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Scary Graphics from the CBO July 20, 2014

Posted by geoff in News.
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The CBO released a damning report last Tuesday, showing what the perpetuation of today’s economic policies would mean in the long term. No one seems to have noticed, but it’s pretty much an unalloyed message of doom and despair. Monty would eat this up.

If you’re not inclined to read it, allow me to sum up:

I hope you’re enjoying life right now, because it’s just going to get worse.

Here’s a tearjerker to get you started:

the-2014-longterm-budget-outlook-in-26-slides-19-1024

Oof. That’s some debt we’re doomed to pile up. 111% of GDP by 25 years from now (using their “extended baseline with economic feedback” scenario). And of course there’s nothing keeping it from continuing on that path thereafter.

Want some even better news? The CBO projection doesn’t include the effect of increasing interest payments on the economy, so it’s a tad (a tad = very) optimistic. It also assumes real GDP growth of 2.3%; over the past 10 years we’ve averaged 1.7%.

You may be wondering how this deficit is being generated. Actually, I’m sure you know already, but the answer is even worse than you think. Yes, it’s increased spending that’s the culprit, but look at the projection for 2039 compared to this year:

the-2014-longterm-budget-outlook-in-26-slides-17-1024

Yup, they’re increasing revenues, but the increased spending overwhelms it, creating a bigger deficit gap that we have today.

And who’s gonna not-quite-pay for all the increased spending? Like you had to ask. You, me, and all of the other people with jobs, of course. As usual:

the-2014-longterm-budget-outlook-in-26-slides-13-1024

So yeah, you’ll be seeing a 10% increase in taxes over the next 25 years, while enjoying a front row seat to watch the economy circle the drain.

Comments»

1. Mitchell - July 21, 2014

So do economies in the southern hemisphere circle the drain in the opposite direction of economies in the northern hemisphere?

2. geoff - July 21, 2014

I think so.

But they all make the same sucking sound when they finally go down.

3. Michael - July 21, 2014

The problem with CBO reports is that the are often meaningless because they begin with assumptions (sometimes required by law) that are foolish. So you get GIGO that everyone rightly ignores.

Here, for example, Geoff tells us that CBO has attempted to model what the “perpetuation of today’s economic policies would mean in the long term.” All we know for a fact is that today’s policies are unlikely to survive even in the short term, and that in the near future the economy will be moved by drivers that we cannot presently anticipate. Nobody takes a 25 year forecast seriously, nor should they. Real life businesses generally ignore anything longer than 10 years.

Those are silly graphics, not scary ones. To be sure, our current policies are deliberately mortgaging our children’s future to some unknown but substantial extent, many of us deem this plunder of our progeny to be unconscionable, and the willingness of our leaders to kick the can down the road is deplorable. But frivolous graphics from the CBO do not really contribute much to the debate.

4. geoff - July 21, 2014

It’s true that these long-term projections are likely to be wildly inaccurate, but I think the inaccuracy is all to the optimistic side. We will be wishing these projections were accurate when 2039 rolls around.

5. Retired Geezer - July 21, 2014

I’ll be almost 100 in 2039.

*stockpiles pennies

(and thank you geoff for putting a post up)


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