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To sway public opinion behind President Truman's policy of Soviet containment, Secretary of State Dean Acheson once admitted he was willing to "scare hell out of the American people" with arguments that were "clearer than the truth."
But sometimes the truth alone is scary enough — particularly when you're talking about the new red menace: the federal budget deficit.
Recent reports from the Congressional Budget Office highlight six indisputable truths, each arguably scarier than the last, that promise to shape the contours of the coming debate over how to handle this menace.
Truth No. 1: The CBO reported last week that the federal budget deficit is, under current law, expected to total $1.4 trillion this year and $6.7 trillion over the coming decade. At $1.4 trillion, this year's deficit is larger than the annual economic output of all but 10 foreign countries.
Truth No. 2: Because of these deficits, the publicly held federal debt is poised to almost double to $18 trillion within 10 years, nearly quadrupling annual net interest costs to $807 billion in the process!
Truth No. 3: While increased spending and depressed revenue both contribute to this year's federal deficit, the source of our long-term fiscal predicament is not a lack of revenues, but an overabundance of spending.
Over the three decades prior to the recent recession, federal revenues averaged 18.3% of gross domestic product while outlays averaged 20.8%. CBO reported last week that with the expiration of the Bush tax rates as scheduled under current law, it expects federal revenues to equal 20.8% of GDP — coincidentally, the historical average for spending — in fiscal 2021.
Federal outlays are expected to fall from 24.1% of GDP this year to 23.9% in 2021. In other words, despite the fact that the tax burden is poised to increase as a share of GDP to a level not seen since 1944, the CBO expects the federal budget will continue to generate massive deficits. And as the CBO reported last summer, "Looking beyond the next decade, the fiscal outlook worsens further."
Truth No. 4: Reducing federal spending in 2021 to its historical average of 20.8% would require a 13% across-the-board reduction in projected spending for that year. Excluding mandatory spending (e.g., Social Security, Medicare) and interest on the debt from the cuts would necessitate an unrealistic 46% reduction in defense and nondefense discretionary spending. Any serious effort to nudge the federal budget toward balance will require a concerted effort to restrain mandatory spending growth.
Japan had a horrible natural disaster. But Japanese politicians had already created an economic train wreck, and U.S. political leaders are emulating the Japanese model. Japanese leaders placed their country in the untenable economic situation of running up their outstanding gross debt to GDP ratio ...
As Congress begins debating the future of Fannie Mae and Freddie Mac, proponents of keeping the taxpayer on the hook for the mortgage market argue that without such support the 30-year fixed-rate mortgage would disappear. The advantages of the 30-year mortgage have, however, been grossly ...
With the Muslim world reaching a boiling point, U.S. intelligence fears that the unrest could create a power vacuum exploited by al-Qaida and its parent, the radical Muslim Brotherhood. Both share a goal of bringing the Mideast under a single Islamic ruler, who could control world oil supplies and ...
Public higher education was on a roll for decades. But its rapid growth came to a halt two years ago, thanks to shrunken state revenues caused by the recession. At first, federal stimulus money and enormous tuition increases — 34% in California and 23% in North Carolina — encouraged ...
How mean-spirited are House Republicans? So mean-spirited that they would end federally funded cowboy poetry! Last Tuesday, Harry Reid, the majority leader, took to the Senate floor to thunder that this town ain't big enough for both him and the Mean-Spirited Kid (John Boehner). "The mean-spirited ...
Posted By: C400Pilot(895) on 3/22/2011 | 1:09 AM ET
We've seen how well they do on those "projections" - we get projectile vomiting.
Posted By: thebassman(1475) on 3/21/2011 | 9:41 PM ET
O is doing exactly what he said he would. Anyone surprised wasn't paying attention. He believes in the Great Depression model, we now have the Great Recession. IMO it is all by design - remember the apology tour? He was speaking how he thinks, he set out to pull US down a couple of notches. Repubs lost way & spent to much as well, but no one ever like left currently in power. As noted the opportunity cost to our younger generations - children/granchildren, is incalculable. Leave it bette
Posted By: bobbygordon(4980) on 3/21/2011 | 7:52 PM ET
Republicans have only themselves to blame for this mess. Had every single solitary Republican shown up at the polls and voted for McCain Obama would not be the president. And if you stayed home or voted for a third party candidate because you didn't like Sarah Palin... you are the one who can't understand normal thinking.
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