarian P||

    Is there anybody who thinks this is sustainable anymore? Why is Geitner's admission news? It's like announcing with great fanfare that water is wet. Of course, for an apples to apples comparison, you'd have to get up to your eyeballs in water and keep on breathing normally.

  • ||

    Guns, ammo, beans and rice.

  • ||

    Dried beans. Keep some bees for honey, which you can use for trade.

  • ||

    You're not fooling me with that bee business. I've seen the The Wickerman.

  • ||

    Okay, just dried beans, then.

  • ||

  • Joe M||

    He shouldn't have done that. Bees can smell screams.

  • Paul||

    Dried beans. Keep some bees for honey, which you can use for trade.

    I thought we libertarians used our women for trade?

  • ||

    We're all planning to use your women for trade. Sorry, but that's people power.

  • Shrike||

    doc fix...doc fix.....DOC FIX!

    christfags!

  • shrike||

    I kind of agree with my spoof.

    Obama took a job with a $1.3 trillion ANNUAL deficit and now complains about that deficit.

    You asked for it, Obama.

  • Mr. FIFY||

    Real shrike always sides with Obama. I call bullshit on both posts above.

  • ||

    Here is a big Middle FInger Salute to Obama and his joke of an organization lol.

    www.Anon-Planet.tk

  • Janet Napolitano||

    Anon-Bot is now on the list.

  • Paul||

    Anon-Bot made the smartest comment... sad, really.

  • ||

    http://www.thefiscaltimes.com/.....aspx#page1

    Since he is a lying sack of shit who was ready to make a deal with Republicans last summer, maybe he doesn't mean it.

  • Tolly||

    *Psssst - Romney campaign... Pull your heads OUT OF YOUR ASSES and accept all the manna from OBVIOUS ISSUE HEAVEN like this.*

    Congrats - you just defeated the most hyped-up, awful politician since JFK!

  • ||

    2000 to 2008 does not look all that bad.

    You know Obama is fucked when Bush has a better record.

    Seriously how hard is it to do better then Bush?

  • Tony||

    How inconvenient for those who would praise Bush that the economic crisis didn't wait a few months so that it could really be sold as Obama's fault to morons.

  • ||

    Bush's fault '12™

  • Tony||

    Drude zombie grunt notwithstanding, doesn't it pay to know the actual, if complex, chain of blame, or is all that matters calling Obama the devil?

  • Mr. FIFY||

    Beats NOT blaming Obama as well as Bush.

  • Paul||

    Like Walmart, Bush created the conditions that make us shop there! And stuff.

    Occupy North Platte!

  • Auric Demonocles||

    Notice that every Obama budget plan has had the deficit dropping "next year". The

  • Auric Demonocles||

    Stupid less than signs and lack of preview!

    The <$1 trillion gap is always just a year away.

  • ||

    To "wrack up" $6.4 trillion in deficits makes for an apt Joycean pun in this context, but the correct usage is actually to "rack up."

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