Updating the Government’s Vision into our Economic Future
The Congressional Budget Office this week issued its Summer Update of projections for our national economy. Although the White House has seized on one piece of positive data ( a slight downward adjustment of the projected 2009 deficit), the overall picture being painted is quite unpleasant to look at.
Now let’s put this inside the big ugly picture. The 2009 federal budget deficit will represent 11.2% of GDP (Gross Domestic Product) which will be the highest level since WW II.
Further, the CBO predicts that with current law and policies remaining in place, the deficit will exceed $500 billion annually through 2019. (This is without costs associated with healthcare reform legislation.) That means that the public debt would grow each year, reaching 68% of GDP in 2019. The public debt was 33% of GDP in 2001 and is expected to be be 54% of GDP this year. Scary stuff.
Oh, and even these awful projections are based on the assumption that federal revenues will increase if all of the tax cuts implemented earlier this decade are allowed to expire in 2010. The expiring provisions would include those intended to keep the AMT (Alternative Minimum Tax) away from the middle class as well as lower rates on capital gains and dividend income. If that happens, the equity markets could go into another deep slide. If some of the tax cuts are renewed, the deficit will balloon even more.
Folks, this is not sustainable. This is not just my opinion. From the CBO Director’s blog:
Beyond the 10-year budget window, the nation will face further significant fiscal challenges posed by rising health care costs and the aging of the population. Continued large deficits and the resulting increases in federal debt would, over time, reduce economic growth. Putting the nation on a sustainable fiscal course will require some combination of lower spending and higher revenues than the amounts now projected.
With the White House and Congress engaged in runaway spending and economic activity in a slow growth mode, taxes on the middle class will have to be increased. I cannot see another way out of this.
So what does this mean to you? You may be like millions of other Americans who have been numbed by all of the gigantic numbers and bad news.
Snap out of it.
You should prepare to vote based on what you want for your economic future and for your children. Read the CBO report. Ask your representatives in Congress if they have read it. Then ask what they intend to do about it. If you don’t get the answer you want, ask those questions of another candidate.
This is not Obama bashing. Bush started this train wreck down the tracks. Obama and friends are just stoking the fires.
Or you could just sit there and let it happen.