CBO’s preliminary analysis of President Obama’s budget proposal is out this month and it has a sharp critique:
According to CBO’s projections, if all of the President’s budgetary proposals were enacted, they would add $26 billion to the baseline deficit for 2011. As a result, the 2011 deficit would total $1.43 trillion, or 9.5 percent of gross domestic product (GDP). In 2012, the deficit under the President’s budget would decline to $1.2 trillion, or 7.4 percent of GDP, CBO estimates. That shortfall is $83 billion greater than the deficit that CBO projects for 2012 in its current baseline. Deficits in succeeding years under the President’s proposals would be smaller than the deficit in 2012, although they would still add significantly to federal debt. […]
Federal debt held by the public would double under the President’s budget, growing from $10.4 trillion (69 percent of GDP) at the end of 2011 to $20.8 trillion (87 percent of GDP) at the end of 2021.
The emphasis added is mine, and it is to point out the blatant disregard for fiscal responsibility with this budget. This is not to say the GOP has the answers instead, only to point out that the White House, for all of its talk about needing to manage public resources well, continues to spend, spend, spend.
We covered this in Issue No. 2 of Ahead of the Curve earlier this month, looking at projections of debt and how that might impact credit rating of federal debt issuance down the road (see figure 1 on the right).
And while on the subject of debt, here are some great Thomas Jefferson quotes from the 1800s that prove sobering:
- “I am not among those who fear the people. They, and not the rich, are our dependence for continued freedom. And to preserve their independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude.” – Letter to Samuel Kerchival, 1816
- “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.” – Letter to Treasury Secretary Albert Gallatin, 1802
- “I, however, place economy among the first and most important virtues, and public debt as the greatest of dangers to be feared. To preserve our independence, we must not let our rulers load us with perpetual debt. If we run into such debts, we must be taxed in our meat and drink, in our necessities and in our comforts, in our labor and in our amusements. If we can prevent the government from wasting the labor of the people, under the pretense of caring for them, they will be happy.” – Letter to William Plumer, 1816
- “It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.” – Letter to Antoine Louis Claude Destutt de Tracy, 1820.