Notes from the Budgepocalypse
The Congressional Budget Office opens its latest attempt to conjure up America's budgetary future with a grim declaration. "The United States is facing profound budgetary and economic challenges." It doesn't get any more pleasant from there.
As usual, the budget-watchers' report is not heated. But it is worrying all the same. The 2011 budget deficit is projected to come in around $1.3 trillion—slightly less than previously projected, but still the third largest deficit chasm in the last six and a half decades, topped only by the two previous years. Employment is expected to expand, but only very slowly, remaining above eight percent through 2014, and that's without factoring in some very recent bad news. By 2013, public debt will equal roughly three quarters of the country's total annual economic output, and, under the most likely scenario, continue upwards from there.
A positive note remarking that "if tax and spending policies unfold as specific in current law, deficits will drop markedly as a share of GDP" in coming years turns out to be not-so-good news after all: Those are the baseline assumptions that assume that current law remains frozen in place, preserved like Captain America after World War II. Perhaps in some parallel Earth, then, America's budget is on a somewhat less disastrous trajectory. But in this corner of the multiverse, that's not going to happen.
And so the CBO warns that the "baseline projections understate the budgetary challenges facing the federal government in the coming years." This is not, contra President Obama, a "manageable" problem. Major changes will be necessary; in order to "prevent debt from becoming unsupportable" policymakers must choose: Either "substantially restrain the growth of spending" or raise "revenues significantly above their historical share of GDP." Without major spending restraint, in other words, historically high tax rates are the only other option simply to make the math work. I think we know where this leads.