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Paging Ken Rogoff: CBO Revises Budget Deficit Higher By $1.2 Trillion, Says In 2020 Debt Will Be Over $20 Trillion, Debt-To-GDP At 90%

Tyler Durden's picture





 

It's Friday after the close - time for the government to sneak one past traders, who are already on their fifth moqito. And sure enough, the bomb today comes from the Congressional Budget Office:

The CBO, in an annual analysis of the White House budget proposal, said today that under Obama’s plan deficits would never shrink below 4 percent of the economy between now and 2020. The cumulative deficits would total $9.76 trillion, and debt held by the public would amount to 90 percent of the nation’s gross domestic product by 2020, the CBO said.

And guess what: this is a huge deterioration from the previous budget deficit presented just a month ago:

Those figures are all higher than the administration
estimated last month when it said its budget would cut the
deficit to as low as 3.6 percent of GDP, with total shortfalls
over 10 years totaling $8.5 trillion. The publicly held debt
would grow to 77 percent of GDP in 2020, under the
administration’s estimate.

In other words, the CBO has just confirmed that America has, at best, 10 years before it is officially bankrupt. That's about 9 years of multi-trillion bonuses for Goldman Sachs. Congratulations fellas.

Here is how the budget deficit will look like pre and post the revision.

Full letter from the CBO below, which should prompt China, Japan and the UK, to hire Akin Gump immediately create a creditor committee in advance of America's upcoming bankruptcy post haste. Luckily, neither will this happen, nor will anyone remember any of this news by Monday when the machines will be back in charge gunning the Dow to its new home, north of 36,000.

 

 


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Fri, 03/05/2010 - 17:29 | Link to Comment AnonymousMonetarist
AnonymousMonetarist's picture

Jeremy Siegel's new list of stocks for the long run ...

Pitchforks, torches, wheelbarrows ...

Any other suggestions?

Fri, 03/05/2010 - 17:34 | Link to Comment jc125d
jc125d's picture

Horsewhips, tar, feathers, cat-o-nine-tails, rock salt (load yer own).

Fri, 03/05/2010 - 17:38 | Link to Comment economessed
economessed's picture

Lead, lead delivery devices, and liquor.

Fri, 03/05/2010 - 17:40 | Link to Comment carbonmutant
carbonmutant's picture

 Hand Tools

Fri, 03/05/2010 - 19:57 | Link to Comment AnonymousMonetarist
AnonymousMonetarist's picture

Everytime I turn on Hee Haw or Bubblevision I see a 'HAND tool' :)

Fri, 03/05/2010 - 22:01 | Link to Comment carbonmutant
carbonmutant's picture

That too.

Fri, 03/05/2010 - 17:58 | Link to Comment Internet Tough Guy
Internet Tough Guy's picture

bulletproof vest

Fri, 03/05/2010 - 19:18 | Link to Comment Crummy
Crummy's picture

Water based lubricants and plastic sheeting.

Fri, 03/05/2010 - 19:23 | Link to Comment faustian bargain
faustian bargain's picture

ropes

Fri, 03/05/2010 - 21:10 | Link to Comment Anonymous
Sat, 03/06/2010 - 13:16 | Link to Comment Anonymous
Fri, 03/05/2010 - 17:39 | Link to Comment economessed
economessed's picture

Hey CBO - what about the GSEs?  We gonna count that our not?  Why suffer through 10 more years of inevitable handwringing before bankruptcy -- we can get there in 10 months!

Nice job on the Friday PM release, by the way.

Fri, 03/05/2010 - 18:01 | Link to Comment crosey
crosey's picture

I think all of the GSEs and entitlements put it close to 140%, but some is off the balance sheet ya know.

Forefathers get to do another turn in their graves.  Wouldn't they be amazed.

If Ken Lay could see this now, I think his jaw would drop, and he would demand a new trial.

Sat, 03/06/2010 - 22:31 | Link to Comment Anonymous
Fri, 03/05/2010 - 17:36 | Link to Comment chet
chet's picture

Reagan proved that deficits don't matter.

Fri, 03/05/2010 - 18:02 | Link to Comment crosey
crosey's picture

I believe that "reasonable" deficits were his brief.

Fri, 03/05/2010 - 18:35 | Link to Comment chunkylover42
chunkylover42's picture

it was dickhead cheney that said that, not Reagan.

Sat, 03/06/2010 - 13:20 | Link to Comment Anonymous
Fri, 03/05/2010 - 17:37 | Link to Comment carlo
carlo's picture

And we all know mondays are always up, so this news should take only a couple of DOW points off the sharp up opening already being discussed.

Fri, 03/05/2010 - 17:44 | Link to Comment Anonymous
Fri, 03/05/2010 - 17:45 | Link to Comment carbonmutant
carbonmutant's picture

 Looks like a Greek gift for the next administration.

Fri, 03/05/2010 - 17:45 | Link to Comment Anonymous
Fri, 03/05/2010 - 17:46 | Link to Comment Anonymous
Fri, 03/05/2010 - 17:51 | Link to Comment johngaltfla
johngaltfla's picture

Nah, it's much higher. Let's bring all the crap ON BUDGET and get the real total. Because in 2011-2012 when expenditures out pace revenues for SS and Medicare it is GAME OVER!

Fri, 03/05/2010 - 17:59 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

It could be worse, right?  Right?

These government reports are usually way off, right?

It's never worse than the administration's economists predict, right?

It's not too late for change, right?

Fri, 03/05/2010 - 17:52 | Link to Comment Anonymous
Fri, 03/05/2010 - 18:15 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

If man (including Greeks) can be convinced to willingly let a shaky old priest cut the foreskin off his penis with a big-ass knife, without anesthetic, then he can be talked in to most anything. 

Fri, 03/05/2010 - 19:25 | Link to Comment faustian bargain
faustian bargain's picture

that's why we do it to the upcoming generation before they have any say in the matter.

Fri, 03/05/2010 - 21:18 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

The deficit, and circumcision.

Fri, 03/05/2010 - 17:54 | Link to Comment Internet Tough Guy
Internet Tough Guy's picture

I'm alreadly emotionally disengaged from the system. I don't put much effort into my work. Someone asked why I didn't apply for a higher paying job that came open, and I laughed and said I didn't want to work hard only to be paid more money which will become worthless anyway. Plus I said we would all be unemployed sooner than later. Yeah, that will get you some funny looks.

I am loaded up on hand tools, food, PMs, lead delivery systems and spend my free time educating myself on things like woodcraft and edible native plants.

10 years? No way, the end is very f***ing nigh.

 

Fri, 03/05/2010 - 18:11 | Link to Comment JJP
JJP's picture

ROTFLMAO post of the day imo

Fri, 03/05/2010 - 17:57 | Link to Comment SWRichmond
SWRichmond's picture

If "soaring public debt" is one of the issues you care about, Mark Potok at SPLC has some words for you, in a very yellow-journalistic sort of way:

The anger seething across the American political landscape — over racial changes in the population, soaring public debt and the terrible economy, the bailouts of bankers and other elites, and an array of initiatives by the relatively liberal Obama Administration that are seen as "socialist" or even "fascist" — goes beyond the radical right. The "tea parties" and similar groups that have sprung up in recent months cannot fairly be considered extremist groups, but they are shot through with rich veins of radical ideas, conspiracy theories and racism.

http://www.splcenter.org/get-informed/intelligence-report/browse-all-iss...

It's no surprise that people who see everything through the lens of race see any opposition to Obama as "racist".  Mark Potok is much more conscious of race than anyone I ever met at any Tea Party.  I wonder why?  I am sure that Mark Potok will add the CBO, for having the temerity to point out that Obama wants to grow the deficit, to his list of those harboring "radical ideas, conspiracy theories and racism."


Sat, 03/06/2010 - 04:45 | Link to Comment jeff montanye
jeff montanye's picture

but the graph doesn't show a growing deficit (as opposed to debt), at least near term.  imo that seems a bit unlikely.  or, if true, a relatively declining government stimulus (with increasing aggregate debt and debt payments, assuming no further substantial interest rate declines) would seem negative for the (highly leveraged) national economy in the immediate future.

Fri, 03/05/2010 - 17:59 | Link to Comment Anonymous
Fri, 03/05/2010 - 18:01 | Link to Comment Anonymous
Fri, 03/05/2010 - 18:21 | Link to Comment Anonymouse
Anonymouse's picture

Damn that George Bush.  It's bad enough that he made it appear that Obama quadrupled the deficit for 2009.  Now he and Dick Cheney have to screw up the deficit all the way out to 2020.

What's poor Obama to do?

Fri, 03/05/2010 - 18:42 | Link to Comment SV
SV's picture

LOL - Borrow some rubberbands from me to keep it together!

Fri, 03/05/2010 - 19:31 | Link to Comment Anonymouse
Anonymouse's picture

Thanks Rubber-band man (or is that Crab Man, the avatar is too small to be sure).

 

In case there was any confusion there, </sarcasm>.  But I can understand if you missed it.  Left wing lunacy is hard to parody.  It's hard to make up something that one of them isn't already saying

Sat, 03/06/2010 - 04:55 | Link to Comment jeff montanye
jeff montanye's picture

but don't forget that the deficits that ran up the national debt during the 1983 to 2007 expansion were largely (in the u.s.) done under "conservative" republican presidents.  running deficits to counter a deflationary depression seems more defensible than during the expansion that precedes it.  not that there is much defensible about the current administration.  and not that the "right-wing"/"left-wing" set-to that so captivates the msm is much more than smoke and mirrors/no bread just circuses to confuse and distract the bottom 99% of wealth holders.  that so little changed under obama is proof of that.

Fri, 03/05/2010 - 18:28 | Link to Comment Anonymous
Fri, 03/05/2010 - 18:40 | Link to Comment Anonymouse
Anonymouse's picture

I believe the criteria are:

Debt to GDP   Rating

0 - 123%       Aaa

124%            Aaa (Neg Outlook)

125%            A2

Fri, 03/05/2010 - 19:11 | Link to Comment hambone
hambone's picture

This budget is still ludicrous - let's just look at the contrary assumptions:

1- above trend GDP growth over the period (so above trend growth of tax revenues).

2- high continuing levels of unemployment and low wage growth

3- higher personal savings and corporate delevering

4- below trend interest costs on the debt (hard to imagine how if the world showing above trend growth the world will loan money with such a low return...or no plan to return in the case of potential high inflation?).

5- The big change in this budget from Jan is that the Big O will extend the Bush tax cuts...hmmm, why don't I think that and further tax hikes at every level of gov are coming?

6- And of course, the budget assumes Big O gets all his cuts made and has max savings and his new programs have significant savings or minimal impact.  Also assumes congress doesn't load the bill w/ pork.  Hmmm.

7- oh yeah, I forgot to mention this all assumes export led recovery 'cause foreigners want to buy our "stuff" and that the FIRE economy will not be coming back to bloom anytime soon?

So, is the Gov's ability to print and spend limitless or will we start to see serious collateral damage if this goes forward (collateral damage = devalued dollar and back to higher fuel costs, higher inputs, higher interest rates...blah, blah).

Thoughts?

Fri, 03/05/2010 - 19:36 | Link to Comment dumpster
dumpster's picture

these numbers ought to be good for a brizzlion new jobs ,,

Fri, 03/05/2010 - 19:48 | Link to Comment faustian bargain
Fri, 03/05/2010 - 20:25 | Link to Comment goldfreak
goldfreak's picture

Debt to GDP ratio is already 87%.

 

debt= 12.4 T  GDP=14.3

 

http://www.usdebtclock.org/#

 

Budgets won't shrink below 4% of the economy? We're lucky if we go below 6%

Fri, 03/05/2010 - 20:32 | Link to Comment rubearish10
rubearish10's picture

And,,,,, the current deficit is 40% of expenditures. 

Deficit = $1.6T   Expenditures = $4T

 

Sat, 03/06/2010 - 12:45 | Link to Comment Anonymous
Sat, 03/06/2010 - 13:07 | Link to Comment Anonymous
Sat, 03/06/2010 - 13:04 | Link to Comment Anonymous
Fri, 03/05/2010 - 20:47 | Link to Comment trav7777
trav7777's picture

What is CBO smoking with those GDP growth projections?!?!

Sat, 03/06/2010 - 11:24 | Link to Comment Anonymous
Fri, 03/05/2010 - 21:00 | Link to Comment Great Depressio...
Great Depression Trader's picture

I cringe everytime I see the "debt to gdp" percentages. Intragovernmental holdings are not included in these assumptions.

Also, the macro picture will continue to get worse as CRE, ARMS, student loans, social security, medicare, state budgets continue to bleed the system dry. These gov stats always fail to include the insanely leveraged private sector, including the infamously indebted US household. Total debt to gdp is a fucking disaster.

US will go broke within 3-5 years. If the ravages of peak oils' effects come sooner, then the 21st century dark age is upon us.

Question is, how the fuck can you plan for this when you are a newly licensed attorney that cant get a job. Ive got $7,000 in savings, a car, and live at home (wealthy parents). I keep trying to convince pops to sell some RE holdings now before its too late but he wont listen. I was telling him to dump some prps in 2006. If only he would have listened.

Fri, 03/05/2010 - 21:22 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

Stop planning, move (far) away from home, and start living.

Fri, 03/05/2010 - 22:14 | Link to Comment Great Depressio...
Great Depression Trader's picture

How the hell do I move away and start living when (a) i cant get a job and (b) cant live unless I have an income. People have this ideas that attorneys make all this money and life is great. Bullshit. Unless you went to a top school and graduated in the top of your class your fucked. Even now, harvard boys and gals are having trouble getting jobs. Ask my harvard law grad Jimmy who has been looking for 9 months. What the hell can I do, the Tier 4 shitlaw graduate. I blame myself for not researching the legal job market better back in 2005 and I also blame the fucking piece of shit ABA that permits law schools to publish fraudulent employment statistics that I foolishly relied upon. 70% of my graduating class dont have jobs in law, most of them are working retail/secretarial/food service just to service their student loans.

If i move then im responsible for the student loan payment. By staying home at least it gets paid. No credit card debt as a result. Call me a 27 yr old moocher oh fucking well besides my parents are also partially to blame as they pushed me "go to law school, be a lawyer, make us proud". Im so fucking discouraged that I havent even bothered to pick up my degree.

If i leave im fucked, if i stay i survive.

Fri, 03/05/2010 - 22:55 | Link to Comment Hulk
Hulk's picture

I understand your position GD
Look, you know Peak Oil is going to hit
us like a ton of bricks, mainly because we are
unprepared (and delusional)
Get your parents to buy or trade for a farm
and get busing farming;Check out:
http://www.polyfacefarms.com/
This will get you off your ass and out of depression or funk. It will occupy your mind
and body and make you money
Its a nice , peaceful existence and will
prepare you for our future...
Also, get your parents to buy gold and silver
Good luck and don't worry about living with your parents, lots of 20 and 30 year olds
are being forced to do it...just don't
lounge around, its not good for you..

Fri, 03/05/2010 - 23:44 | Link to Comment Great Depressio...
Great Depression Trader's picture

Hulk:

Thanks for the kind words. For the record I am THANKFUL that my parents are cool enough to let me stay. I love them and am forever grateful for their support. Every time i sleep in my bed i thank them and God for having a place to stay. I thank them for not having the despair that my fellow grads are going through, drowning in debt with no support. Graduating in the worst market EVER for law grads.

What drives me INSANE is that pops is a successful boomer type that thinks we are going back to 5% property appreciation per annum. He thinks that "america can print money so we are going to be ok". He doesnt want to accept the reality of the mini dark ages to come. However, we can be FORCED to move on a farm as we are originally from Greece. Western Greece, population of a few thousand with nice beaches and islands. The chaos you see in Athens does not apply to my region (lefkada). I believe that my family will end up going back there. We have plenty of farm land, my uncles have sheep, goats, cows, pigs, crops, you name it. Ive actually slaughtered several sheep myself so i know what the agri life entails of. Its peaceful but also backbreaking and tough. Im HOPING that I will be able to convince him to liquidate some of his holdings, convert them to gold and silver and then split.

I burn with anger as i know that thousands of my generational peers are graduating from grad school, whether it be MA, MBA, JD, or even PHD with horrible job prospects and 100'k + in debt. In the end ill have to fend for myself. Its just so fucking frustrating, having spent 7 yrs in school, passing bar exams, LSATS and other shit for NOTHING. Ive been digging a hole for 7 yrs. Now that i realized that im stuck in this hole im pissed as hell. But hey, at least im now looking in the right direction.

Sat, 03/06/2010 - 12:46 | Link to Comment Hulk
Hulk's picture

GD, I am very happy to hear that you have farm experience.It doesn't have to be back
breaking work. Study the Amish, GD, they are the most intelligent farmers on the planet
and are not working fools....
Wasted educations are a sign of the times.
As far as the job market goes, I too have a
wasted education due to a lack of leadership
in this country and GREED.Education and experience are just wasted now due to incompetent management, which is now endemic
in our society.
I married into a foreign family and I understand that they are too optimistic about
this country.Their optimism level remains at
pre-entry, dream of coming to america levels....I can't get them to buy gold either.
Even though their country experienced a currency collapse and they had to use gold to buy food in the 60's! My wife's parents practically begged me to sell gold when it hit
$1000! Very interesting....
Tale a road trip through Lancaster Co, PA and check out Amish Farming.Get out of the car
and talk to the farmers, I think you will be
amazed at just how efficient they are.
Once you get out and explore, you will see
the endless opportunities that still exist
out there..and you will meet fascinating people.
Lastly, you have to control the anger otherwise it will feed on itself and get completely out of control and become self sustaining...Been there, done that.....
Your education will become very useful at some point, I guarantee that!

Sat, 03/06/2010 - 14:35 | Link to Comment Great Depressio...
Great Depression Trader's picture

Wasted educations are a sign of the times.
As far as the job market goes, I too have a
wasted education due to a lack of leadership
in this country and GREED.Education and experience are just wasted now due to incompetent management, which is now endemic
in our society.

Wow. Truer words never spoken. You are very wise. Gekllc@gmail.com

Thats my email, contact me anytime you want to discuss the future. Thanks

Sat, 03/06/2010 - 15:35 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

Join the Army.  Travel to far away lands.  Meet interesting people, and kill them.

Fri, 03/05/2010 - 21:28 | Link to Comment Anonymous
Fri, 03/05/2010 - 21:29 | Link to Comment Anonymous
Fri, 03/05/2010 - 21:14 | Link to Comment Anonymous
Fri, 03/05/2010 - 21:18 | Link to Comment Anonymous
Fri, 03/05/2010 - 21:30 | Link to Comment Anonymous
Fri, 03/05/2010 - 21:46 | Link to Comment CB
CB's picture

:::cringe::::

Fri, 03/05/2010 - 22:06 | Link to Comment Anonymous
Fri, 03/05/2010 - 22:50 | Link to Comment merehuman
merehuman's picture

That is just too funny to me. I have walked away from all i owned many times.

I mean really.. walked away with 0 ,nada. Clothes on my back. Devoid of friends and family, literally no one to turn to.

I still value my freedom over money and things. Security is relative.

In retrospect , its been a hard life, but rich in action and diversity.

Fri, 03/05/2010 - 22:56 | Link to Comment MarketTruth
MarketTruth's picture

Got gol...

Oh heck forget it. If you have not woken up by now to the reality of the future of currencies and their continual devaluation (also called inflation)...

Ahh yes, the soothing tones of Happy Talk from Ben Shalom Bernanke. Surely he knows what is going on and can steer America as the Chairman of the United States Federal Reserve.

www.youtube.com/watch?v=HQ79Pt2GNJo

.

.

.

.

(OH SH*T!)
PS: Wow, look at those gold prices during the above video. One day we'll all look back at today's price and say, "i KNEW i shoulda bought, coulda bought back then and woulda bought gold but..."

Sat, 03/06/2010 - 03:15 | Link to Comment Hephasteus
Hephasteus's picture

Dow the same, oil the same. Gold nearly double in 4 short years.

Sat, 03/06/2010 - 05:06 | Link to Comment jeff montanye
jeff montanye's picture

dow and gold don't correlate that well historically.

Sat, 03/06/2010 - 13:02 | Link to Comment Hulk
Hulk's picture

I clicked on the gold bullion ad on zh and they actually had good prices. 50 bucks over spot.$1185 for a maple, not bad...
I too have mostly given up on telling folks
to buy PM's.....
Look at the old Peter Schiff montage videos's
of him warning of the coming crisis, back in 06 and 07. He was literally laughed out of the
studio by the likes of Ben Stein
I know his investment portfolio performance sucked, but his actual calls on this crisis
have been spot on..
I expect peak oil to have a major impact on
gold prices too.Just waiting for a Cantarell style, Ghawar collapse. Its coming, they are currently over 50 percent water cut... At that point, we will realize just how unpayable our debt is and
how unsustainable our lifestyles are without
cheap, abundant sources of energy.
Got Nuclear?

Sat, 03/06/2010 - 01:03 | Link to Comment Anonymous
Sat, 03/06/2010 - 02:54 | Link to Comment Anonymous
Sat, 03/06/2010 - 05:57 | Link to Comment Anonymous
Sat, 03/06/2010 - 12:49 | Link to Comment Mission Stupid
Mission Stupid's picture

I struggle to understand the consequences of the implosion point, or end game scenario, but I do understand that it is coming with the parabolic expansion of debt.  From what I've read much of the gov't debt is tied to inflation so inflating the debt isn't much of a solution.  The only thing I can think of that truly preserves wealth is gold.  Everything else is short term gambling.

Sat, 03/06/2010 - 13:48 | Link to Comment Anonymous
Sun, 03/07/2010 - 12:57 | Link to Comment Anonymous
Fri, 04/16/2010 - 08:37 | Link to Comment mark456
mark456's picture

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