Compared to the size of the economy, the deficit in 2013 is much lower than in 2009, when Obama took office, the CBO noted. The deficit will be 5.3 percent of gross domestic product this year, nearly half the 10.1 percent of GDP in 2009.
The CBO report argues the “fiscal cliff” deal that also ended a two-year payroll tax cut will lower budget deficits but hurt economic growth in the short term, as it forecasts growth of just 1.4 percent in 2013.
CBO projects an unemployment rate above 7.5 percent through 2014, which would mark the sixth straight year with a jobless rate above that mark, the longest stretch in 70 years.
It says that growth would be 1.5 percentage points greater in 2013 if automatic spending cuts known as the sequester were turned off, if the 2 percentage point payroll tax break were reinstated and if tax increases instituted last month on wealthier taxpayers were voided. ...The Hill
That doesn't mean the deficit can't grow again, given the demands on "entitlement" programs. The Hill doesn't seem to mention Congress' raids on those programs or the excessively high prices for prescription drugs and other elements of health care flowing to the corporate sector. But it does suggest a Republican party hellbent on destruction of our budget.
"Obamacare," on the other hand, will benefit the economy.
The CBO report also had new projections on Obama’s healthcare reform law. The CBO projected that Obama’s signature healthcare law will cost about $1.3 trillion over the next 10 years — a slight increase of $164 billion over its projection from August. CBO concluded that healthcare reform, in spite of its price tag, will ultimately reduce the deficit because of revenue-raisers within the bill. ...The Hill
Oh. Wait a minute. I didn't take into account the fact that the CBO was set up by the Soviet Union and they're all communist bots, manufactured in Kenya and tasked with destroying Austrian and other conservative economists.
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Bloomberg sees trouble ("hidden thorns") in the CBO report.
The underlying problem, of course, is entitlement spending. Medicare and Medicaid outlays are projected to jump more than 90 percent over the next decade and the pace will only grow with an aging population and fewer workers to compensate for the retiring workforce. That will increase the debt load and balloon the deficit.
Obama said today the deals he offered in the lead-up to the fiscal cliff -- reductions in Medicare and Social Security spending and tax changes that increase revenue without raising marginal rates -- remain on the table. In a perfect world, lawmakers would come together and compromise -- accepting some reduction in entitlement benefits in exchange for more tax revenue from limiting deductions and other loopholes for wealthier Americans. Yet given lawmakers were unable to reach a bipartisan agreement as the sword of Damocles (otherwise known as the fiscal cliff) dangled above them, it's hard to see how they'll be propelled into action now. If anything, today's CBO report gives them political cover to continue playing kick-the-can. ...Bloomberg
It's hard not to agree with Kevin Drum's analysis of the report.
... The fact remains that debt reduction just isn't a five-alarm fire kind of problem, no matter how loudly the Pete Petersons of the world claim otherwise. In fact, if you go to page 23 of the CBO report, you'll see that federal spending is on a downward slope in almost all categories. Aside from interest on the debt, the only spending that's projected to increase is Social Security (a little bit) and healthcare spending (a fair amount). Of those, the Social Security spending is baked in the cake and there's nothing much we can, or should, do about it. Seniors should get the pensions they've been promised.So, as usual, that leaves healthcare spending. If you're truly concerned about debt, instead of someone who just pretends to be concerned, that's pretty much the only thing you should care about. If we rein in healthcare spending, we're in good shape. If we don't, we have problems. ...Kevin Drum
What worries me about the health care problem remains the same. We tend to talk about cutting back on health care one way or another -- but always in terms of cutting the "care" part of it, the patients' part of it. Until we confront the corporatization of health care -- until we get honest and question "a cui bono" -- we won't fact the fact that the health care America delivers goes straight to very healthy profits for providers and a raw deal for many if not all patients.
