GAO Report: Obama's Policies 'Not Sustainable'

by Celia Bigelow 19 Feb 2013

 
 For two months, reporters and lawmakers have ignored a devastating report from the federal government itself, which warns that the nation's current fiscal policy will lead to economic collapse. The Government Accountability Office (GAO)—the personal auditor of President Obama and the federal government—released its assessment of the federal government on January 17, 2013. The report's findings illuminate just how dire America's spending problem is and, therefore, how little the current cuts debated by Congress do to fix it.

The findings of the paper include these excerpts (emphasis added):

• “The projections in this Report indicate that current policy is not sustainable... Preventing the debt-to-GDP ratio from rising over the next 75 years is estimated to require some combination of spending reductions and revenue increases that amount to 2.7 percent of GDP over the period.”  
• “It is estimated that running primary surpluses that average 1.0 percent of GDP over the next 75 years would result in the 2087 debt-to-GDP ratio equaling its level in fiscal year 2012, which compares with primary deficits that average 1.7 percent of GDP under current policies.”
• “It is noteworthy that preventing the debt-to-GDP ratio from rising over the next 75 years requires that primary surpluses be substantially positive on average. This is true because projected GDP growth is on average smaller than the projected government borrowing rate over the next 75 years.”  
• “If the primary surplus was precisely zero in every year, then debt would grow at the rate of interest in every year, which would be faster than GDP growth.”
• “The differences between the primary surplus boost starting in 2023 and 2033 (3.2 and 4.1 percent of GDP, respectively) and the primary surplus boost starting in 2012 (2.7 percent of GDP) is a measure of the additional burden policy delay would impose on future generations. Future generations are harmed by a policy delay of this sort, because the higher the primary surplus is during their lifetimes the greater the difference is between the taxes they pay and the programmatic spending from which they benefit.”

While President Obama and his media allies boast from their ivory towers that America “doesn’t have a spending problem” but rather a “health-care problem,” they are sweeping reality under the rug and spouting lies to the American people.

This is the reality: when President Obama’s personal auditor says the federal government has a spending problem, it indeed has a spending problem—and one that is growing rapidly.

The most devastating part of the report is the fact that the federal government must run surpluses over the next century to keep the same debt-to-GDP ratio it has today. Meanwhile, Congress and President Obama are throwing a fit over the looming sequester—which will cut a mere 1.2 percent of total deficits (not total debt) over the next ten years—and the Senate has not produced a budget for close to 1,400 days.

A balanced budget will not be enough to cover the rapid growth of interest payments owed on U.S. national debt in the future. The federal government currently pays $223 billion—roughly $3,000 per taxpayer—in annual interest payments. This number is expected to increase to $857 billion by the end of the decade, a 290 percent increase. 

If the federal government does not fix the spending problem detailed in this report, it will have to take out more and more loans to pay for the already-outstanding interest payments on the federal government—loans to pay off loans. 

Thus, the question remains: what happens when no one will grant Congress more loans?

Big Government

After 'No Budget, No Pay,' Will GOP Cut Spending?

by Matthew Boyle 23 Jan 2013

 

 Facing the passage of the House GOP's "No Budget, No Pay" bill Wednesday, Senate Democrats, including Senate Budget Committee chairwoman Sen. Patty Murray, have promised they will draft a budget for the first time in four years. “I’ve been discussing this path with my colleagues in the weeks since the year-end deal before I officially became chairman of this committee, and now that Congress is back in session, we are ready to get to work,” Murray said, according to the Washington Post.

Murray promised what she calls a “balanced approach” and said Senate Democrats “are eager to contrast our pro-growth, pro-middle class budget priorities with the House Republicans’ [Rep. Paul] Ryan budget that would end Medicare as we know it, gut investments in jobs and programs middle-class families depend on, and cut taxes for the wealthiest Americans and biggest corporations.”

“We know that when our priorities are laid out next to Republicans’, the public stands with us,” Murray proclaimed.

The question now becomes whether House and Senate Republicans will force Murray to draft a balanced budget with actual spending cuts. Now that the House has passed the No Budget, No Pay plan, over the coming weeks and months the House and Senate will work on their budgets. It's unclear as of yet what the Senate budget will look like.

In a lengthy statement on Wednesday, Senate Budget Committee ranking GOP member Sen. Jeff Sessions of Alabama signaled Republicans would be able to fight for a fiscally sound budget.

“I am gratified that Chairman Murray has announced that the Senate majority has relented and will offer its first budget in four years,” Sessions said. “Majority Leader Reid had previously said it would be ‘foolish’ to do a budget and his party cancelled the legally required Senate mark-up in 2011 and 2012—even after former Chairman Conrad had explicitly promised to bring up a budget in committee. I have repeatedly and emphatically called for an end to the Senate Democrats’ brazen legal defiance in this time of national fiscal emergency. I was frankly stunned that our new Chairman would say that Republicans ‘have time and again pulled budget negotiations out of the Budget Committees,’ when Senate Democrats alone control whether committee meetings occur. They alone decided to cancel them. The House, on the other hand, met its legal obligations.”

“To compel Senate action I have introduced legislation, blocked recess, and encouraged the use of the debt ceiling as leverage,” Sessions added. “Now, with their pay threatened, and long-simmering public anger growing, Senate Democrats have suddenly seen the light. Even just a few days ago, they were not willing to commit to doing a budget. The sooner the majority allows the budget process to move forward, the sooner meaningful debate can occur and the sooner the Senate can at last meet its legal and moral obligations. Secret meetings are an affront to popular democracy.”

Sessions added that it “certainly won’t be easy to put this nation on a sound financial course, but it is essential. Needed fiscal changes will not only prevent an economic nightmare but they will reduce growing poverty, dependency, and joblessness and help more Americans live free and prosperous lives. Republicans are eager to work on this important endeavor and look forward to the commencement of committee activity.”

Big Government

Congressman: Obama's Tax Increases Would Only Fund The Government for Eight Days

by Wynton Hall 28 Nov 2012
 

  President Barack Obama has proposed raising taxes on the rich to put America's fiscal house in order, but critics say federal spending is so massive that the wealthy don't have enough money to cover the nation's unprecedented debt. In an interview with MSNBC's Andrea Mitchell, Rep. Tom Price (R-GA) said President Barack Obama's plan to raise taxes on the wealthy would only generate enough revenue to fund the federal government for eight days.

"The president’s plan to increase taxes on the upper two percent covers the spending by this federal government not for eight years, not for eight months, not for eight weeks but for eight days. Eight days only," said Mr. Price. "It’s not a real solution. So, again, I’m puzzled by an administration that seems to be more interested in raising tax rates than in gaining economic vitality."

The problem is that the rich don't have enough money to put so much as a dent in America's $16 trillion national debt. "If the IRS grabbed 100 percent of income over $1 million, the take would be just $616 billion," writes John Stossel. "That’s only a third of this year’s deficit. Our national debt would continue to explode."

Still, Mr. Obama's supporters persist in proposing tax hikes on the wealthy. On Sunday, billionaire Warren Buffett proposed a minimum tax for America's top earners. "We need Congress, right now, to enact a minimum tax on high incomes. I would suggest 30 percent of taxable income between $1 million and $10 million, and 35 percent on amounts above that."

There's just one problem with such an approach, says author Mark Steyn:

If you took every single penny that Warren Buffett has, it'd pay for 4-1/2 days of the US government. This tax-the-rich won't work. The problem here is the government is way bigger than even the capacity of the rich to sustain it. The Buffett Rule would raise $3.2 billion a year, and take 514 years just to pay off Obama's 2011 budget deficit.

Indeed, even Mr. Buffett seems to concede that he and the president's "soak the rich" proposals are more an act of political theater designed to generate an emotional response than serious solutions: Mr. Buffett told Matt Lauer he believes his proposal would boost the "morale of the middle class."

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