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CBO Sez: Obama Kilt Us July 22, 2011

Posted by geoff in News.
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I was reading through the CBO’s July 14 report, succinctly titled, “The Macroeconomic and Budgetary Effects of an Illustrative Policy for Reducing the Federal Budget Deficit.” But getting past the title is worth it. Basically the document answers this question (though it’s a pretty crude analysis):

What effect would reducing deficit spending by $2 trillion over the next 10 years have on the economy?

And the answer is:

  • The GNP would be boosted by 1% in 2021
  • The cumulative deficits would be reduced by an additional $185 billion as the economy improves
  • We’d pay $400 billion less in interest over those 10 years
  • Adding it all up, the cumulative deficits would be reduced by $2.6 trillion

What’s the down side? Well, in the near term (the first 3 years), the economy would be suppressed, since the government wouldn’t be propping it up with so much deficit spending. By 2015, though, the long-term benefits cancel out the short-term penalties, and after that the situation just keeps getting better.

The moral of the story is: If you just take your medicine in the early years, life gets much better a bit later.

Which brings us to the present administration’s budgets. If Obama had kept his deficit spending at Bush’s level, he would have spent $2 trillion less over the past 2 years. So just put a minus sign in front of all those benefits listed above, and that’s what the Obama budgets have cost us so far.

The growth penalty is particularly bothersome – we don’t need to lose 1% of GDP in 2019 (10 years after his first budget). So although the CBO didn’t say it explicitly, you can just reverse their conclusions and realize that we’ll be suffering from the economic damage Obama has caused for a generation.

Yup, he done kilt us.

Comments»

1. geoff - July 22, 2011

I edited this a couple of times after posting – my apologies to anybody who read the earlier version(s) and is now confused.

2. wiserbud - July 22, 2011

well, aren’t you just a bright little ray of sunshine, huh?

3. Mitchell - July 22, 2011


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