Michael Jackson is on the front page of just about every newspaper today. Buried within your newspaper you might find a story that is, I dare to say, a bit more important.
The Congressional Budget Office has just released two reports--one on Obama's budget, the other on the long-term fiscal outlook--that give some more concrete numbers on the coming growth of both the annual deficit and the long-term debt. Of course, it's nothing new that America isn't in great fiscal shape, but attaching numbers to that realization is necessary to really comprehend what's going on.
The CBO finds that under President Obama's budget, the deficit would be $9.9 trillion, or 9.9 percent of GDP, in 2009. Accompanying this, the CBO also finds the total debt held by the public to rise from 57 percent of GDP in 2009 to 82 percent (!) of GDP in 2019.
Repealing the Bush tax cuts doesn't save us. It's true that, as the Washington Post points out, under the CBO's "baseline scenario," under which they assume the Bush tax cuts are not extended and other policies are changed, the debt would hit 42 percent by 2019. That's a lot different than 82 percent. But the difference in revenues created by the allowing the Bush tax cuts to expire is the difference between revenues being 19.9 percent of GDP in 2013, or 18.9 percent of GDP in 2013. Those "other policies," not spelled out by the Washington Post, make a big difference. For one, the alternative fiscal scenario--where debt hits 82 percent in 2019--assumes that Medicare's physician payments grow at a faster rate. It also assumes that federal spending related to the fiscal stimulus is temporary and will expire.