When dealing with the massive spending levels of the federal government, a small rounding error can add up to big money. Now it looks like the amount of debt President Obama’s budget will generate in the coming decade will be $2.7 trillion more than expected. Oops.
The Congressional Budget Office (CBO) on Friday updated its analysis of the government’s red ink and found the fiscal hole deeper than expected. “For the 10-year projection period as a whole, the deficit that would result under the President’s proposals - $9.5 trillion, or 4.8 percent of GDP - would be $2.7 trillion greater than the cumulative deficit projected under current law,” CBO’s report explained.
In concrete terms, that means today’s public debt of $14.2 trillion will balloon to $23.7 trillion by the year 2021. For each American who pays taxes, that represents a $260,000 liability. The jumbo-sized deficits have a real impact on taxpayers who will end up spending more of their money on interest. That’s the case under Mr. Obama’s budget, where interest payments nearly quadruple from $260 billion to $931 billion a year in 2021. That means 3.9 percent of the nation’s entire productive output will be devoted not to funding present government operations, but to covering the excess spending of an administration long past.
The House Republican majority has been saying the right things about reducing government spending - reducing any amount of current-year expenditures represents a breakthrough achievement in this town. The problem is that even Republicans are using Washington math, not actual arithmetic. Their proposal is to cut $61 billion from the president’s proposal, not from last year’s spending. Even if the Republican majority could push their plan into law, 2011 spending would be $3.59 trillion - a 4 percent increase over the $3.46 trillion spent in 2010.
Americans who have cut back during the tough economic times have no patience for a Congress and administration that refuse to show any amount of true restraint. A real cut starts at $200 billion, and the Republicans should demand no less.