Budget Deficit

Obama, President of Debt

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The federal government could hit its legal debt limit again right before this year's presidential election, according to Reuters:

The latest $1.2 trillion increase in the U.S. debt limit may not last through November's election and could provide fresh ammunition for Republicans to attack President Barack Obama on what they see as a particularly vulnerable point—spending.

Based on current deficit rates and borrowing estimates, some analysts say the United States could reach the debt ceiling again before the November 6 vote. This would force the U.S. Treasury to turn once more to accounting maneuvers to avoid the unthinkable: asking Congress for another increase as the presidential election campaign reaches its crescendo.

What's the president's plan to deal with the nation's mounting, unsustainable debt? Keep piling it on. Via Economics 21, a look back at how the Congressional Budget Office scored President Obama's 2012 budget proposal:

Here's what the CBO thinks the future would hold if the president's budget proposal was enacted, as summarized by the folks at E21:

Deficits over the next two years. If the President's proposals were enacted, the federal government would record deficits of $1.4 trillion in 2011 and $1.2 trillion in 2012. Those deficits would amount to 9.5 percent and 7.4 percent of gross domestic product (GDP), respectively. (By comparison, the deficit in 2010 totaled 8.9 percent of GDP.)

Deficits over the next 10 years. The deficit under the President's proposals would fall to 4.1 percent of GDP by 2015 but would generally rise thereafter. Compared with CBO's current-law baseline projections, deficits under the proposals would be higher. By 2021, the deficit would reach 4.9 percent of GDP, compared with 3.1 percent under CBO's baseline projections. Over the 2012–2021 period, deficits under the President's budget would total $9.5 trillion, compared with $6.7 trillion under those baseline projections.

Comparison with the Administration's Estimates. CBO's estimate of the deficit for 2011 under the President's budget is $220 billion less that the Administration's figure, mostly because of lower estimates of outlays. In contrast, largely because of lower projections of revenues, CBO's estimate of cumulative deficits over the 2012–2021 period is $2.3 trillion greater than the Administration's.

Debt. Under the President's budget, debt held by the public would grow from $10.4 trillion (69 percent of GDP) at the end of 2011 to $20.8 trillion (87 percent of GDP) at the end of 2021, about $2.8 trillion more than the amount in CBO's baseline projections.

That is to say: the Obama Administration's record on the short-term fiscal balance is as poor as their record on the long-run fiscal challenge. The CBO projects that the Administration's budget will result in steadily rising debts and deficits as far as the eye can see — and that's based on the assumption that the economy will run into no future recessions.

As I wrote last year when the CBO's assessment of the White House budget plan was first released, the president's budget is built on what you might call the rosy scenario system—a sort of cross-your-fingers-and-hope-nothing-goes-wrong approach to budgeting. What's worse is that under the president's plan, all those rosy scenarios will only barely keep us afloat; even if nothing goes wrong, and the economy chugs along at an unlikely pace, the country's fundamental fiscal problems won't be resolved.

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