6 Takeaways from the CBO's Latest Budget Report

Whitehouse.govWhitehouse.govThe Congressional Budget Office just released a big new budget report outlining its most up-to-date expectations for the economy, the deficit, and Obamacare over the next decade.

It’s the first major budget document from the office since the launch of the health law’s exchanges last year, so there are plenty of interesting new figures and projections. Here are six key takeaways from the report:

1. Over the next decade, there will be millions fewer full-time workers because Obamacare creates disincentives to work. In 2024, the labor force will be smaller by about 2.5 million full-time equivalent jobs than it would have been in the absence of the health law. This represents a significant upwards revision; CBO had previously estimated that there would be about 800,000 fewer full-time equivalents in 2021 because of the law (as a comparison, it now projects the relative loss to about 2.3 million that year). As before, the expectation is that this reduction will stem largely from a reduction in the labor supply; with Obamacare in place, CBO expects that fewer people will choose to work in order to maintain their health coverage. The effect is expected to be concentrated in amongst part-time workers, for whom “the loss of [Obamacare’s health insurance] subsidies upon returning to a job with health insurance is an implicit tax on working.”

2. Fewer people are expected to gain insurance through Obamacare as a result of the botched rollout of the exchanges. The CBO expects that 1 million fewer people will enroll in Medicaid, and 1 million fewer will get coverage through the exchanges, thanks to the “significant technical problems that have been encountered in the initial phases of implementing the ACA.” The CBO's projections were finished last year, however, so they don't incorporate the latest enrollment data. 

3. CBO estimates that Obamacare’s risk corridors program—the provision which has been dubbed a bailout of insurance companies—will result in a net revenue gain for the government rather than a net payout to insurance companies. The CBO projects that the government will make about $8 billion in payments to insurers under the program and receive about $16 billion in revenue in return, for a net gain of $8 billion. That estimate, which was completed in early December, is based on the experience with insurers participating in Medicare Part D, which also includes a risk corridor program. This is a hard one to estimate. As CBO’s report says, “the government has only limited experience with this type of program, and there are many uncertainties about how the market for health insurance will function under the ACA and how various outcomes would affect the government’s costs or savings for the risk corridor program.” Whether you think this is a likely estimate, then, depends on whether you think Medicare Part D offers a useful guide for what to expect from Obamacare. 

4. Taken by themselves, Obamacare’s insurance provisions will increase the deficit by $1.4 trillion. The Affordable Care Act is a sprawling piece of legislation with a variety of revenue mechanisms built in that are supposed to offset the significant cost of the law. But CBO broke out the provisions that are specifically related to the provision of insurance coverage—the cost of the subsidies, the Medicaid expansion, the penalty payments made as a result of the mandate, the tax on high-end coverage, etc.—and found that, over the next 10 years, they will increase the deficit by $1.48 trillion. (See the CBO's table below.) This doesn’t mean that Obamacare, as a legislative whole, is now scored as a deficit hike. But it does mean that its central component, the coverage expansion scheme, is. 

5. Under current law, annual budget deficits will remain roughly equal to their current size for a few years before they start to rise again. The 2014 fiscal year’s deficit is projected to total $514 billion, a big drop from the $1 trillion annual shortfalls we were seeing during Obama’s first term. And next year’s deficit is projected to be slightly smaller—about $478 billion. But that’s where the reduction stops. After that, CBO projects that deficits will begin to rise again, both in dollar terms and as a percentage of the economy.

6. The federal debt is huge. In part because the nation has run such large annual deficits over the past few years, the total amount of debt held by the public is enormous. By the end of this year, outstanding national debt will equal about 74 percent of gross domestic product (GDP), rising to 79 percent over the next decade. That’s going to create a drag on the economy for a long time to come. “The amount of debt relative to the size of the economy is now very high by historical standards,” the CBO’s report says. “Such large and growing federal debt could have serious negative consequences, including restraining economic growth in the long term, giving policymakers less flexibility to respond to unexpected challenges, and eventually increasing the risk of a fiscal crisis.”

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Swiss Servator, Befehl!||

    Let me preempt the trolls...

    BOOOSH!

  • wareagle||

    and there's your fundamental transformation. Many thanks to the guilty whites, tribal blacks, assorted proggies, and others who helped make this possible.

  • R C Dean||

    This year’s deficit is projected to total $514 billion,

    Fascinating, especially since the shortfall for the first six weeks of FY 2014 was $134.5BB.

    http://cnsnews.com/news/articl.....weeks-fy14

    In six weeks, they were already over a quarter of the way to the entire projected deficit.

  • ||

    That's just right-wing scare mongering by Beckerheads and Fat Rush. Come back with some real numbers.

    /shriek

  • John||

    I wouldn't discount that. Revenue doesn't come in 12 equal chunks throughout the year.

  • R C Dean||

    Through December, it was up to $178BB, not counting, I believe, drawdowns in cash balance, but not sure).

    http://www.fms.treas.gov/mts/mts.pdf

    What has happened, anyway, that the FY 2014 deficit has gone from a projected $700BB-plus to just over $500BB, and in only a few weeks, anyhow?

  • John||

    I don't know. And it may be wrong. But it is not impossible.

  • Brett L||

    Which is weird because January should really be a net revenue month along with all the other quarterly pay months.

  • Red Rocks Rockin||

    What's truly fascinating is that the Treasury doesn't appear to be counting all the deficit spending that took place between March and October of 2013 that never made it on the balance sheet until after the shutdown ended--which allowed Obama partisans to claim that the deficit was "only" about $600 billion, when in reality it was over a trillion.

    Taking the Debt to the Penny charts into account, $546 billion has been added to the debt since 1 October. The $328 billion jump happened on 17 October. So we're already over halfway to a trillion and it's only February.

  • Mike M.||

    All bets are completely off with this guy Jack Lew. Hundreds of billions worth of lies is now the new normal.

  • R C Dean||

    They shifted hundreds of billions from FY 2013 to FY 2014 with accounting tricks.

    Probably planning to do the same thing again this year.

    Seriously, though, we've added more to the debt this fiscal year already than CBO is now saying we are supposed to add during the entire fiscal year. We know they are going to continue spending more than they take in, so that can't be the answer.

    So what is the answer?

  • Fist of Etiquette||

    So it's all good then?

  • Swiss Servator, Befehl!||

    Yes, the cost curve has been bent...right up our backsides.

  • All-Seeing Monocle||

    What does this have to do with the war on women?

  • Certified Public Asskicker||

    Romney would have been worse!

  • ||

    Well he wouldn't have been better.

  • Anonymous Coward||

    The CBO has been taken over by Republicans! It's the only answer that makes sense!

  • Page 7||

    No way. CBO was obviously taken over by those pesky super-villain Koch Brothers.

  • Almanian!||

    Shorter: we're right foked.

    Thanks for cheering me up, CBO.

  • ||

    Now here's a CBO report liberals/progs will be ignoring! They'll just wait for one that backs up their derpenomics.

    Obama had to do this. Because Bush.

  • Doctor Whom||

    Look! Over there! Something about a celebrity!

  • Sevo||

    Yeah, he died.

  • Pro Libertate||

    All the good news just keeps piling up, doesn't it?

  • Snark Plissken||

    Guy Benson ‏@guypbenson 1h
    Lefties: LIES! Obamacare isn't "killing jobs," per se, it's merely causing millions to CHOOSE not to work! #GoodLuckWithThat
  • NotAnotherSkippy||

    So like extended unemployment insurance then. Got it.

  • Mike M.||

    Taken by themselves, Obamacare’s insurance provisions will increase the deficit by $1.4 trillion.

    A trillion here, a trillion there, next thing you know you're doubling the public debt in just five and a half years. That'll never happen though.

  • GregMax||

    So government is systematically and idiotically fucking things up. The question is if and when the rest of the idiots are gonna figure this out and start supporting people with policies that support a free economy and seek to cut government by half (at least!).

  • Juice||

    Increasing the deficit by $1.4 trillion would happen anyway if you just sent in all medical bills to the federal government.

  • Doctor Whom||

    In 2024, the labor force will be smaller by about 2.5 million full-time equivalent jobs than it would have been in the absence of the health law.

    This is how government creates jobs.

  • Juice||

    So far the Democratics making comments about this are saying that this will incentivize people to start their own businesses.

  • Pro Libertate||

    Yes, because the regulatory system and the moribund economy are so conducive to entrepreneurship.

    I suppose utterly wrecking any long-term confidence in other investment vehicles might contribute to the growth of small business, coupled with massive real unemployment. Maybe that's their strategy?

  • american socialist||

    Right. Have you heard of recent IPOS by facebook and Twitter. i mean, golly, the fact that they can be launche when his communist is in the WH is nothing short of a miracle.

  • Sevo||

    american socialist|2.4.14 @ 4:01PM|#
    "Right. Have you heard of recent IPOS by facebook and Twitter. i mean, golly, the fact that they can be launche when his communist is in the WH is nothing short of a miracle."

    The market is truly robust in spite of the efforts of imbeciles such as you.

  • american socialist||

    and libertarians are busy running somalia.

  • Red Rocks Rockin||

    and libertarians are busy running somalia.

    Libertarians are tribalist Muslims?

  • Sevo||

    american socialist|2.4.14 @ 7:53PM|#
    "and libertarians are busy running somalia."

    Q: How many times will socialists repeat a lie?
    A: How long you got?

  • american socialist||

    you are just bitter you didn't get in on socialist california's billion dollar ipos. tough shit for you, longhorn.

  • Sevo||

    american socialist|2.4.14 @ 9:16PM|#
    "you are just bitter you didn't get in on socialist california's billion dollar ipos. tough shit for you, longhorn."

    Q: How many times will an ignoramus socialist make meaningless statements?
    A: How long you got?

  • Mike M.||

    The fewer people that are working and the more people that are on welfare, the stronger the nation is.

  • Horatio||

    Wait a tic - I thought none of this mattered since our debt is denominated in USD, no?

  • Herpes Trismegistus||

    "Obamacare creates disincentives to work"

    It's a shame people keep saying Obamacare is a clusterfuck, it's working precisely as intended.

  • PRX||

    paging Ms. Moneyprinter

  • american socialist||

    you mean people will be able to stay at home and take care of their kids instread of working to get health care insurance and that federal deficits are sustainable? the horror...

  • creech||

    You really believe in that "we are our brother's keeper" stuff, don't you?

  • wagnert in atlanta||

    No, he believes that the government is his brother's keeper. That way he doesn't have to pay attention or feel guilty.

  • american socialist||

    yes, i believe in medicare and social security and think that rich people should pay more as a percentage of their taxes than middle class taxpayers like me. i erect statues of mao in my living room and worship stalin.

  • Herpes Trismegistus||

    If you can't afford them don't have them.

  • Red Rocks Rockin||

    federal deficits are sustainable?

    Someone doesn't appear to understand how exponential functions and the impact of rising interest on existing (and growing) debt works.

    And people staying home to take care of their kids won't really work out from an economic standpoint unless some deflation occurs. This will hurt people who maintain their standard of living off of their lines of credit, but those who are financially responsible will be sitting pretty.

    http://static5.businessinsider.....30/cpi.gif

  • american socialist||

    oh yeah... have you checked the interest rates on federal debt? let's see... 0.083%. evidently investors haven't been paying much attention to libertarian doom-and-gloomers.

  • R C Dean||

    Interest rates on federal debt are controlled by the Fed, not the markets. The Fed bought around 90% of the debt issued last year. Full-on, no-shitting, Weimar-style monetization.

    Which only ever has one end. (Hyper-)inflation and currency collapse. I think the only question now is when, not whether, that happens to us.

    If interest rates merely reverted to the mean for Treasuries, which is probably around 5 - 6%, the interest payments alone will be $600 - 700BB per year. Math says there will be a recognition of reality at some point, and that reality will be very harsh. Its when, not whether.

  • R C Dean||

    You might also google "financial repression". Those kind of rates are bad for a lot of people, and bad for capital formation, which is bad for the economy long-term.

  • Red Rocks Rockin||

    evidently investors haven't been paying much attention to libertarian doom-and-gloomers.

    Yeah, I'm sure all the downslope of the DOW has nothing whatsoever to do with the Fed ramping back QE.

    And the more the debt grows, the more increases in the interest rate impact national budgets. This is basic math, but I'm not surprised you don't understand it. Most socialists don't.

  • american socialist||

    yes its down 5% after being up 300%. ITS ALL OBAMA'S FAULT!

  • Red Rocks Rockin||

    yes its down 5% after being up 300%. ITS ALL OBAMA'S FAULT!

    When did Obama take over the Fed, Mary?

  • wagnert in atlanta||

    Up 300%? Interesting math you libtards use. Bush's Dow Jones peak was 14066, Obama's was 16478. That's a 17% rise. The lowest point the Dow hit was 6626. 16478 is 2.486 times 6626. That's an increase of 148%, not 300%. Up 300% would be 66000. And, just to rub it in, the market closed down 6.27% from its peak. Learn to use a calculator.

  • wagnert in atlanta||

    Oops. Up 300% would be 26500.

  • american socialist||

    touche. i meant tripled... i think i said that somewhere. nasdaq tripled, no?

  • Sevo||

    american socialist|2.4.14 @ 9:17PM|#
    ..."nasdaq tripled, no?"

    And imbeciles think that means, uh, well, uh,
    What does that mean?

  • Red Rocks Rockin||

    Furthermore, the current blended interest rate is 2.406--the 0.083 rate you're citing is just for bills, not notes or bonds. That and the other drops have been due entirely to the Fed distortions of the Treasury debt market with QE.

    If it goes back to what it was at the end of 2007--4.838%--guess what? That's $690 billion in interest payments; 17% on just the CURRENT debt.

    The math doesn't suffer fools or american socialists lightly, but I repeat myself.

  • american socialist||

    so a 2.4% yield on a 10 yr note is a sign of impending inflation in the monetary system. i did not know this. Those guys must be Keynesians and not privy to the wisdom of peter schiff and his magic band of pop-austrian economists like you are. again, if you are so fond of charts why not plot the djia over comrade obama's presidency?

  • Red Rocks Rockin||

    if you are so fond of charts why not plot the djia over comrade obama's presidency?

    Still butthurt over the government's own data showing what a dumbass you are?

  • american socialist||

    dude, i'm just trying to see how bad its gotten since socialist-fascist obama got into office. has atlas shrugged yet? let me know when that happens.

    yield on danish 10 yr t-bill= 1.692 %. tax rate as % of gdp= 49%. that place is a hellhole.

  • Sevo||

    american socialist|2.4.14 @ 8:18PM|#
    "dude, i'm just trying to see how bad its gotten since socialist-fascist obama got into office."
    No, shitpile, you're hoping someone doesn't yet know your fave lying bastard has made things 'way worse than they need to be. Your lies and misdirections are entirely too visible.

    "has atlas shrugged yet? let me know when that happens."
    No, but shitpile has started posting on Reason.com

  • Red Rocks Rockin||

    yield on danish 10 yr t-bill= 1.692 %. tax rate as % of gdp= 49%. that place is a hellhole.

    Interesting you pick Denmark and not Japan, which takes in 10% greater revenue to GDP than we do, yet only takes in enough taxes to pay for their social security system and debt payments.

  • Red Rocks Rockin||

    so a 2.4% yield on a 10 yr note is a sign of impending inflation in the monetary system.

    Still can't understand basic math, I see.

    No wonder socialists can't figure why their glorious utopias can't handle the limits of scale.

  • american socialist||

    hey conservatives, let me know when i should start hoarding gold for the impending economic collapse that you guys have been pedicting over the last 5 yrs (while the nasdaq has tripled). i know, i know... qualitative easing, Da Fed, Ron Paul...

  • Red Rocks Rockin||

    LOL--yep, look at that robust recovery!

    http://data.bls.gov/timeseries/LNS11300000

  • american socialist||

    gee i wonder what demographic trend could be behind this sort of chart. why don't you post the djia for the last 5 yrs, hmmm?

  • R C Dean||

    Lets look at the last hundred years, adjusted for inflation, shall we?

    http://www.macrotrends.net/131.....ical-chart

    I see stagnation for the last fifteen or so.

  • Red Rocks Rockin||

    gee i wonder what demographic trend could be behind this sort of chart.

    Why don't you tell us? It's certainly not the retirement of the baby boomers, because the LFP only counts a certain age window--theoretically, the population growth should be available to fill the gaps they leave behind.

    why don't you post the djia for the last 5 yrs, hmmm?

    I see you're butthurt by the data from your glorious goverment making you look like a dumbass.

  • american socialist||

    16 and up, dumbass. that includes grandma too. i wonder what other demographic changes could affect this chart.

  • Red Rocks Rockin||

    16 and up, dumbass. that includes grandma too

    The baby boomers didn't hit retirement age until 2011, dumbass. Still butthurt about those government statistics?

  • Red Rocks Rockin||

    Here's another one for you, dumbass--straight from the BLS again:

    Persons who are neither employed nor unemployed are not in the labor force. This category includes retired persons, students, those taking care of children or other family members, and others who are neither working nor seeking work.

    http://www.bls.gov/cps/lfcharacteristics.htm#nlf

    IOW, dumbass socialist, when someone retires they aren't counted as part of the labor force, and thus aren't included in LFP calculations.

    Looks like you just fucked by government data again.

  • american socialist||

    so in an ageing society you think participation in the work force will remain constant? ROTFL, you are a fruit loop

  • Red Rocks Rockin||

    so in an ageing society you think participation in the work force will remain constant? ROTFL, you are a fruit loop

    You do realize that the population has grown in the last 30 years, yes?

    Dumbass socialist still can't do basic math.

  • R C Dean||

    let me know when i should start hoarding gold

    Now is not a bad time. Prices are down, and its looking like a very solid base has formed.

  • american socialist||

    quantitative not qualitative. damn this free market iphone

  • Paul.||

    iPhones are a right.

  • american socialist||

    Retired people with cancer are moochers

  • Horatio||

    We hate puppies too

  • Sevo||

    Socialists are pimples on the ass of humanity.

  • XM||

    I want the Obamacare exchange folks to build the O-phone. Made by purebred Americans who only eat freshly made American cheeseburgers and milkshakes. Not those Chinese people, they rove free mark too machi.

    And for every metadata they harvest from my phone calls, I get a 25% discount on my monthly phone bill. And if the data they mined from my phone doesn't prove that I'm a terrorist, the taxpayers pay for my phone bill for the month!

    People shouldn't talk secrets on cell phones anyways, it gives them cancer.

  • XM||

    No.1 takeaway of the CBO report for the media -

    "Bad CBO report provides fodder for Republicans"

  • LibertarianX||

    My only questions are: Why are you paying attention to any points from the CBO report? When have they ever been right about anything?

  • Eric Bana||

    They were right in 2009 about Obamacare.

  • LibertarianX||

    Nope. They keep adjusting their results everytime someone asks a question about it. I mean, 800,000 jobs to 2.3 million? If it and bee the 2.3 million at the beginning, things may have been different.
    They only get to work with what they are given. That way, people get the results they want.

  • bassjoe||

    It's okay. I read somewhere the debt is just a number in a computer.

  • dj kumquat||

    the results are in, and it's worse than every reasonable person predicted. nothing short of full repeal is necessary. if you're still lickin' boots, cut it out, ya uncaring, useful idiot.

  • american socialist||

    the only way to respond to a society that emphasizes the ability of a parent to stay home and take care of their kid over working a shit job to get shitty health insurance is to build a bunker and become a hardcore agonist. whom shall we put on the face of the 100 billion dollar bill when weimar style hyper-inflation surely comes (current treasury yield=0.11%). i vote for dick cheney

  • Sevo||

    american socialist|2.4.14 @ 10:06PM|#
    "yaba, yaba, yaba..."

    What a pile of shit. Are you trying to beat Tony in the race for lefty stupidity?

  • ||

    Not only that, but the trains run on time!

  • thorax232||

    Numbers don't lie. XD

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Video Game Nation: How gaming is making America freer – and more fun.
  • Matt Welch: How the left turned against free speech.
  • Nothing Left to Cut? Congress can’t live within their means.
  • And much more.

SUBSCRIBE

advertisement