CBO Director: Obama’s Budget Unsustainable

The Director of the Congressional Budget Office testified on Capitol Hill on Thursday. What did he say?

That using the current trends of the Obama Administration, the U.S. debt and annual deficit are on an unsustainable path to ruin.  This came only hours after the CBO announced that the Democratic Health care plan would increase health care costs instead of reducing them…not a good day for the White House.

Deficit as percentage GDP
Deficit as percentage GDP

From the Director’s own testimony:

Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario for current law.

Keeping deficits and debt from reaching these levels would require increasing revenues significantly as a share of GDP, decreasing projected spending sharply, or some combination of the two.

Brilliant.  We already knew that, even if Barack Obama and Democrats appear to be lost on the issue.  But here is the money statement:

The current recession and policy responses have little effect on long-term projections of noninterest spending and revenues. But CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of those deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010. This higher debt results in permanently higher spending to pay interest on that debt. Federal interest payments already amount to more than 1 percent of GDP; unless current law changes, that share would rise to 2.5 percent by 2020.

I just have one question:  What is Barack Obama thinking?

There are only two answers.  One is that he is so ignorant that he doesn’t realize the cliff he is driving off of.  I don’t believe that.

The second alternative, however, is scarier…that Obama is doing this knowingly.  That he doesn’t care if there is a cost explosion, and that ultimately this is a power grab unlike any we have known…the U.S. government virtually taking over one-sixth of the U.S. economy, with no checks and balances involved.  For example…Obama continually says that health care costs are rising because of insurance companies.  The CBO actaully disputes that.  It argues that the main increase in health care costs comes from the quickly aging population…which, if you remember, is not covered by private insurance but is covered by Medicare, the largest socialized health care system in America.

Aging society's effect on cost of health care
Aging society's effect on cost of health care

I refer to my earlier post:   we as Americans cannot compromise on this.  And Americans are coming to reality on health care:  Rasmussen now shows that 50% oppose the current health care plan, while 35% support it.  The CBO now states that the House bill will add $240 billion to the deficit over the next 10 years…not a huge number.  Of course, once you see how many of the costs are hidden, that number will skyrocket.  Obama has promised not to sign anything that will add to the budget deficit.  I have my doubts.

Send the health care bill back to the drawing board, because it is fatally flawed.  Mr. Obama is not telling the truth on this bill.  It will (by nonpartisan analysis, mind you), increase cost, move more people to a single payer system, decrease choice, and eventually bring about rationing.  That is the first step in attempting to reign in the budget mess.  If we allow the health care bill, which CBO has clearly said will cost more than the current baseline, to go forward, then we basically have accepted budget deficits as far as the eye can see.  And as for the rest of the budget…the other shoe has yet to drop.  The budget numbers for this quarter are so bad, the White House is hiding them from Congress until after the August recess.

America, is that what we really want?

13 thoughts on “CBO Director: Obama’s Budget Unsustainable

  • July 17, 2009 at 9:13 am
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    Maybe in the campaign Mr Mao-bama should have truthfully stated “Spare Change you can believe in…”

  • July 17, 2009 at 10:53 am
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    it is clear that we need to dismantle and sell off our “defense” infrastructure to pay for healthcare, i don’t care one bit about blowing up iraq, pissing everyone off and inspiring a next generation of terrorist. we can easily pay for healthcare when we stop wasting money on the military “defense”

  • July 17, 2009 at 11:32 am
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    Actually, that makes more sense than the Democrats current bill…

  • July 17, 2009 at 12:54 pm
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    I live in Ontario Canada.and watch CNN Regularly. I notice the negative commercials against the health care reform in the States. First, why do you run them? They are false. we have long waiting times because our doctors are all moving to the States to make lots of maney at private hospitals that charge very high fees for everything. Doctors in Ontario do not make alot of money and often receive training and leave. Only those with committment stay. God bless them.

  • July 17, 2009 at 1:55 pm
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    I am confused…are you for or against reform?

  • July 17, 2009 at 2:07 pm
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    You are right and wrong. This bill is fatally flawed and will not control costs. Instead, they will continue to spiral out of control. But this is because it is a bill that is castrated by the insurance companies, lobbyists and special interest groups. The public option is not actually public, and it will do nothing but complicate things and give the insurance companies even more leeway to jack their premiums up. It’s ludicrous. It’s a hollow bill that will essentially make things more complicated. If Obama would actually ask that the bill create a TRUE public option, then maybe something could get done. Then again, if Single Payer was just accepted and not thrown off the table right away, then we’d be fine. And no, Single Payer would not involve rationing or any horses@@t like that. That’s a misguided conservative fear of people who are afraid of real, positive change because they are sitting pretty at the expense of someone else’s livelihood. It would not ration, it would just mean that those with less critical illnesses and problems would have to wait just a wee bit longer than those with critical or life-threatening conditions. I suppose, though, that it’s too much to ask of the privileged, wealthy elite of the American people to give up some of their hollow, unnecessary luxury for the good of others. Are there any actual unselfish people in America? Hmmm…probably not.

  • July 17, 2009 at 3:44 pm
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    Carolyn, so basically you tell us that you have to wait in long lines since many of your doctors are fleeing to where they’re better compensated…and this is supposed to encourage people to adopt your style? We should embrace the Canadian system and watch the doctors who are WORTH more money flee someplace else? The American education system has underpaid teachers for DECADES…and guess what? We now have to import the “best and brightest” from around the world to work in our companies, since our own education system can’t produce enough geniuses to keep us on top. Now you want me to get treated by the lowest bidder? No thanks, bring on the costs if it’ll save my life.

    Joe-personally I do feel that the insurance companies do pump up rates a bit, but our legislative process has only helped them. There isn’t enough competition within individual states, only certain companies run in certain regions, mandated by state/local governments. If we want health care costs to level off somewhat (they wont drop or go flat, since the pool of recipients is aging, thus making each person cost the insurance provider more…thanks parents-of-baby-boomers for not learning how to stop having kids soon enough) then we need to open the doors as wide as possible and get as many insurance companies involved in each state as we possibly can, to create a gas-wars style competition which whittles away at prices.

    Long story short, our demographics mean that we wont see costs decrease, and unfortunately much of this nation’s political leanings mean that we’ll fall flat on our faces trying to pretend we can’t go bankrupt on a national level. God, I wish my generation (those who came after the boomers, the 20 somethings now) would learn their lesson faster.

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  • July 18, 2009 at 3:18 pm
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    You kinda left out a lot of what the CBO Director was saying on his blog…it seems important to say that the figures you quote are not final and are contingent on many other factors. Here is some more text from his blog at http://cboblog.cbo.gov/

    “the figures do not include certain costs that the government would incur to administer the proposed changes and the impact of the bill’s provisions on other federal programs, and they do not reflect any modifications or amendments made after the bill was introduced.”

  • July 18, 2009 at 4:12 pm
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    Yes…in other words, the costs could go up or down depending…but more importantly, why can’t the CBO calculate a more accurate number? Because Democrats are preventing CBO from looking at the most current iteration of the bill.

  • July 19, 2009 at 10:17 am
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    Of course if you did nothing this would be bad but you would have to be an utter moron not to think that Obama and Congress already know that things must change and the reforms that he implements will have the power to bring down the cost in the long run and also be deficit neutral to get there. A tax on the upper income in line with Ronald Reagan’s tax tables would be the best way to do this. So I would give little heed to your gloom and doom predictions. Is fear all the Republicans have to offer us? This is going to happen whether you like it or not.

  • July 19, 2009 at 12:50 pm
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    This is not my prediction…it is the CBO, whose head was picked by the Democratic Congress. He actually had more doom predicted than I did.

    Second, why not get it right in the first place? We can have a system that works right from the beginning. Lying to the American public does not instill confidence, IMHO.

  • July 20, 2009 at 1:56 pm
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    Of course this release was totally ignored. This was released last night from the House Energy, Ways and Means and Education and Labor committees:

    Washington, D.C. — The Congressional Budget Office (CBO) released estimates this evening confirming for the first time that H.R. 3200, America’s Affordable Health Choices Act, is deficit neutral over the 10-year budget window – and even produces a $6 billion surplus. CBO estimated more than $550 billion in gross Medicare and Medicaid savings. More importantly, the bill includes a comprehensive array of delivery reforms to set the stage for lowering the future growth in health care costs.

    Net Medicare and Medicaid savings of $465 billion, coupled with the $583 billion revenue package reported today by the House Committee on Ways and Means, fully finance the previously estimated $1.042 trillion cost of reform, which will provide affordable health care coverage for 97% of Americans.

    “This fulfills the strong commitment of the President and House leadership to enact health reform on a deficit-neutral basis,” said Chairman Henry A. Waxman, Chairman Charles B. Rangel, and Chairman George Miller. “The reforms included in this legislation will help control health care costs and expand access to quality, affordable coverage to all Americans in a fiscally-responsible manner.”

    The estimates also cover important reinvestments in Medicare and Medicaid, including phasing in the closing of the “donut” hole in the Medicare drug benefit. The bill’s long-term reform of Medicare’s physician fee schedule to eliminate the potential 21 percent cut in fees, and put payments on a sustainable basis for the future, will cost about $245 billion. Those costs, however, are not included in the net calculations above, as they will be absorbed under the upcoming statutory “pay go” legislation that is pending in the House.

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