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Some Troubling Numbers From The CBO
In its latest long-term budget outlook, the Congressional Budget Office has some troubling numbers.
According to the CBO, the long-term budget picture of the US, having seen a modest rebound in recent years, is about to take another big step down driven primarily by the US demographic shift. Specifically, it says that if current laws on taxes and spending remain, "deficits and federal debt held by the public would remain roughly stable in the near term, reflecting the anticipated further strengthening of the economy and constraints on federal spending built into law" however it cautions that "the outlook for the budget would steadily worsen over the long term."
Well, one can debate whether the US economy is strengthening, especially when one considers that in reality quite the opposite is taking place...
... confirmed recently by none other than Goldman which last month cut its long-term potential growth rate for the US by half a percent from 2.25% to 1.75%.
That about covers the persistent upside bias to CBO forecasts. Now the downside.
According to the CBO, "mainly because of the aging of the population and rising health care costs, CBO's projections show a substantial imbalance in the federal budget over the long term, with revenues falling well short of spending. As a result, budget deficits are projected to rise steadily and federal debt held by the public is projected to exceed 100 percent of GDP by 2040, a level seen only one previous time in US history - the final year of World War II and the following year."
There's that World War II reference again.
Visually, this looks as follows:
The projected rise of the debt in question:
And while the CBO expects a gradual, constant increase in the net interest outflows (once again a very optimistic estimate) rising to a little over 4% of GDP from the current level of just about 1%, it is the US health care programs meant to take care of an ever older population that trouble the CBO the most:
Growth in the major health care programs - Medicare, Medicaid and subsidies for health insurance purchased through exchanges created by the Affordable Care Act - and Social Security is projected to exceed the decline in other noninterest spending relative to GDP.
The main drive for the deteriorating US budget picture is a simple one: an ever older population, one which demands increasingly more welfare spending.
The aging of the population will increase the share of the population receiving benefits and also affect the average ago of beneficiaries. Health care costs per beneficiary, adjusted for demographic changes, will grow faster than economic output per capita as they have historically. Finally, enrollment in Medicair under the ACA and the number of people receiving subsidies for health insurance purchased through the exchanges are projected to continue toi increase.
This in chart format:

So what can the government do to put the country on a sustainable path? Simple: enact austerity.
To put the federal budget on a sustainable path for the long term, lawmakers would have to make major changes to tax policies, spending policies, or both - by reducing spending for large benefit programs below the projected amounts, letting revenues rise more than they would under current law, or adopting some combination of those approaches.
And here are the troubling numbers in question, numbers which would put the Greek austerity to shame, because according to the CBO if the US wants to return back to its long-term debt/GDP average of 38% of GDP, it needs to boost revenues by 14% or slash spending by 13%. Alternatively, if it wants to keep debt/GDP at its current level of 74% of GDP, the US will need to boost revenues by 6% of cut spending by 5.5%.
Unfortunately for future US generations none of those will happen, which is why the "worst case" debt/GDP forecast in which the CBO is proven to be optimistic, as it always is, about mortality decline, productivity growth, interest and spending growth on Medicare and Medicaid, and which results in 144% debt/GDP in 2040 will be proven to have been far too low.
Source: CBO
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WEALTH. TAX. Prepare your anus.
Just to refresh everyone's memory -- the crying and gnashing of teeth about the government shutdown last year was over less than 2% of GDP.
Just say'in.
Have an international exit plan. I recommend rural German real estate.
Nice timing to release this report immediately before an important Fed announcement on interest rate policy.
These reports are yet another waste of taxpayer money spent on status quo promoting propaganda anyway. CBO estimates are always the best case scenario, and consistently underestimate the largesse of the government while overestimating the capacity of the Fed or gov to stimulate the economy. Worthless assumptions always lead to worthless results.
Garbage in, garbage out. There's your condensed version of every CBO report.
Well, we know they sure don't want to push what the GAO says. It's too, too...
Bullshit numbers to support bullshit projections.
bingo....seriously, they're planning on keeping spending relatively flat for the next 25 years!!! How can they say this with any sincerity at all!
What would the model look like if they threw a war into the mix? What does it look like if interest rates have a mean regression event?
There was $80 Billion per month for a year for Wall Street in QE3, and it was not a problem.
If they want to keep the serfs toiling on their debt plantation, they have to pretend this is a problem.
WEALTH. TAX. Prepare your anus.
Never thought that Gold or Silver was a Lube.......................you learn something new every day
Translation:
Can you say "austerity"?
Then again, the crushing deflationary implosion ahead will take care of that by itself.
u want troubling? go listen to the ron barron interview from this morning on CNBC; first democrat to wave the white flag on inflation, admitting its been the feds mission all along to make rich richer.
"i asked someone in my office the other day how much was it for a big-mac: they said 5 bucks. when i was in law-school, it was a dollar!"
oh, and when becky asked if there is any way this has a possible happy ending, he dodged it. basically said more inflation everywhere (so-long as its in the stock market also, all is well).
Federal debt held by the public.
Does that refer to the Fed or China?
Hahah. Lies, damn lies, and governments stats. Lets just tweak this bitch a few percentage points here and there and all will be fine. From the same group of asshats that assert unemployment rate is what? 5.5%???
See John Williams of Shadowstats and compare numbers using proper accounting principles. Defecit spending is completely out of control and the true debt numbers are being hidden. Cut all entitlements completely and the fed still doesnt collect enough to cover out of control spending.
From the same group of asshats that assert unemployment rate is what? 5.5%???
Every statistic about the US economy is now a lie as David Stockman looks at 5.5% unemployment:
At the present time, there are 210 million adult Americans between the ages of 16 and 68—to take a plausible measure of the potential work force. That amounts to 420 billion potential labor hours, if we accept the convention that all adults are at least theoretically capable of holding a full-time job (2,000 hours/year) and pulling their share of society’s need for production and work effort.
By contrast, during 2014 only 240 billion hours were actually supplied to the US economy, according to the BLS estimates. Technically, therefore, there were 180 billion unemployed labor hours, meaning that the real unemployment rate was 42.9%, not 5.5%!
Yes, we have to allow for non-working wives, students, the disabled, early retirees and coupon clippers. We also have drifters, grifters, welfare cheats, bums and people between jobs, enrolled in training programs, on sabbaticals and much else.
http://davidstockmanscontracorner.com/the-warren-buffett-economy-why-its...
US wants to return back to its long-term debt/GDP average of 38% of GDP, it needs to boost revenues by 14% or slash spending by 13%. Alternatively, if it wants to keep debt/GDP at its current level of 74% of GDP, the US will need to boost revenues by 6% of cut spending by 5.5%.
The CBO sugar coats everything, a hundred times over. Here the facts about long-term US debt - Long-Term US debt to GDP is over 1200% today as Kotlikoff explains:
“I told them the real (2014) deficit was $5 trillion, not the $500 billion or $300 billion or whatever it was announced to be this year. Almost all the liabilities of the government are being kept off the books by bogus accounting. . . . The government is 58% underfinanced . . . . Social Security is 33% underfinanced . . . . So, the entire government enterprise is in worse fiscal shape than Social Security is, but they are both in terrible shape.” So, how much is America on the hook for in the future? Kotlikoff contends, “If you take all the expenditures that the government is expected to make, as projected by the Congressional Budget Office (CBO), all the spending on defense, repairing the roads, paying for the Supreme Court Justices’ salaries, Social Security, Medicare, Medicaid, welfare, everything and take all those expenditures into the future . . . and compare that to all the taxes that are projected to come in, and the difference is $210 trillion. That’s the fiscal gap. That’s our true debt.”
http://usawatchdog.com/financial-system-will-collapse-just-a-matter-of-w...
210 trillion isnt much . . . if you say it fast.
Enron accounting 101.
This is all very bullish for bringing much-needed liquidity back to the Treasury market. So the Fed can do QE4, 5, 6......
CBO optimism = Avoiding WW III
The Greatest Generation and their Boomerangs .... who created the wealth .... will not be allowed to enjoy .... the fruits of their labor and sacrifice .... Muslim immigrants and welfare brown rats .... will spend the inheritance .... most ungratefully !
CBO what a crock of shit. embarrassingly false numbers.
A return to Eisenhower-era income tax levels would fix all that mess yesterday.
When there is a decreasing pool of disposbile income across the bottom 80% of US workers, raising income taxes forces more people into the welfare system.
No, it would not. And, don't forget that back in that by-gone era people actually felt shame in seeking a handout .. today it is celebrated. Just like the song says ... most people today want the money for nothing and their chicks for free ...
My guess is they will cut revenue by 14% and boost spending by 13%.
Not even worth caring about at this point.
ZERO possibility of a bloodless ending.
America is over. Most just don't know it yet.
According to the CBO, the long-term budget picture of the US, having seen a modest rebound in recent years, is about to take another big step down driven primarily by the US demographic shift. Jezzus H Christ! Now it's a demographic shift!!! Are you kiding me, next month it will be area 51 UFO's fucked up the economy and stole all the money. Our government is total and conplete bullshit and propaganda now,.
Keep contributing to your 401k! .gov is going to need your help /s
The Just-Us department will ensure the 401K raiding is done legally.
letting revenues rise more than they would under current law...
love how they word that, letting revenues rise, lulz
gee, that was easy! take another bonus out of petty cash boyz!
To have .... and to have not .... now .... To have had .... and to have wanted not !
In 30 Years most of us boomers will be long gone. GenX, Millennial crowd has to wait out the storm. Need some charts to show what happens then?
two hoots a newbie shill. Don't be confused.
All we need to do is have granny take the blue pill.
I am not worried - we will soon hear endless TV ads about how our politicians and candidates in the 2016 elections are going to get us more jobs with higher wages, and will be cutting wasteful government spending. Surely they can fix the problem??
And surely if they can, they won't.
I love predictions for 25 years out.
2040....?!?
At the current rate of change in global debt (sovereign, corporate, personal), the system will collapse on itself long before then.
One of these days, weeks or months, we are just going to hear a loud "pop" and the great unwind will begin in earnest.
Massive hyperinflation is coming for any dollar-based economies in the not-too-distant future....
Ever larger government needs to take more from the masses.
When you have 50% living off the government tit you have a move to socialism.
More people are going to be living off the government tit in the future.
"Ever larger government needs to take more from the masses."
- Ever larger USG & Ever more US Owned by Foreigners.
Hey, CBO where is the chart of Foreign Property & Business Ownership in USA & our Debts?
Trend line would show decreasing Tax Revenue from Monetary Leakage/Economic Leakage from Off-Shore Production, Outsourcing Services overseas, and Profits & Revenue to overseas tax Jurisdictions... plus foreigners that send money home to families.
Federal Debt Held by Foreign & International Investors as Percent of Gross Domestic Product, 2014:Q4: 34.75940 Percent of GDP,
http://research.stlouisfed.org/fred2/series/HBFIGDQ188S
Current Account Balance: Total Trade of Goods for the United States©, 2013: -703,911,000,000 US Dollars,
Sum Over Component Sub-periods (2013 was last data),
http://research.stlouisfed.org/fred2/series/BPBLTD01USA637S
http://www.bea.gov/newsreleases/international/intinv/iip_glance.htm (wow huge trend, $31 Trillion in Foreign Property ownership in the USA vs $24 Trillion US Ownership of Property in Foreign Countries)
- What about a US Trend Line in Usury, Payday Loans, Bank Fees?
Monetary interest paid: Households and nonprofit institutions
2013: 615.9 Billions of Dollars (+ see more)
Annual, Not Seasonally Adjusted, W291RC1A027NBEA,
- What if Utilities, Property Taxes, Local Taxes, Housing, Insurance, and Food all inflate due to the burden of Fraud, Waste & Abuse by Bankers & the Federal Government....? Cause that is what it looks like is coming down the pike.
- What if US Treaties & Trade Agreements (NAFTA, TAP, TTIP, TAA, TPA) create bigger monopolies which control the costs & quality of products even more than today so that Drug Prices, health Care, Education, Housing, Home Furnishings, Appliances... all the prices go up and with "Sticky Prices" then never come down again... since they are monopolies that use slave trade.
- Throws all your CBO Numbers off doesn't it?
Bankrupt since 1971. Thanks Tricky Dick.
And not saveable without pain since about 1982.
They knew some wealthy didn't pay any tax on Income since like 1968 and since then it has spawned an industry in Tax Avoidance, Tax Planning, Tax Lobby, Financial Advisers, Off-shore Experts....
If they just got Corporations & Wealthy to pay a patriotic share, problem fixed. Instead we have industries of a million employees who add no value to the USA and help Monetary leakage to Off Shore Tax Havens. (paper Pushing)
http://www.bloomberg.com/news/articles/2015-06-17/wal-mart-has-76-billio...
Well okay we have too many problems caused by Lobbying to actually fix more than a couple of problems with tax jurisdictions.
I love how they use the lower number of public debt, 74% of GDP vs the "real" number 106% of total debt. Only in the world of accounting magic can you owe yourself money.
25 year projections? WTF these clowns can't even get 5 or 10 year projections right. Their 1999 projections had public debt as a % of GDP to be only 9% by 2009. In reality it was 60%.
If we add in money we owe ourselves, the FED and state debt this number currently stands at 120% of GDP.
Yeah I always hate these CBO Charts. If you look at the Increases in Federal Spending they were exponential from the trend lines if not by math.
- US Education (State & Fed) $1.1 Trillion
- US Medicare/Medicaid $1.1 Trillion
- US Social Security (with Admin) $1 Trillion
- US DoD, MIC, Security, Prisons nearly $1 Trillion
CBO: "So what can the government do to put the country on a sustainable path? Simple: enact austerity."
Well Reorganization, massive Federal Reforms, Simplify Banking, Finance, Income Tax or VAT Tax, Regulations, End Corporate Bailouts, End Corporate Socialism, End Off Shore Tax Jurisdiction, End Lobbying for Loopholes, End Lobbying, gift giving, Campaign Contributions, limit the Activities of Lawyers to type up courts with expensive legal team paid by wealthy/corporate powers, speed up courts with benchmarks, guidelines, and streamline all useless no value added Employment in the USA, use GAAP Accounting as a standard, standardize financial instruments, reform financial ratings organization so that high admin costs and high compensation for executives is penalized(disincentive greed).
CBO is not a great economist. Much of Federal Money goes into the hands of a few who are getting rich.
CBO should know that.
Redirecting corporate socialism to infrastructure would greatly stimulate Economic Growth while avoiding an Economy with little money flows.
Maybe that is really what CBO wants, but can't say it. Massive USG Reforms & Restructuring.
Wait - so you are implying that numbers still have any real consequences, even just sometimes??
Imagine setting up a factory in the open on a large slab of concrete.
No building, no doors, no locks, and no security for your assets, raw materials, and product.
Imagine the levels of theft and how difficulty operating like so.
That is how the American economy, controlled by Zion's banksters, operated--daily plundered.
Liberty is a demand. Tyranny is submission..