The latest congressional report released last week stated that the United States long term fiscal problems are even worse than the budget President Obama submitted last month. The Budge Office predicts that the President’s budget plans would generate deficits over the upcoming decade that would total $9.8 trillion dollars. That’s $1.2 trillion more than was predicted by the administration.
The CBO projects slightly lower economic growth than the White House and says its future year predictions of tax revenues are more pessimistic. The deficit picture is now much worse since the recession that started at the end of 2007. Economists are saying that the present size of the deficits are unsustainable and could put upward pressure on our interest rates, and erode the nation’s standard of living.
The White House Budget Plan of February 1st, which is a stand-pat document that avoided difficult decisions on curbing the growth of federal benefit programs like the Medicare health care program for the elderly and Medicaid, which provides health care to the poor and disabled.
Obama instead has created an 18 member fiscal reform commission that’s working to submit a plan to shrink the deficit to 2 percent of the economy within five years. However, Republicans to be named to the panel will probably not go along with any tax increases that could be proposed, which could ensure election year gridlock.
The report states that extending tax cuts enacted in 2001 and 2003 under then President George W. Bush and continuing to update the alternative minimum tax so it won’t hit millions of middle-class taxpayers would cost $3 trillion over 2011-2020. Obama wants to extend the tax cuts that expire the end of this year, except for individuals making more than $200,000 a year and couples making $250,000.
So, for the ongoing budget year, CBO predicts a record $1.5 trillion deficit. Actually, that is a little better than the White House predicted, but at 10 percent of gross domestic product, it is still bigger than any deficit in history, other than those experienced during World War II.
Helen L. Price
(Excerpt from Associated Press)
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