CBO projects deficit to fall to $845 billion in 2013

[Dusty Bake Activate]

CBO projects $845B budget deficit for 2013 - The Hill's On The Money

The Congressional Budget Office on Tuesday projected a federal budget deficit of $845 billion in 2013, the first time it will have fallen below $1 trillion under President Obama.

The reduction in the budget deficit comes after Congress approved higher tax rates on households with annual income above $450,000. But the long-term forecast from the non-partisan CBO shows the fiscal-cliff deal that prevented higher tax rates on most households did little to help the nation’s long-term budgetary outlook.

CBO sees the deficit falling to $430 billion by 2015 before slowly rising again. By 2023, CBO projects the nation will be nearing the $1 trillion mark with a $978 billion budget deficit as the aging population and rising health costs explode entitlement spending.

CBO notes that compared to the size of the economy, the deficit is much lower than 2009 when Obama took office. The deficit will be 5.3 percent of gross domestic product this year, nearly half the 10.1 percent of GDP in 2009.

CBO also projects weak economic growth for 2013 and a high unemployment rate above 7.5 percent through 2014 in its annual fiscal outlook published on Tuesday. That would mark the sixth straight year with a jobless rate above 7.5 percent, the longest stretch in 70 years.

CBO sees the economy growing at a weak 1.4 percent rate in 2013. It says that growth would be 1.5 percentage points greater if automatic spending cuts known as the sequester were turned off, if a 2 percentage point payroll tax break were reinstated and if tax increases instituted last month on wealthier taxpayers were voided.

The House and Senate point persons on the budget offered typically disparate reactions to the CBO report.

House Budget Committee Chairman Paul Ryan (R-Wis.) said the CBO report shows that the country is still on the path to a debt crisis and needs to get serious about spending cuts now.

“The CBO’s report is yet another warning that we need to get spending under control. The deficit is still unsustainable. By 2023, our national debt will hit $26 trillion. We can’t let that happen," he said. Ryan noted that Obama is late in producing his budget for 2014.

“House Republicans have offered their solutions. Now the president and Senate Democrats must do the same," he said.

Senate Budget Committee Chairman Patty Murray (D-Wash.) said the CBO economic forecast shows more needs to be done to stimulate growth.

“Today’s CBO outlook confirms that the economic recovery remains fragile and we can’t afford to lose focus on job creation and economic growth," she said. “The outlook also highlights the danger to the economy if sequestration takes effect as scheduled on March 1. It’s clear that sequestration is an irresponsible way to reduce the deficit, and I hope that Republicans are truly willing to work with us on a balanced and bipartisan replacement that doesn’t place the entire burden on the middle class and most vulnerable families and that calls on the wealthy to pay their fair share.”

Automatic spending cuts known as the sequester are set to begin in March, though Obama on Tuesday urged Congress to prevent most of them.

Economists at CBO do see the economy rebounding strongly in 2014 with 3.4 percent growth. Unemployment would get down to 5.5 percent by 2018, CBO says.

The 2013 growth numbers are rosier than those CBO projected in August when the fiscal cliff loomed and CBO saw the economy contracting by 0.5 percent in 2013.

CBO estimates the government will add $6.96 trillion in deficit spending over the next ten years under current law.

The fiscal-cliff deal added $3.9 trillion in deficits over the next ten years, CBO said.

The CBO has projected budget deficits below $1 trillion under Obama before, but only if all of the Bush-era tax rates were allowed to expire. Assuming those tax hikes expired, for example, the CBO last year projected the deficit would fall to $641 billion. Such a scenario was unlikely, however, given opposition from Obama and Republicans in Congress to raising taxes on the middle class.

The CBO budget baseline, which will form the yardstick used by lawmakers during coming fiscal debates this year, assumes that nearly $1 trillion in automatic spending cuts over nine years is allowed to take place and that a radical cut to doctor payments under Medicare is allowed to occur, among other assumptions.

Assuming Congress simply turns off the sequester cuts and passes a “doc fix” without paying for it, among other actions, a total of $9.5 trillion in new deficits over ten years would be added.

 

[Broke Wave]

Still disgusting honestly. How long can America spend every dollar it has and then some on billion dollar stealth bombers to defeat a Soviet Union that never was?

 

[Ian1362]

I'll believe it when I see it.

CBO also projects the two parties will continue to do jack shyt about massive debt accumulation.

Back in August 2011, when faced with a debt-limit showdown, Obama cut the following deal: For a $2 trillion increase in the amount of money the government could borrow, the government would agree immediately to $900 billion in trims on expected spending over the next 10 years and it would work to come up with another $1.2 trillion in similar "cuts" by the end of 2011 (cuts is in quotes because the recissions aren't actual year-over-year reductions but minor trims on a decade's worth of spending equal to around $44 trillion). If Congress couldn't agree to $1.2 trillion in future cuts by the end of 2011, then automatic, across-the-board cuts of the same amount would go into effect in January 1, 2013, mostly on defense spending and other discretionary spending.

So what happened? Nothing, of course. The sequestration cuts were pushed back to March 1, 2013. With that new deadline approaching, Obama is now calling for yet another incomplete:

“If Congress can’t act immediately on a bigger package, if they can’t get a bigger package done by the time the sequester is scheduled to go into effect,” Obama said in the White House briefing room, “then I believe that they should at least pass a smaller package of spending cuts and tax reforms that would delay the economically damaging effects of the sequester for a few more months until Congress finds a way to replace these cuts with a smarter solution.”

This is ridiculous, to say the least. We have a federal government that hasn't been able to pass a budget in years - not because of ideological gridlock but because of bipartisan incompetence. And every time a trigger date comes around, all sides work like hell to figure out how to worm a way around it. By most counts, sequestration will take about $55 billion out of the Defense budget (whose 2012 baseline was around $535 billion, not counting other add-ons that bring national security spending to a grand total of $928 billion). Another $35 billion or $45 billion will come out of other discretionary programs. Sequestration is a blunt tool - everything gets cut, across-the-board - but that was the whole idea of using it as a threat: It's so bad that the government would of course come to some agreement to avoid it.

Well, they haven't and Obama's proactive punting is yet one more sign that the adults left Washington some time during the second Washington administration (indeed, Obama is already late with this year's budget proposal). If Obama wants to avoid the blunt force wounds inflicted by sequestration, he can put a few of his best and brightest on coming up with more surgical cuts to programs that nobody really needs.

The Republicans should do the same, but don't hold your breath. According to the Washington Post, here's Speaker of the House John Boehner's idiot wind: “The president’s sequester should be replaced with spending cuts and reforms that will start us on the path to balancing the budget in 10 years.” Thanks, Speaker, that's really helpful.

Suffice it to be said: The federal government is expected to spend $3.5 trillion dollars in fiscal year 2013 (which ends on September 30). Cutting $100 billion from that amount should not be difficult. Between 2001 and 2012, inflation-adjusted spending increased by around 55 percent (see table 1.3). If the government cannot find the courage to hit the deadlines it imposed on itself, it will be up to voters - 75 percent of whom think the budget deficit is a major problem that needs to be addressed now - to force the issue.

 

[theworldismine13]

what i never understood is why it didnt drop the second year, i thought the trillion dollar deficit was because of the stimulus, so once the stimulus was done, why didnt it drop?

 

[Marciano]

Looks like the bottom line is....we're in trouble.

Doesn't matter who the President is & who is in Congress. If these problems aren't solved or at least reduced, we'll have a lost decade & then some.

The baby boomers & their LTC will be a huge problem

 

[Brown_Pride]

This is what happens when generations push debt onto other generations AND steal from the piggy bank all at the same time. We turned down this road we're on now decades ago. Those with the foresight saw it coming and milked the system for everything it was worth. The rest are just victims of a system for outside the realm of their understanding.

Wars, military, lax/no regulations, poor regulations, corporatism, nepotism, greed - these are the things we can pin blame on. Also, and most importantly, SELF. We owe it to ourselves to blame ourselves for allowing it to happen.

Death by papercuts.

 

[Rekkapryde]

Baby boomers fukked this country...please believe it.