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Wednesday, July 20, 2011

Obama's Proposal: Increase Debt Extra $26B This Year, $83B Next Year, $2.7T Over Decade

President Barack Obama

(CNSNews.com) - While the Republican-controlled House of Representatives has voted this year to approve House Budget Chairman Paul Ryan's (R.-Wis.) proposal--that would put the government on a gradual path to a surplus by 2040--and plans to vote on a balanced budget amendment next week that would cap federal spending at 18 percent of GDP, the only budget proposal President Obama's has publicly revealed in 2011 would, according to the Congressional Budget Office, increase the deficit by $26 billion this year, $83 billion next year, and $2.7 trillion over the next decade.

Additionally, although annual budget deficits would decline somewhat between 2013 and 2015 under Obama's proposal, according to the CBO, after that they would start increasing again, going up every year from 2016 to 2021, the last year estimated by the CBO.

In short, the only budget proposal Obama has put forward this year for the public to review and analyze puts the federal government on a path to eventual bankruptcy.

In the latest Congressional Budget Office's analysis of the president's budget--published in April--the CBO compared its "baseline" estimates for the coming decade to what it estimates would be the fiscal results of Obama's budget plan. (The CBO's baseline largely assumes current law will be maintained.)

"According to CBO's projections, if all of President Obama's budgetary proposals were enacted, they would add $26 billion to the baseline deficit for 2011," said the CBO analysis. "As a result, the 2011 deficit would total $1.43 trillion or 9.5 percent of Gross Domestic Product." Under the baseline projection, as of April, CBO estimated the deficit this year would reach $1.399 trillion.

"In 2012, the deficit under the President's budget would decline to $1.2 trillion, or 7.4 percent of GDP, CBO estimates. That shortfall is $83 billion greater than the deficit that CBO projects under the current baseline," said the CBO report. "Deficits in succeeding years under the President's proposal would be smaller than the deficit in 2012, although they would still add significantly to the federal debt."

"In all, deficits would total $9.5 trillion between 2012 and 2021 under the President's budget (or 4.8 percent of total GDP projected for that period)--$2.7 trillion more than the cumulative deficit in the CBO baseline," said CBO.

Under Obama's budget proposal, according to the CBO, after 2012 the year-to-year annual deficits would only decline until 2015, when the deficit would be $748 billion. After that, the deficits would begin increasing again--year after year. By 2021, the last year in the CBO projections, the deficit under Obama's plan would be $1.158 trillion. That would be marginally less than the $1.2 trillion deficit CBO estimates will occur in 2012 under Obama's plan, but it also would be $429 billion higher the $729 billion deficit the CBO estimates would occur in 2021 if current law were simply maintained as assumed by CBO's baseline estimate.

Although CBO does not estimate the effect of the Obama budget past 2021, it does show that from 2016 to 2021 the Obama budget proposal would see increasing deficits every year. In other words, if Obama's budget were enacted, according to the CBO, Obama not only would increase the deficit by $2.7 trillion over current law over the next decade, but also, when he left office in 2016, he would be leaving the government with the prospect of ever increasing annual budget deficits.


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