This more realistic “current-policy” budget baseline reveals a ten-year deficit of $13 trillion. The annual budget deficit never falls below $1 trillion, and reaches $1.9 trillion by 2021. At that point, the $25 trillion debt would exceed the size of the entire economy – and even that assumes a return to peace and prosperity.He also adds these very sobering notes:
These deficits are driven by spending. Even if all the 2001 and 2003 tax cuts are made permanent, tax revenues (historically 18.0 percent of GDP) would climb to 18.4 percent by 2021. Yet federal spending (historically 20.3 percent of GDP) is projected to soar to 26.4 percent by 2021. By that point, 100 percent of rising long-term deficits will result from above-average spending. There is no long-term revenue decline.
* Between 2008 and 2021, the annual cost of Social Security, Medicare, and Medicaid is set to rise from $1.2 trillion to $2.2 trillion (adjusted for inflation);These spending and deficit figures are unsustainable. In order to avert an economic crisis, Congress must substantially rein in non-defense discretionary spending, enact multi-year caps, and then begin fundamental Social Security, Medicare, and Medicaid reform. Small budget tweaks and freezes are no longer sufficient. If this means also trimming the Pentagon then so be it. Having a first rate military will do us no good if we can't afford ever to use it when we need it.
* Letting the tax cuts expire for those earning more than $250,000 would close just 5 percent of the budget deficit over the next decade. The $736 billion price tag is a fraction of the $21 trillion cost of Social Security, Medicare, and Medicaid over the decade;
* Between 2009 and 2021, the national debt would increase by $150,000 per household. By 2021, net interest alone would cost $1 trillion – nearly one-half of all tax income revenues; and
* Over what would be President Obama’s eight years in office, baseline budget deficits are projected to total $9.9 trillion— triple the $3.3 trillion in deficits accumulated by President Bush.
If Congress fails to do this, and if President Obama fails to go along with significant spending cuts, they will be responsible for deliberately driving the entire nation over an economic cliff. There can be no question that entitlements like Social Security, Medicare, Medicaid, and Obamacare need to be reformed or eliminated. The only question should be about the best way to do this. Anyone in Congress or among the commentariat who seeks to obstruct reform and calls for maintaining the status quo should be considered to have forfeited any claim to be taken seriously.
UPDATE: Already Senate Democrats have announced that they are not interested in reforming Social Security in any meaningful way. Over the next decade Social Security will run up a deficit of a half a trillion dollars, and the President in his State of the Union scarcely mentioned it. Are these people simply in denial or do they actually want to turn us into an economic basketcase?