Budget and Economic Outlook: 2010 to 2020

[Mike_03]

This link is offered for your consideration.

http://www.cbo.gov/ftpdocs/108xx/doc10871/01-26-Outlook.pdf

This goes beyond party, partisanship, any kind of divisive barricade you can fabricate.

Bottom line: What do we do about this?

For one thing, I would love us to get the hell out of Afghanistan. I know Obama means well, but this is a lost cause that will cost us a fortune.

And I say this as a devout fan of President Obama. He is the most ambitious, intelligent and sincere President I have seen in my lifetime.

But we are coming up against a disaster, regardless of our party affiliation.

[Zynx]

1. This is manageable with modest tax increases and spending controls.

It need not be drastic.

[Mike_03]

2. Maybe undo Bush tax cuts.

In in the interest of being objective I understated how much I love this President, but when I read the CBO report I realized the magnitude of the issues we face.

This is not the fault of our administration, clearly, but the last eight years have been an irresponsible horror.

[Igel]

3. That's in there.

I say foolishly confidently, having not read it. But I've read others and know how they usually go.

The assumption has to be that the laws on the books stay on the books unchanged. So the middle class tax cut and child tax credit that dems have said they'll continue are assumed in that report to end in 2011. They have to assume that the economy in the future behaves as it has in the past.

On the other hand, these reports are seldom correct. Simply because the assumptions they have to make aren't always reasonable but are nonetheless required. First, look at the assumptions. Then look at the predictions.

Remember the report predicting what -- a $1 trillion budget surplus? It had one little problem: It assumed no recessions and no increased spending, that the budget rules would continue uninterrupted. Of course we got a recession early in 2001. Spending increased, both for stimulus and, in short order, military. And the budget rules changed. But hey -- just because every major assumption was seriously flawed doesn't mean it wasn't a report.

[Zynx]

8. It did assume increased spending, though at the 1990s rates.

Those were considerably lower than what happened. Also, the long term forecasts do have rates of growth that bake in about one recession per decade. They tend to straight-line growth rates at around 2.5%. During expansions we typically do around 3.5%. The reason they use these lower rates is that there is the assumption that the average will be brought down by a recession somewhere in there.

The problem is that recessions have a decidedly different impact than just shifting averages. Due to numerous provisions regarding capital gains and corporate income taxes, the effects of recessions stay in the revenue stream for many years. I think rather than straight-lining they should show what happens with to revenue streams with different timing for recessions (ex: this is what happens if we have a recession in 2012-2013, 2014, 2016, etc) just to show how the long term effects are different under those scenarios.

[Zynx]

4. The Bush tax cuts have to be reversed and additional tax increases have to be added on.

The trick is to narrow the budget deficit dramatically before 2014 because then the debt service in the out years will be heavily reduced from current projections.

[fasttense]

5. Roll back the Raygun tax cuts for the uber wealthy and stop paying for the bush wars.

The problem solved.

Bush can pay for his own wars and Raygun gave us the 1st of many crashes directly due to his tax cuts.

[Zynx]

6. I think the top rate should go up to at least 45%. The next highest rate should go to 40%.

End the foreign entanglements we are engaged in, reduce defense related R&D, raise the Federal gas tax, and these items put together would reduce the budget deficit to the point that debt service forecasts in the out years would be up to 20% lower. That has a huge impact on the overall balance.

[Mike_03]

7. Your ideas are all good. Raise revenues by raising taxes on the rich and what about

lowering some costs. I love President Obama more than I can even put into words, he is the best thing that has ever come into politics, so far as I am concerned, but could we possibly get out of these wars???? Get the hell out of Afghanistan and pull all troops out of Iraq.

We have no hope of helping either of those locations.

I wish them well, but we can't help.

[Zynx]

9. The wars do have to end for the budget to be balanced.

We also have to cut defense R&D and procurement. Those have been allowed to run wild for far too long now.

[Mike_03]

10. I love this plus or minus feature. This is new since I was last here.

Is it working? It seems like it might backfire depending on certain foreseeable factors. But it is cool, I have to admit. There were so many posts I would have loved to de-rec.

Well, regardless, hats off to this experiment.