Federal Deficit Outrage
(The New American) -- by Bob Adelmann --
Back in August of 2010, the Congressional Budget Office estimated the federal deficit for 2011 to be $1 trillion. On Thursday, after revising its assumptions, the CBO announced they missed the mark by $500 billion. The deficit number has been revised upward to $1.5 trillion, and could bring the national debt to $20 trillion by 2021.
Back in August the CBO assumed that the Bush tax cuts would end in December, that doctors would get another financial haircut under Medicare, and that unemployment benefits wouldn’t be extended. It also assumed modest growth in the economy and consequently in tax revenues and that spending would be somewhat restrained. The CBO was wrong on all counts, and the difference between anticipated revenues and spending has virtually exploded.
One of the annoying assumptions, of course, is that the extension of the Bush tax cuts is considered a “cost” to the government. That assumption is based on the concept that all revenues belong initially to the government, and then as that government allows individuals to keep part of their incomes, those are considered costs to the government. It is the concept of human rights turned on its head.
In its report, the CBO points out that, despite the stimulus programs under the Bush and Obama administrations, employment (which declined by 7.3 million jobs during the Great Recession) only gained 70,000 jobs “on net” between June 2009 and December 2010. Consequently, tax revenues have fallen to just 14.8 percent of GDP, a low unmatched in decades.
But, not to worry. As the CBO points out, by 2014 the deficits will be in decline again, to below $700 billion a year. But that assumes that the Bush tax extension ends in 2012, thus increasing government revenues once again. If those tax cuts are extended however, deficits will increase by between $400 billion and $500 billion each year thereafter.
Simple math concludes that deficits could add another $6 to 7 trillion to the national debt by the end of the decade, with the present $14 trillion looking paltry indeed...MORE...LINK