Comments on: CBO’s Long-Term Budget Outlook: What It’s Telling Us

By: Bruno

Bruno — Fri, 22 Jun 2012 13:39:38 +0000

Eum – isn’t the whole point about the pessimistic scenario that spending related to health and pensions would explode, and thus the comment that

“But there are unrealistic assumptions under the other scenario too (the federal gov’t is not going to be spending 36% of GDP by 2037 (the historical average is about 21%)).”

is a bit strange, no? The 36% is surely the consequence of entitlement spending going off the rails ?

By: Dan Tomkinson

Dan Tomkinson — Fri, 22 Jun 2012 11:33:22 +0000

Isn’t it fair to ask WHY those assumptions are “wholly unrealistic”?

Did we not, as a nation, generally enjoy reasonable prosperity under the tax code as we knew it in the year 2000?

Pray tell, what happened between then and now to render us, as a whole, incapable of learning from our own actions from such a short time ago?

I theorize that, rigid ideologues have captured our regulatory structure and have embedded themselves so deeply that honest self reflection, as a nation, has become impossible.

Whether they caused the financial crisis (arguable), or are merely taking advantage of the crisis, these ideologues are driving an agenda to undo the meager American social safety net. An agenda they’ve publicly held for some 80 years now.

By: Troy

Troy — Fri, 22 Jun 2012 06:29:50 +0000

The problem here is with CBO’s projection of real GDP, which is on Sheet 3. Economic Vars and Population here:

http://cbo.gov/sites/default/files/cbofiles/attachments/43288-LTBOSuppTables_0.xls

$20.0T by 2020!

Let’s say by some miracle employment (PAYEMS) rises to 150M by 2020, $20T real gdp is $130,000/job, ~12% more per-job productivity than now.

We might get that growth nominally:

http://research.stlouisfed.org/fred2/graph/?g=8aY

but I don’t see how we can get that real GDP productivity this decade.

And, semi-optimistically, PAYEMS looks to arrive at 140M by 2020:

http://research.stlouisfed.org/fred2/series/PAYEMS

requiring per-worker productivity to rise 20% by 2020 to meet that $20T projection. Are we going to be working an extra day per week or something?

By: Marie Burns

Marie Burns — Sat, 09 Jun 2012 02:41:34 +0000

Not “entitlements,” please. This is a term the right uses to make these programs seem like handouts to the undeserving indolent. Say, after me, “social safety net programs,” or “safety net.” Let’s not help the gang that wants to snip away the safety net by embracing their nomenclature.

By: wkj

wkj — Thu, 07 Jun 2012 15:49:48 +0000

Is there any simple source for determining what the annual federal income tax increase would be for middle income individuals or couples with taxable incomes of (say) $50,000 to 150,000, if the Bush tax cuts were not extended?

By: Charles Becker

Charles Becker — Wed, 06 Jun 2012 23:45:04 +0000

As I understand it, the extended baseline scenario depends on letting all the Bush-era tax cuts expire. That’s a substantial amount of revenue, $500B/yr vs $100B/yr if only the top bracket doesn’t expire. Considering the miracle of compound interest, I don’t see any possible way to achieve the extended baseline scenario without that revenue. I don’t mean to bludgeon the author with his own words, but in terms of achieving anything like the extended baseline scenario, “Some of the assumptions … are wholly unrealistic” seems like quite an understatement.

Maybe in 25 years from now the federal government won’t be spending 36% of GDP, but I wouldn’t dismiss it out of hand. The only prior time in history that we’ve spent as much as we are now (~24% of GDP) was during WWII. As I’ve written elsewhere, the combination of industrial automation, international telework, and the global transportation infrastructure mean that US workers are under pressure as never before. It’s entirely conceivable that 7-8% unemployment and zero increase in median incomes represent the future.

Planning for that scenario means that if things turn out better, we can party.