In 30 Years Debt Will Be $72 to $120 Trillion

Discussion in 'Politics' started by pspr, Jun 13, 2013.

  1. pspr


    Actually it won't. We will most likely have long collapsed the monetary system or the government before we get that far in debt.

    At his March dinner at the Jefferson Hotel with a small group of Senate Republicans, President Obama made something of an admission.

    “The problem you have reforming Medicare is that for every dollar Americans pay into the system, they’re going to get three dollars out in benefits. Americans don’t understand that,” Obama said, citing a study from the Urban Institute.

    “You’re right about Medicare. We’ve been quoting that exact same study,” Senator Ron Johnson responded, according to attendees. “We’re pretty small little voices compared to your platform. It would be enormously helpful if you use that bully pulpit and start telling the American people the truth.

    Three months later, Johnson and his fellow Senate Republicans are working with top White House officials to define how big the entitlement problem really is. Their proposal is to agree on the size of the problem before tackling the reforms that would solve it.

    White House chief of staff Dennis McDonough, congressional liaison Rob Nabors, and other Obama officials came into the initial meetings on the Hill reiterating the president’s position that $4 trillion in deficit reduction would basically solve the problem for now.

    But according to GOP deficit projections subsequently prepared by Johnson and obtained by National Review Online, the true size of the problem is staggering, and surprised even many of the seasoned budget negotiators involved.

    $4 trillion? Try $106 trillion, the medium estimate. That’s $106,954,000,000,000. Even the lowest, extremely conservative estimate comes in at $72 trillion; the highest is over $120 trillion.

    The amounts are so large that some controversial reforms appear inconsequential in comparison. Take Obama’s “chained CPI” proposal: it would save an estimated $89 billion over ten years, or 1.3 percent of the total deficit over those same ten years.

    Part of the difference is time. The Congressional Budget Office pegs its cost estimates of bills to ten years. Not only has that led to a sort of CBO-score arms race on Capitol Hill, where legislation — Obamacare being the best example — is designed to exploit the ten-year window to produce a lower cost estimate. It also obscures the scope of the long-term entitlement crisis and the savings of reforms that would compound in the second and third decade.

    The Senate GOP projection is for 30 years, which encompasses the retirement of the baby boomers — a far more significant problem than the deficits of the past few years.

    “In all of these budget negotiations, we’re really trapped by this ten-year budget window, which, truthfully, minimizes the problem,” Johnson observes.

    Another difference is the assumptions behind the projection. CBO’s long-term budget outlook, for example, offers two estimates: the “baseline” scenario and “alternative fiscal scenario.”

    Baseline is according to current law, including all of the gimmicks Congress has put in current law to game their CBO scores. According to that, we’re totally fine — the debt will slowly go down without Congress’s having to do anything. It’s also fantasy.

    The other scenario is more realistic. In it, debt begins to really ramp up around 2025, and quickly becomes unwieldy — even insurmountable — by 2040, when the graph ends.