Pick Your Community: | Hopkins | Muhlenberg | Daviess | Christian | Fayette | Henderson | Lakes | McCracken | Warren | Webster
Davis Motor Sales banner ad

Editorial - CBO Doubles US Deficit Forecast

TwentyDollarBillWASHINGTON, D.C. (3/10/13) – The Congressional Budget Office (CBO) is a non-partisan operation of the US Government that helps guide Congress and the President in predicting the impact of budgetary actions on the economy, deficit and debt.  Unfortunately, neither the President nor Congress has any obligation to follow the recommendations of the CBO.

What the CBO is now reporting is confusing and alarming.  It is very difficult for the average citizen to understand much of what the CBO is saying.  And, you have to read very carefully.  

The so called “Sequester” was to cut spending by some $85 Billion dollars.  To hear the President, you would think disaster had hit the nation.  To put it into perspective, only $44 Billion is to be reduced in this fiscal year and represents about 1% of government spending.  Even with the Sequester, government spending is to increase by about 2% this fiscal year.  

Furthermore, the CBO estimates that the federal government spent $205 Billion more than it took in for February ALONE.  That is better than February 2012 when the deficit was $232 Billion.  

Here is the confusing part: Don’t leave me here.  Just skip the technical stuff like the next two sentences.  Economists use the Gross Domestic Product (GDP) to baseline spending.  The CBO uses constant dollars of 2007 GDP baseline.  You can pick up here: This year for every $100 spent across our entire economy $5.30 is borrowed money spent by the feds.  This is a big improvement from three years ago when it was $8.50.  Over the past 6 months the federal government has spent $500 Billion more than it took in (This is Fiscal 2013 for you techno geeks). 

Here is the alarming part:  The CBO has revised the debt projections UPWARD DOUBLED!! This will put the US debt at an alarming $21 Billion dollars by 2022.  Many economists have warned that such a debt level will destroy our economy resulting in a catastrophic collapse of the US and world economies.  Here is the CBO projection:

Changes from CBO’s Previous Projections

The deficits projected in CBO’s current baseline are significantly larger than the ones in CBO’s baseline of August 2012. At that time, CBO projected deficits totaling $2.3 trillion for the 2013–2022 period; in the current baseline, the total deficit for that period has risen by $4.6 trillion. That increase stems chiefly from the enactment of the American Taxpayer Relief Act of 2012 (P.L. 112-240), which made changes to tax and spending laws that will boost deficits by a total of $4.0 trillion (excluding debt-service costs) between 2013 and 2022, according to estimates by CBO and the staff of the Joint Committee on Taxation. CBO’s updated baseline also takes into account other legislative actions since August, as well as a new economic forecast and some technical revisions to its projections.

Revenues

Federal revenues will increase by roughly 25 percent between 2013 and 2015 under current law, CBO projects. That increase is expected to result from a rise in income because of the growing economy, from policy changes that are scheduled to take effect during that period, and from policy changes that have already taken effect but whose full impact on revenues will not be felt until after this year (such as the recent increase in tax rates on income above certain thresholds).

As a result of those factors, revenues are projected to grow from 15.8 percent of GDP in 2012 to 19.1 percent of GDP in 2015—compared with an average of 17.9 percent of GDP over the past 40 years. Under current law, revenues will remain at roughly 19 percent of GDP from 2015 through 2023, CBO estimates.

Conclusion

If the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $845 billion, or 5.3 percent of gross domestic product (GDP), its smallest size since 2008. In CBO’s baseline projections, deficits continue to shrink over the next few years, falling to 2.4 percent of GDP by 2015. Deficits are projected to increase later in the coming decade, however, because of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt. As a result, federal debt held by the public is projected to remain historically high relative to the size of the economy for the next decade. By 2023, if current laws remain in place, debt will equal 77 percent of GDP and be on an upward path, CBO projects.

Economists and historians agree that history will not be kind to this Congress or President Obama if they don’t fix this deficit problem.  Granted, most of the deficit is the result of a sluggish economy not keeping pace with federal spending; or, others would say that it is the federal government spending beyond its means.  


Ron Sanders
SurfKY News
Graphics provided by SurfKY Graphics

© Copyright 2014 SurfKY News Group, Inc. All rights reserved. This material may not be published, broadcast, or rewritten without permission. SurfKY News encourages you to share this story by using one of the social media links below.

In Other News...

Five Sent to Hospital After Two-Vehicle Accident

GRAHAM, Ky. (7/21/14) ― Five people went to the hospital after a two-vehicle collision Sunday, July 20 in Graham.… Read More

Gov. Beshear Announces Commitment of Funding for Commercial Service at Bowling Green-Warren County Regional Airport

FRANKFORT, Ky. (7/21/14) — Governor Steve Beshear announced a commitment of state funding to promote commercial air… Read More

Most Read This Week (Site-Wide)

July 18, 2014 2820

Madisonville Man Arrested for Meth in…

in Top Stories by Sheriff Curtis McGehee
July 18, 2014 1881

Hopkins County Health Department Food…

in News by Lisa Miller
July 18, 2014 1774

K9 Unit Helps Find Meth in Muhlenberg…

in Top Stories by Sheriff Curtis McGehee
July 18, 2014 1692

Man Injured in Depoy Accident

in Top Stories by Trooper Stu Recke
July 21, 2014 1545

Five Sent to Hospital After Two-Vehicle…

in Top Stories by Rita Dukes Smith, SurfKY News Director

Most Read Stories from Hopkins County

July 18, 2014 2820

Madisonville Man Arrested for Meth in…

in Top Stories by Sheriff Curtis McGehee
July 19, 2014 966

Local Hip-Hop Artist, Marack, Talks About…

in Top Stories by Amber Averitt, SurfKY News
July 21, 2014 801

Three Injured in Three-Vehicle Collision…

in Top Stories by Rita Dukes Smith, SurfKY News Director
July 19, 2014 778

Riddle Insurance Inaugural Flight

in Top Stories by Ron Sanders
July 21, 2014 634

Madisonville Fire Chief Announces…

in Top Stories by Rita Dukes Smith, SurfKY News Director

Most Read Stories from Owensboro

July 18, 2014 1513

Owensboro Police Department Reports…

in News by Dennis Beard, SurfKY News
July 21, 2014 564

Portion of Southeastern Parkway Closed…

in News by Beth Cecil
July 18, 2014 399

Owensboro Begins Year-Long, Long Range…

in Top Stories by Dennis Beard, SurfKY News
July 21, 2014 352

Strahan Selected as Cravens Elementary…

in Top Stories by Julie Ellis
July 21, 2014 161

ODC 14-Year-Olds Win West State, Move on…

in Top Stories by Steve LeMaster

Most Read Stories from Muhlenberg County

July 18, 2014 1774

K9 Unit Helps Find Meth in Muhlenberg…

in Top Stories by Sheriff Curtis McGehee
July 18, 2014 1692

Man Injured in Depoy Accident

in Top Stories by Trooper Stu Recke
July 21, 2014 1545

Five Sent to Hospital After Two-Vehicle…

in Top Stories by Rita Dukes Smith, SurfKY News Director
July 18, 2014 1241

From New York to Greenville, Iron Beam…

in Top Stories by Charles W. Riley II, SurfKY News
July 19, 2014 1169

Cash Mob Descends on Muhlenberg…

in Top Stories by Rita Dukes Smith, SurfKY News Director

SurfKY News Group, Inc. Central Office & Printing Division
1125 Nebo Rd.  •  Madisonville, KY 42431  •  270.452.2249 (fax)
Main Number: 270.452.2727 (phone)  •  Printing Division Direct Line: 270.821.8600 (phone)

SurfKY Owensboro News Bureau
920 Frederica St. / Suite 210  •  Owensboro, KY 42301  •  270.683-8060 (phone)


Contact a member of our staff: www.surfky.com/contact
Copyright © 2014 SurfKY News Group, Inc.  •  Terms of Use  •  Site Map

social 06social 21social 22social 04social 03