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Friday Night Dump: CBO Admits Error, Now Expects Another $600 Billion In Deficits From Obama Tax Cuts

Tyler Durden's picture




 

Two weeks ago, when we commented on the biggest farce in financial thinking at the time (promptly replaced by the even more lunatic platinum coin "idea"), namely that one of the main "spending cut" proposals of the Obama administration, amounting to $290 billion, was the assertion that the US will save hundreds of billions because, get this, interest rates are now lower than they were before. We commented as follows: "this is where one's Excel refs out, because the interest payment on Treasuries, at least in a non-banana republic, one set to see 120 debt/GDP in 3-4 years, is a function of fiscal decisions (central-planning notwithstanding), and to make the idiotic assumption that one can control interest rates for 10 years (central-planning notwithstanding), just shows what a total farce this whole exercise has become, and also shows that nobody in the administration, or the GOP for that matter, has even modeled out the resultant budget pro forma for the proposed tax hikes and budget "savings" as that would blow up said excel model immediately." We now learn that one other entity that did not fully model out the last minute Fiscal Cliff deus ex, and especially not the recursive debt relationship in a country where half the government spending is funded by debt, is the always amusing CBO (whose epic prediction failure rate has been discussed here on numerous occasions).

It appears that they just did... after the close... on Friday. The outcome? Their initial estimate of a $4.0 trillion budget increase was wrong and when one factors in the fact that this incremental spending would have to be funded by, you guessed it, debt, debt which has interest, the full impact of the Obama tax cut rises deficits by 15% to $4.6 trillion over the next decade.

Oops.

But what's $600 billion for a nation that is now discussing idiotic gimmicks involving $1 trillion coins as a means to avoid reality.

Here is the Friday night bomb in all its glory (link):

Relative to what would have occurred under the laws previously in effect, this legislation will increase budget deficits in coming years.

 

Like all of CBO’s cost estimates, our estimate for this legislation shows the effects of the legislation relative to current law at the time we did the estimate. Relative to the laws in place at the end of 2012, we estimate that this legislation will reduce revenues and increase spending by a total of nearly $4.0 trillion over the 2013-2022 period. (Also like all of CBO’s cost estimates, this estimate’s numbers for the effect of changes in the tax code—which represented the bulk of the bill—were produced by the staff of the Joint Committee on Taxation. They published the details of their tax revenue estimates separately.)

 

From that perspective, why will the legislation increase deficits? Mostly because, under the laws previously in place, numerous tax provisions originally enacted in 2001, 2003, and 2009 would have expired. As a result, in 2013 personal income tax rates would have gone up for people at all income levels, the alternative minimum tax (AMT) would have applied to many more people, estate and gift taxes would have risen, and a number of other revenue-increasing changes in tax law would have taken effect. This legislation will prevent those changes in law from occurring or reduce their scope; hence, relative to what would have happened without the legislation, it embodies substantial tax cuts. The legislation also will boost deficits by increasing spending, mostly for refundable tax credits and unemployment compensation.

 

That dramatic widening of the budget deficit will increase interest payments on the federal debt, an impact that is not included in CBO’s cost estimates. The additional debt service will cost about $600 billion. Thus, if we added the estimated cost of the legislation and the related debt service to our previous baseline budget projections (which followed current law at the time), we would show additional deficits between 2013 and 2022 of roughly $4.6 trillion.

And, while tangential, here is something else rather funny: the CBO attempts to predict the GDP in 2022, in both absolute terms and relative to the prior baseline. While ludicrous, at lest they get the general direction right:

What Effect Will the Legislation Have on the Economy over the Longer Term?

 

Although we expect that the legislation just enacted by the Congress will lead to higher output and income in 2013 we also expect that it will lead to lower output and income later in the decade than would have occurred under prior law. The legislation lowers tax rates for many people—thereby boosting output—but it also expands budget deficits—which will reduce national saving and lower the stock of productive capital, thereby reducing output relative to what would have occurred under prior law. CBO has not estimated the longer-term economic effects of the legislation itself, but we previously estimated the economic effects of the aforementioned alternative fiscal scenario, which embodied the assumption that many policies that were in effect or had recently been in effect would be continued. Under that scenario, as described on page 37 of our Update, we estimated that real gross national product (GNP) would be 1.7 percent lower in 2022 than would have been the case under prior law. .

Remind us to look back on this post in one decade to find just how misplaced that decimal comma truly was.

* * *

Is it just us, or does it really seem like nobody is even trying to mask the fact that the iceberg has been hit head on?

 

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Fri, 01/04/2013 - 19:03 | 3124097 PhD
Fri, 01/04/2013 - 19:08 | 3124102 nope-1004
nope-1004's picture

Had they named it "credit account", it prolly would have lasted.  Merikans understand having debt, "but WTF is capital"?

 

Fri, 01/04/2013 - 19:11 | 3124108 Michaelwiseguy
Michaelwiseguy's picture

That's $46 trillion over the next century and $460 trillion over the next millennium. It's just math.

Fri, 01/04/2013 - 19:19 | 3124117 knukles
knukles's picture

Confirmed it's business as normal, nothing's changed.
And after all the heebie geebies we've gone through the last sevral days.

Nothing like the smell of rotten drama in the morning.

Fri, 01/04/2013 - 20:11 | 3124242 negative rates
negative rates's picture

In that case, full steam ahead!

Fri, 01/04/2013 - 20:41 | 3124297 Mactheknife
Mactheknife's picture

A trillion here...a trillion there and pretty soon you're talking about real money.  Oh wait..I forget...we're not talking about REAL money in any amount of dollars.  Those assholes should have sent this thing over the cliff.

Fri, 01/04/2013 - 23:26 | 3124571 boogerbently
boogerbently's picture

What....oh, wait a minute.....Whoopsie !!

Sat, 01/05/2013 - 10:55 | 3125081 trav777
trav777's picture

what does it matter?  put as many of these dollars as you can into your pockets.  The nation of "USA" is dead.  It died decades ago.  Don't mourn for it, just move to the acceptance stage and get on with things.

The Constitution and all those high-minded ideals are dead. They were invented by white slave owners, so they're illegitimate anyhow.  What's legitimate is brown-style government, banana republic, generalissimos, chiefs, warlords, and gangster states.  Systems where the law is whatever the Man says it is.

"The Man" is a very literal phrase.  It means exactly what it says and comes from a chieftain style of government.  The Man owns and runs everything and can do as he wants.  If he decides to give stuff that you thought was "yours" to someone else, that's his prerogative.  It wasn't yours anyhow, it was The Man's.

A lot of people in the world live under The Man.  They seem to be pretty OK with it.  I was just in Africa and saw "Elect R. Mugabe for President" T shirts on people and no, it's not a joke.  The dude wins despite having destroyed the economy totally in the span of 10 years.  This type of populace doesn't mind corruption or incompetence or criminality; it's the Man's prerogative to do these things.

Sat, 01/05/2013 - 12:15 | 3125163 Taffy Lewis
Taffy Lewis's picture

Spot on, Trav, as usual.

The USA is Rhodesia becoming Zimbabwe with an injecition of 3rd world hispanics. The only variable is the timeline.

It was easier to figure out for me because I came back to the U.S. three years ago after almost all of the previous 30 years outside of it, the last 10 in Southeast Asia. The change after 30 years is astonishing.

For me, it's come down to "choose which 3rd world country you want to live in and where you want your children to grow up". I choose SE Asia and I am thankful for the can-kicking because it allows me to execute my plan to move back; as of today, end of 2013 or 2014.

Fri, 01/04/2013 - 22:04 | 3124409 Theta_Burn
Theta_Burn's picture

Really, If there is anyone here who didn't expect the exact opposite of what was spewed, step foward for your kick in the nutz...

Wheres the bigger betrayal, is it this shocking revelation, or that EVERYONE in .gov just went with the flow?

Sat, 01/05/2013 - 10:07 | 3125038 disabledvet
disabledvet's picture

This is a tax INCREASE not a tax cut you dopes. read the stupid headline first. Also "never underestimate the greedy when they want to slash your benefit check." Obviously there are many ways to cut spending as the "axe wielders" start whacking. Obviously Defense will be untouched by this. But all spending bills originate in the House of Reps so "that's where all the power is." the Dividers are already screaming "screw the American people! Give me the money!" unfortunately the debt ceiling is also up to Congress so if you want the dough you're going to have to find a way to stretch the buck..."Governmentally." which is a good thing of course...

Fri, 01/04/2013 - 20:53 | 3124312 Chump
Chump's picture

Heh, except it's compounding...

Fri, 01/04/2013 - 19:14 | 3124110 akak
akak's picture

 

Merikans understand having debt, "but WTF is capital"?

It's a building in Washington DC where omnipotent men decide our fate with wisdom, benevolence and only the purest of altruistic intentions.

Fri, 01/04/2013 - 19:30 | 3124140 Go Tribe
Go Tribe's picture

I don't know. But I know an alien when I see one, and that single Christian girl in the upper right corner is downright spooky.

Fri, 01/04/2013 - 19:50 | 3124195 unrulian
unrulian's picture

haha no kidding...

Single and Alien?

Find Zods match for you at galaxymingle.com

 

Sat, 01/05/2013 - 11:29 | 3125096 Jam Akin
Jam Akin's picture

Identify the apple of your eye at lizardlounge.us

Fri, 01/04/2013 - 19:39 | 3124169 PhD
PhD's picture

Well, they do know the term "capital offence".

Perhaps they thought it was a show keeping account of the recent capital punishments

Fri, 01/04/2013 - 19:19 | 3124115 HelluvaEngineer
HelluvaEngineer's picture

If Lauren needs a job, I'm sure I can think of something to help out.  Just sayin'

Fri, 01/04/2013 - 19:23 | 3124126 FEDbuster
FEDbuster's picture

She will do just fine, but I really did like that show.  Good guests, and Lauren gave them a chance to talk and answer questions.

Fri, 01/04/2013 - 19:27 | 3124130 S5936
S5936's picture

And rat face Matt Lauer makes 18 mil per annum. I'd say the planet is slightly upside down eh? Bizzaro world is alive and well... I need a stiff drink.

Fri, 01/04/2013 - 19:31 | 3124143 Dasa Slooofoot
Dasa Slooofoot's picture

You sure they're cancelling the show?   Reads like just the producer is leaving.  

Fri, 01/04/2013 - 19:41 | 3124174 PhD
PhD's picture

Yeah, its cancelled.

https://twitter.com/laurenlyster

Fri, 01/04/2013 - 20:08 | 3124238 ImReady
ImReady's picture

Damn I miss those legs already! 

Fri, 01/04/2013 - 22:42 | 3124502 Buck Johnson
Buck Johnson's picture

I started getting into watching her show a few months back, I thought it was great.

Fri, 01/04/2013 - 23:10 | 3124542 ball-and-chain
ball-and-chain's picture

I've got bad news.

In order to solve this debt problem, we need to raise taxes and cut spending.

This depression is painful.

It's going to go on for decades.

We are Japan.

http://www.angrysinner.blogspot.kr/2013/01/yesterday-dragon-lady-served-egg-rolls.html

Sat, 01/05/2013 - 11:04 | 3125093 trav777
trav777's picture

so we have a high-tech, orderly society, with high speed rail, clean facilities, pristine cities, and a vanishingly low crime rate?

You morons act like Japan has a problem.  in a world of CONTRACTION, you don't want the demographics of growth.

Fri, 01/04/2013 - 19:04 | 3124099 Lin S
Lin S's picture

Pay no heed to this unfortunate revelation.  Just repeat after me:

Forward, bitchez!

Fri, 01/04/2013 - 20:22 | 3124265 edb5s
edb5s's picture

All will have been forgotten (or never noticed in the first place) by Monday just in time for another rally on no news

Fri, 01/04/2013 - 19:07 | 3124100 ShorTed
ShorTed's picture

From bad to worse to... 

 

!@#$%^&* you politicians!

Fri, 01/04/2013 - 19:08 | 3124103 Muppet Pimp
Muppet Pimp's picture

TD et. al. - I can no longer access your site through normal channels (my desktop or my phone).  In addition Google chrome does not allow my twitter to work and my android phone will not load t.co pages from my twitter app. 

 

This may be an opportune time to short goog if others are experiencing similar.  Liberty not popular with TPTB in the US it seems. 

Hopefully this is a technical issue unrelated, but if you use the secret sauce it is still accessible for now . Lator.

Fri, 01/04/2013 - 19:45 | 3124155 Muppet Pimp
Muppet Pimp's picture

Back live through regular channels.  Was able to access through alternative channels while being blocked elsewhere (hence the above comment, this one is regular).  Hmmmm.

Advice to my peeps stateside: Keep an eye on the US mint and supplies of real money coins.  If we soon see 'no supplies' or 'temporary shutdown' etc. This could be a sign of the tryanny getting closer.  Just my opinion, .gov is broke expect shenanigans.

Fri, 01/04/2013 - 19:12 | 3124109 Blackfox
Blackfox's picture

Some Friday humour...

Wealthy Indian spends £14,000 on a shirt made of GOLD to impress the ladies.

http://www.dailymail.co.uk/news/article-2257209/Wealthy-Indian-Datta-Phuge-spends-14-000-shirt-GOLD-impress-ladies.html

 

Fri, 01/04/2013 - 19:18 | 3124112 akak
akak's picture

"I am doing the pitying of the fool who is not finding me the sexy!"

 

OK, OK, so you can wear it .... you still can't eat it!

Fri, 01/04/2013 - 19:26 | 3124128 FEDbuster
FEDbuster's picture

I wonder how long it will be before I have one of the new trillion dollar platinum coins jiggling around in my jeans pocket?  I will save a spot next to my $100 trillion Zimbabwe bank note on my desk.

Fri, 01/04/2013 - 19:29 | 3124138 akak
akak's picture

Is that a $1 trillion platinum coin in your pocket, or are you just happy to see Ben?

Fri, 01/04/2013 - 19:32 | 3124145 FEDbuster
FEDbuster's picture

That would be a $10 trillion dollar platinum bar or a roll of 20 coins.

Fri, 01/04/2013 - 19:34 | 3124153 knukles
knukles's picture

Gonna give New Meaning to "Having the Shirt Stolen Off Your Back."

Sat, 01/05/2013 - 09:53 | 3125019 francis_sawyer
francis_sawyer's picture

The joke is going to be on him when he realizes the shirt was made by some jewish 'goldsmith' tailors who filled all the little gold pieces with tungsten...

Fri, 01/04/2013 - 19:20 | 3124119 HelluvaEngineer
HelluvaEngineer's picture

Completely stupid.  How can you dance on a hilltop with 50 other people while wearing that heavy shirt?

Fri, 01/04/2013 - 21:29 | 3124377 SilverRhino
SilverRhino's picture

DAMN .... that makes Mr T look fucking low ley.  

 

Fri, 01/04/2013 - 19:15 | 3124111 zilverreiger
zilverreiger's picture

WHADDAMISTAKA TO MAKA

Fri, 01/04/2013 - 19:21 | 3124121 nmewn
nmewn's picture

And!

Benny's still my bitch.

Fri, 01/04/2013 - 19:21 | 3124122 fuu
fuu's picture

Lulz

Fri, 01/04/2013 - 19:23 | 3124125 toady
toady's picture

What's a few quadrillion among friends?

Fri, 01/04/2013 - 19:28 | 3124134 knowless
knowless's picture

yay! we're almost to quintillion!

Fri, 01/04/2013 - 19:25 | 3124127 Mark123
Mark123's picture

Wouldn't it be great if we the people took up arms and marched on New York and Washington to enforce the law and punish the criminals in charge?

 

 

Fri, 01/04/2013 - 19:34 | 3124151 FEDbuster
FEDbuster's picture

That's why there is an urgency to take away your ability to keep and bear arms.

Fri, 01/04/2013 - 21:17 | 3124357 ZeroAvatar
ZeroAvatar's picture

I ran across this yesterday:

 

http://www.standinwashington2013.com/

 

I might take a coupla days & ride the hog up to D.C.

Fri, 01/04/2013 - 19:29 | 3124136 Cursive
Cursive's picture

Uh, so do our brilliant legislators get to re-vote it?  Disgusting. 

Fri, 01/04/2013 - 19:35 | 3124157 knukles
knukles's picture

NO

They already had their 3 minutes to read the bill

Fri, 01/04/2013 - 19:30 | 3124139 phoolish
phoolish's picture

We have sailed over the Weimar Falls.

 

Act Accordingly.

 

Fri, 01/04/2013 - 19:33 | 3124148 Al Huxley
Al Huxley's picture

So as I read this, instead of drowning in 100 ft of water, we are now drowning in 120 ft, correct?

Fri, 01/04/2013 - 19:34 | 3124152 booboo
booboo's picture

Oh my, what a bust. Refering to the CBO numbers not Lauren Luster, I mean Lyster which reminds me of Listerine which reminds me of gargling which reminds me of Lauren again.

Fri, 01/04/2013 - 19:36 | 3124162 Lin S
Lin S's picture

Sweet!  =D

Fri, 01/04/2013 - 19:35 | 3124159 Cdad
Cdad's picture

Ummm...no Tyler...it is definitely not just you.  However, and since what we are dealing with, what ZH is dealing with, is an entrenched establishment that HAS ALREADY FAILED, it is exhausting.  And as such, and since the math is obvious and can no longer be avoided, said establishment simply says and does whatever it wishes...ultimately waiting for the day that the population finally "comes for them"...in one way or another, and said establishment is finally determined to be "illegitimate."  

And having piled up more than $16 trillion in debt, spending the money of unborn generations on wars, buying political influence and votes, welfare, etc...our Federal Government is quite obviously illegitimate.  That much is already clear.

As for how the people come to finally tap this government on the shoulder to say..."you're out"...well, that will come in one way or another.  I think the way it is happening already is simply through the collapsing economy...or the failure of people to participate in it.  Maybe that movement is held off awhile...until the govt finally defaults.  Another complete market crash is very near...maybe that's it.  Succession anyone?  Maybe some other sort of revolution takes place.

But no, Tyler.  You are not alone.  And those of us who read you every day...we thank you for the frustration you feel when such obvious things as this come up...the CBO.  A complete joke...for many decades.

Many thanks [Cdad ripping out hair]

 

Fri, 01/04/2013 - 19:54 | 3124205 slaughterer
slaughterer's picture

What Cdad said.  

Fri, 01/04/2013 - 22:39 | 3124495 petolo
petolo's picture

The Ceausescu moment is approaching .

Sat, 01/05/2013 - 07:34 | 3124928 dogfish
dogfish's picture

Perfect.

Fri, 01/04/2013 - 19:38 | 3124160 Jam Akin
Jam Akin's picture

Anything less than a trillion is merely a rounding error these days.

Fri, 01/04/2013 - 19:36 | 3124163 Clint Liquor
Clint Liquor's picture

This is just plain silly. There will be no debt to service in 2022.

There will also not be a US Dollar or 454 Trillion in nominal interest derivatives. It all be swept away like so much confetti after a parade.

 

Sat, 01/05/2013 - 07:32 | 3124926 Winston Churchill
Winston Churchill's picture

Slightly off subject.

Went to one of my banks the other morning to transfer money overseas.

Do it on a regular basis,first time this year.Always less than 10k at a time.

New bank requirement for overseas wire;TIN required.

Took two days to get there instead f two hours normally.

Beware.

Fri, 01/04/2013 - 19:39 | 3124166 BraveSirRobin
BraveSirRobin's picture

Well, I guess stamping 12 zeros on a coin is harder and takes longer than typing them in a computer. So, I guess this is progress in the right direction.

Fri, 01/04/2013 - 19:39 | 3124168 Al Huxley
Al Huxley's picture

I thought it was all good though, because the FED gives the interest back to the govt, so no need to worry about 600 billion here or there...

Fri, 01/04/2013 - 19:40 | 3124171 Al Huxley
Al Huxley's picture

BTW, I'm using the above to angle for an anchor position with CNBC - does it fly?

Fri, 01/04/2013 - 20:10 | 3124241 Mike in GA
Mike in GA's picture

I think it was great!  Sounded like it was straight from the mouth of The LIESman.

Fri, 01/04/2013 - 19:41 | 3124173 Sudden Debt
Sudden Debt's picture

does it matter what will happen in 10 years in theory?

this system won't float for another 10!

The question when will they adress the people where they need to say that they'll devalue the currency by at least 50% to keep the lights on another day.

Pensionfunds collapsing is on of the worst things in our history that will happen.
It will break down or society.
And that's not 10 years from now!
That's in 1 or 2 years from now!

Fri, 01/04/2013 - 19:43 | 3124179 Frank N. Beans
Frank N. Beans's picture

meaningless to look out 10 years

after all, what did they say 10 years ago about today's debt?

Fri, 01/04/2013 - 19:57 | 3124212 knukles
knukles's picture

20 years ago the deficit was forecast to disappear in 10 years.
Remember?
Clinton had a year or two of "surplus" and the Fed was worried about the dwindling supply of Treasuries?

Honest injun, folks.
(speakum with forked tongues)

Fri, 01/04/2013 - 20:03 | 3124224 SKY85hawk
SKY85hawk's picture

In 2002 they were talking about Surpluses as far as the eye can seeeeeeeeeeeeee

Fri, 01/04/2013 - 19:45 | 3124184 surf0766
surf0766's picture

Their prediction was good for how many weeks?

Fri, 01/04/2013 - 19:53 | 3124203 Zap Powerz
Zap Powerz's picture

Im genuinely interested to see what happens during and after this economy collapses.

I wonder if humans will remember to never ever repeat this mistake again?

Why do humans continually try to change the laws of nature?  Wouldnt it be more productive and less painful to work with the laws of nature rather than against them?

Fri, 01/04/2013 - 20:19 | 3124261 Poor Grogman
Poor Grogman's picture

One little nibble from the tree of knowledge and everyone acts like they are a god.

We are smarter now, this time it really is different.

Nothing new to see there...

Fri, 01/04/2013 - 22:25 | 3124473 dwdollar
dwdollar's picture

So fucking true...

Fri, 01/04/2013 - 20:23 | 3124268 Radical Marijuana
Radical Marijuana's picture

We ARE working within the laws of nature! Energy goes down the path of least resistance, which, in human terms, is the path of least morality. In systems, the most labile component controls the system. In human societies, the most dishonest and violent people are the most labile component, which have evolved to control civilization.

FRAUD does not actually break the laws of nature. FRAUD simply takes advantage of the laws of nature. When "money" appears to get made out of nothing, as debts, and then those who can make money out of nothing find more and more excuses to make more and more money out of nothing, as debts, (and those numbers therefore go up exponentially, in astonishing ways, like this article points out) there is nothing happening that changes the laws of nature.

The "conquest" of nature was ALWAYS the conquest of some men, by other men, using natural laws to their advantage. There is nothing about fraud, backed by force, that changes the laws of nature. That is simply the result of the smartest people, evolving to become the best at doing that, while driving others to become too incompetent to be able to understand what is going on.

Lies, backed by violence, are working with the laws of nature, not against them. Of course, a big part of that was deliberately dumbing down enough people, so that enough of them could be fooled, enough of the time. For instance, believing in the official story about the events on 9/11/2001 requires ignoring basic laws of physics and common sense about materials like steel. But nevertheless, that was quite successfully done by the mass media, to most of the American people.

??? Your comments, Zap Powerz, would lead me to presume that you are a "reactionary revolutionary" who wants to believe in impossible ideals, and false fundamental dichotomies, and therefore, has solutions to our problems lined up like ducks in a row, going BACKWARDS.

One of the greatest triumphs of the ruanway fraudulence that controls our society is the runaway ability to brainwash people to think about things BACKWARDS, which backwardness is as profound as an infinite tunnel of deceits. I believe it is vital to understand that money is based on murder. Those who were the best at that have taken covert control over the powers of government, and have already achieved almost total privatization of those sovereign powers to rob and to kill. That is WHY there are runaway Federal government debts, leaping by the $trillions and $trillions, wherein a half a trillion can be mistakenly miscalcuted, and yet, most people will not even know that happened ...

The debt controls depend upon the death controls. That system is now totally out-of-control insanity, beyond the established systems to fix themselves. The correction of that insanity, by natural laws trumping human laws, appears to be the only thing left ... BUT, we will not like that, and it would be nicer if some series of political miracles could happen instead. The future will be a hyper-complicated working through of the discordance between human laws being legalized lies, backed by legalized violence (which still do operate within the laws of nature, because lies CAN be backed up by violence, and therefore, frauds CAN be forced through) increasingly in conflict with greater, relatively objective realities, which can not still be successfully lied about more and more, forever and ever ...

Sat, 01/05/2013 - 02:40 | 3124754 NoControl
NoControl's picture

Kipling would have something to say to that

 

Oh those pesky Gods of the Marketplace

Fri, 01/04/2013 - 19:58 | 3124206 Radical Marijuana
Radical Marijuana's picture

It must be interesting working for the CBO, where a qualification for getting your job is to not know, or to not admit to knowning, how the system really works, because then one has no chance of being hired. After the FRAUD KINGS took control over the government of the USA, everything any government employee says, especially including the puppet politicians, has to be carefully crafted to be the bullshit that pleases those biggest bullies.

Since the first rule of ideology is that people rationalize the way that they make a living, the higher level employees of the Federal government of the USA are picked to be able to do that. Their lives depend upon deliberately ignoring that the whole thing is a fundamentally fraudulent financial accounting system.

Cognitive Dissonance to infinity and beyond! The CBO appears to be like NASA, in the sense of astronauts operating in the outerspace of frauds whose numbers are in the similar magnitudes as Lightyears!

Oops, sorry about that $600 billion ...

As a comment above said, anything less than a $trillion these days can be rounded off. When EVERYTHING is based on the privatized, legalized, counterfeiting being able to make endless "money" out of nothing, no "accounting" can be rational. However, those whose job descriptions are supposed to do that are forced into their paradoxical double bind, Catch 22, that they MUST be incompetent, or appear to be incompetent, or else they would not be hired, or would be fired, since the Fraud Kings dominate the whole system!

Sat, 01/05/2013 - 03:40 | 3124795 Totentänzerlied
Totentänzerlied's picture

Is that a $1,000,000,000,000 platinum coin in my pocket or am I getting a smart-on from your posts?

PS: You could abate world hunger for a year (or do countless other ~nice~ things) for less than half of the CBO's mistake. A billion here, a billion there ... Ooh let's build a few more fighter planes.

Sat, 01/05/2013 - 12:51 | 3125239 rwe2late
rwe2late's picture

 Much the same could be said for employees of BP Oil, Goldman Sachs, Halliburton, CBS, Citibank et al.

Fri, 01/04/2013 - 20:00 | 3124215 Seasmoke
Seasmoke's picture

These clowns can't even raise interest rates .000001% without the whole Ponzi collapsing.

Fri, 01/04/2013 - 20:19 | 3124262 negative rates
negative rates's picture

Since the clowns have left the stage, yes, they can't raise rates. But it wasn't their job to raise rates, it was the Feds responsibility to be able to raise rates at the appropriate time. Which we, and now they have finally admitted, it aint gonna happen on the Feds watch at all. The mkts will raise rates and reek havock on the Feds ability to keep rates down. For if they don't, the fat lady will have sung and danced her way to glory leaving the Fed, and it's tentacles, far behind.

Fri, 01/04/2013 - 20:25 | 3124269 my wag
my wag's picture

 

 

What would you rather have?

$4.6 Trillion in debt or $4.6 Trillion coming out of the GDP?

In the Bush days we had tax cuts because:

  • we were paying off the debt too quickly (Ah...how I fondly remember that)
  • we also had tax cuts because the economy was in recession and we needed to add to the GDP

I'm all for the temporary fix of a $1 Trillion Dollar Platinum coin with the eventual implementation of MMT.

 

F the Banksters.

Fri, 01/04/2013 - 20:32 | 3124279 are we there yet
are we there yet's picture

Bernankie has been scheduled to leave the fed, and he has already bbeen offered a job as a buss driver in New Deli.      /sarc off

Fri, 01/04/2013 - 21:07 | 3124338 Bohm Squad
Bohm Squad's picture

Absurd?!?!  I don't think so...

 

I think the trillion dollar platinum coin shows a lot of foresight by those in Washington.  The way things are going, some precious metals can easily reach that valuation!

 

How soon until $1T platinum coins are trading at a 2800% premium to face value?!?!

 

[snark off]

 

 

Fri, 01/04/2013 - 21:33 | 3124388 hooligan2009
hooligan2009's picture

and in case you are wondering what interest rate lies behind the assumption it is 3%.

you can work this out using (presumably the same) simplifying assumptions used by the CBO. Firstly, that the balance on which the interest is payable is half the 400 billion in additional annual deficits. So the average balance for year 1 is 200 billion in deficit, year 2 it is the full 400 billion year 1 deficit plus half another 400 billion so the second year balance on which interest is payable is 600 billion.. year ten average balance is 3.8 trillion (3.6 from year 9 plus half the 400 billion year 10 deficit). you then solve (using excel goal seek) for the interest rate that results in an interest bill of 600 billion. 

the answer is 3%.

why is this significant?

well, let's see. todays treasury yield curve is 0.25% for 2 years, 0.8% for 5, 1.9% for  ten and 3.1% for 30 years. what do these have to do with the flat 3% interest rate assumption? NOTHING!!! 

put this 3% rate back in the equation against the 16.4 trillion national debt for ten years? hmmm..ok..will be about as valid as a finger in the air 3%, but let's try it over ten years.

16.4 trillion * 3% * ten years...compounded = a little over 22 trillion 

so, hmmm..what does this mean that us debt will be in ten years time.

22 trillion + the 4 trillion in extra deficit + the 600 billion on the new 4 trillion = 26.6 trillion.

GDP better grow at faster than the 3% interest rate or debt to gdp is going to look much worse than greece, ireland, spain, italy, and will be on the road to tokyo!!!

CBO must have had to guess a lot of numbers..i suspect that most of the numbers they have produced are ummm..crap? based on perfect excel spreadsheet progressions using fixed formulae? but then what else does wall street do. 

stop listening to economists and banks..their mathematicians are scoundrels, careless in the extreme and not interested in paying attention to detail!

Fri, 01/04/2013 - 21:51 | 3124418 inevitablecollapse
inevitablecollapse's picture

ahhh, math - not just for MIT grads!

Fri, 01/04/2013 - 21:59 | 3124427 hooligan2009
hooligan2009's picture

oh...and by the way...this excludes the actual base line fiscal deficits before the latest tax breaks given...worth ...hmmm...an average of 1 trillion per annum? remember those cbo numbers represent the changes to its bsseline..i cant be bothered catching up with the CBO's latest crap..i know it had outrageous assumptions on growth and employment

Sat, 01/05/2013 - 08:52 | 3124984 in-Credible Banker
in-Credible Banker's picture

Dude you can figure out the GDP growth assumptions by using the first tab of the Excel.  Starting with FY 2012 they are: 

 

  2.04% 3.35% 6.40% 6.52% 6.05% 5.48% 4.74% 4.49% 4.32% 4.26%

 We are gonna PARTY in 2014 onwards!!!

And the interest rates on the Public Debt as follows:

 

1.81% 1.81% 1.90% 2.16% 2.65% 3.07% 3.42% 3.67% 3.81% 3.94%

 

This Excel sheet is cool!  And - yes - this is EXACTLY the way it works on Wall St....

 

 

 

 

Sat, 01/05/2013 - 10:52 | 3125078 hooligan2009
hooligan2009's picture

you are way ahead of me...which spreadhseet are you checking out?

i tried navigating around here..

http://www.cbo.gov/publication/43835 and here

http://www.cbo.gov/sites/default/files/cbofiles/attachments/American%20T...

(groan...so tedious!)

note here from first link:

In our August Update, we projected that, under the laws in effect at the time, budget deficits from 2013 through 2022 would total $2.3 trillion. This legislation will boost deficits over that period by an estimated $4.6 trillion (including debt service costs). CBO’s next budget projections will incorporate the effects of the legislation, as well as technical revisions and the effects of a revised economic forecast.

how on earth current 1.3 trillion deficits in just one year could be truned into just 2.3 trillion over ten years is beyond me, unless this was a fradulent attempt by a poltically influenced CBO to rig estimates to suit the pox ridden drunken sailors in the white house, congress and the senate.

even the increase ten year deficit of 6.9 trillion over ten years beggars belief given the current starting point. 690 billion a year on average? the next three years will be over 4 trillion, leaving an average of less than 400 billion for the remaining 7 years.

seems to me that is not even the CBO's responsibility but a ghost party whose numbers are  " produced by the staff of the Joint Committee on Taxation". 

these people are washington staffers who the fuck are they? can they do sums? are they told to massage numbers to a "px ridden drunken sailor" outcome?

only GDP growth numbers I can find from CBO Baseline predictions in August 2012 are starting from 2011. I am betting there are multiple sources of GDP and interest rate assumptions scattered throughout the vomit soaked bar used by the sailors. looks just like the cock up that went along with lack of co-oridnation amongst " intelligence" agencies (CIA, FBI, HS, FEMA, etc etc). 

3.6% 4.4% 4.5% 5.2% 5.4% 5.2% 4.7% 4.5% 4.4% 4.4% 4.4%
Fri, 01/04/2013 - 23:34 | 3124586 A Lunatic
A Lunatic's picture

Yes Virginia, there are no unicorns.........

 

http://www.aei-ideas.org/2012/12/in-2002-cbo-predicted-2012-u-s-debt-wou...

Sat, 01/05/2013 - 00:07 | 3124630 economessed
economessed's picture

Who cares about Government debt?  It's not like we're going to pay it back. 

Sat, 01/05/2013 - 13:08 | 3125274 rwe2late
rwe2late's picture

 Well,

certainly THEY are not going to pay it back!

 

austerity (for us), inflation (theft), or revaluation perhaps (an "Ameripeso"-style scam)

How many elaborate swindles will be offered?

Sat, 01/05/2013 - 01:16 | 3124705 q99x2
q99x2's picture

Hey Porcupine give em another dose of Weasel.

Sat, 01/05/2013 - 01:16 | 3124709 H E D G E H O G
H E D G E H O G's picture

ditto...............

Sat, 01/05/2013 - 02:56 | 3124752 Element
Element's picture

 

 

"... this is where one's Excel refs out ..."

Instant classic! ... I don't think they're even trying to make sense Tyler, they aren't in control and they know it. They know policy can't do a damn thing, they failed long ago. They know it's print or nothing, so intellectual justification seems like way too much work. Lame logic is a symptom.

Sat, 01/05/2013 - 06:03 | 3124869 Disenchanted
Disenchanted's picture

 

 

 

 

CBO Admits Error

In the words of Gomer Pyle, "Surprise surprise surprise!"

Sat, 01/05/2013 - 07:05 | 3124905 katchum
katchum's picture

Indeed, if interest rates on bonds go up to 4%, which is likely. Their interest payments are going to balloon.

Sat, 01/05/2013 - 08:01 | 3124950 justsayin2u
justsayin2u's picture

1) The con-gressional bull shit office intern that omitted interest on the debt assumed the fed would buy the debt so no interest was correct.

2) the cbso determined they might get some credibility by acting so open and "admitting" thei mistake.

3) looks like e need a 2 or 3 trillion dollar coin - but to be sure e should just go for a 100 trillion dollar coin,  yeah,  thats the ticket.

 

Sat, 01/05/2013 - 10:06 | 3125032 Sandmann
Sandmann's picture

We commented as follows: "this is where one's Excel refs out

Lovely, the US runs its government on Excel !  Need to run an Anti-Virus Package through the entire Executive and Legislature before PCs are switched on. It is the Personnel that is infected with bots not the software.  When Berlin fell in 1945 they parties in the bordellos of Friedrichstrasse waiting for the Red Army to arrive - looks like Washington has a similar approach

Sat, 01/05/2013 - 10:35 | 3125066 dcb
dcb's picture

Ok, I'm not going to disagree with how silly calculations are made. but I do disagree with the headlines if one assumes that obama wanted a 250K limit and the republicans wanted none. the limiting factor on raising taxes was the republicans not Obama

Sat, 01/05/2013 - 13:00 | 3125259 TruthBeforeAll
TruthBeforeAll's picture

They're just laughing at us now.

Sat, 01/05/2013 - 13:23 | 3125298 rwe2late
rwe2late's picture

Some appear to lack confidence that our leaders are taking enough into account.

 Our leaders surely anticipate great returns for the debt spending, especially spending for the global military and financial TBTFs.

Why, once the US controls Iranian oil and Africa's minerals,

the fruits of conquest, ahem, "liberation" should astonish everyone.

Sat, 01/05/2013 - 13:21 | 3125300 sbenard
sbenard's picture

I was at a meeting with Sen. Mike Lee the day after elections. He DOES understand the magnitude of our debt and the coming interest costs, as mentioned in this article. He told us that by the end of this decade, using Obama's own budget projections, the US will be paying $1 trillion/year in interest alone on our debt. That's about half of all income tax receipts.
Sen. Lee reviewed the various options, including 1) higher taxes, which the democrats want, but $1 trillion of new taxes would cripple the economy, 2) print our way out, which would create a hyperinflationary depression, 3) a Balanced Budget amendment, which was his recommendation, but which he freely admitted couldn't get through Congress at this time, and 4) full-scale economic collapse and a rebellion of the bond markets.
Sen. Lee said option 4 is the most LIKELY to happen! In essence, he acknowledged that a calamity worthy of the Bible is a virtual certainty! Plan and prepare accordingly! Shockingly frank candor from a US Senator. At least HE gets it!

Sat, 01/05/2013 - 16:25 | 3125355 hooligan2009
hooligan2009's picture

then he should acknowlegde that the solution is to raise 15,000 per annum per household, mitigated by whatever spending cuts can be made.

the numbers are simple. 

current 1.4 trillion deficit needs to be turned into a surplus of 300 billion NOW. this is a 1.7 trillion improvement per anum in the fiscal position.

first let's assume that voters are the only ones who have to pay this 1.7 trillion every year.

115,000,000 households contributing 15,000 each would generate 1.7 trillion per annum. tax increases worth 400 billion a year have just been passed. Funny how that worked out, CBO estimates 400 billion extra to avoid the fiscal cliff and these represent tax increases...wtf? for the full burden to fall on the household sector there needs to be 1.3 trillion in benefit cuts to come, in the next round of talks. (think dropping all medicare, medicaid, vet benefits, SNAP by a third to a half)

Of course, this 1.3 trillion from households can be mitigated by action to raise taxes in the corporate sector or from cuts in the defense budgets. corporates are guilty as sin during this whole fiscal crap shoot; offshoring jobs to evade US tax (and the income taxes paid on earnings to US workers), then withholding cash overseas to further evade repatriation of the "overseas sourced" profits that could only have been generated with the US infrastructure used to gain the capital. Thank you Clinton and Gore..someone should force you to wear stained red dresses for this "inconvenient truth". 

Getting 200 billion a year out of corporates (especially banks and insurance companies) drops the burden on households to 1.1 trillion, dropping the defence budget to levels prevailing prior to 9/11 (obama is dead); that is from the current 600 billion to just 300 billion. why is it so hard to replace manpower with technology in the military; perhaps i am missing the removal of able bodied men who would otherwise get pissed off living in the usa.

check this out: http://www.globalissues.org/article/75/world-military-spending (the us bit is 3/4 the way down)

that makes 500 billion between corporates and defense and lowers the burden on households from 1.3 trillion to 800 billion per annum, for a contribution of 7,000 per household.

the 300 billion surplus needs to be maintained for ten years to retire 3 trillion out of 16 trillion of debt - bringing debt to gdp down from 100% of GDP to "only" c. 80% of GDP.

now let's see which politician has the balls to stop being a pox ridden drunken sailor and can start being more like Chester Nimitz.

 

Sun, 01/06/2013 - 10:52 | 3126893 justsayin2u
justsayin2u's picture

Eliminate medicare.  Thats a good start.  Thow in term limits.

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