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Testifying before the House Budget Committee today, U.S. Treasury Secretary Tim Geithner told Chairman Paul Ryan the following: "We're not coming before you to say we have a definitive solution to that long-term problem. What we do know is we don't like yours."
Actually, President Obama sort of did have a definitive solution. He created a debt commission, which devised a long-term debt reduction plan. Which the president rejected. And instead, we get this new budget proposal, which makes no effort to deal with Medicare, Medicaid, and Social Security"”the long-term drivers of U.S. federal debt. The debt curve never gets bent, as the above White House (!) chart shows. (Yes, the chart comes from the White House’s Office of Management and Budget.) It just goes up and up and up"”until the heat death of the universe or the economy is struck by a Greek-style debt crisis.
Here’s what the bipartisan Committee for a Responsible Federal Budget says about the president’s plan:
Over the long-term, the President's budget would not constrain rising debt, as retirement and health care costs continue growing faster than the economy. According to the Administration's own estimates, debt would grow as a share of the economy past 2022 exceeding 93 percent by 2035 and nearly 125 percent by 2050. These levels would be both economically constraining and ultimately unsustainable.
Well, the president’s budget at least cuts $4 trillion in debt over ten years, as the White House claims, right? Again, the CRFB:
Well, the answer depends on what savings are compared against, and what is counted as savings "“ but in no case does the President have comparable deficit reduction to the Fiscal Commission. To reach his $4.3 trillion in savings through 2021, the President's budget counts $1.6 trillion (excluding interest) of already-enacted savings. In addition, it includes two elements which the Fiscal Commission assumed in its baseline "“ a drawdown of the wars ($740 billion through 2021) and the expiration of the upper-income tax cuts ($830 billion through 2021). If the Commission's plan were scored the same way as the President's $4.3 trillion, we estimate it would save roughly $6.5 trillion through 2021.
Well, at least the president’s budget keeps the debt problem from getting any worse over the next decade, right? Not really. Despite $1.7 trillion in tax increases, debt as a share of GDP"”already at a historically high level"”actually ticks up a bit to 76.5 percent from 67.7 percent in 2011 and 74.2 percent in 2012.
And even to achieve this, the Obama White House has to assume rosy economic growth. As the CRFB says:
OMB's economic assumptions are somewhat more optimistic than CBO's, as well as the Blue Chip consensus ranges. The Administration projects real GDP growth to be 2.7 percent in 2012 and 3.0 percent in 2013, compared to 2.2 percent and 1 percent, respectively, from the CBO. Importantly, much of this difference is due to the fact that CBO assumes a temporary economic contraction in 2013 due to all the tax cuts expiring and the automatic spending sequester going off at the same time in the start of 2013. However, OMB continues to be more optimistic than CBO beyond this contractionary period, with estimated growth rates of 2.5 percent per year by the end of the decade as opposed to 2.4 percent by CBO. On the whole, these faster growth rates likely lead to a more favorable fiscal picture than what CBO would show using its economic projections. By our estimates, if OMB were to employ CBO assumptions debt would stabilize at about 80 percent of GDP as opposed to 76 percent.
My baseline case has been that Obama has no interest in being Clinton 2.0, the Debt Cutting President. He wants to be FDR 2.0, the Expanding Welfare State President. He wants that to be his legacy. Let Ryan or Chris Christie or Marco Rubio be the Austerity President in 2017. And what does Geithner care? He’s on his way out this year. At one point during the hearing, Ryan brought out this chart illustrating the impact of the Ryan debt plan, the one Geithner said “we don’t like”:
And here was the exchange between Geithner and Ryan, after Ryan pointed out the terrifying budget baseline (in red):
GEITHNER: You could have taken [the chart] out [to the year] 3000 or to 4000. [Laughs]
RYAN: Yeah, right. We cut it off at the end of the century because the economy, according to the CBO, shuts down in 2027 on this path.
And that’s no joke, Mr. Geithner.
James Pethokoukis is a columnist and blogger for the American Enterprise Institute. He is also an official contributor on CNBC television, a global business and financial channel. He can be reached at james.pethokoukis@aei.org or on Twitter: @JimPethokoukis
Previously, Pethokoukis was Washington columnist for Reuters Breakingviews, as well as business editor and economics columnist for U.S. News & World Report.
This website is all obvious distortions this administration will it be blamed for what happens beyond 2016? It big ship it does not do hair pin turns, in regards to 2027 and when the financing of bonds exceeds the ability to pays their interest, then cuts come and hard, because there would be no other choice.
The previous administration did this, they started the wars then this admin shifted the cost of the war into the budget, the previous hid it. Conservatives for such self proclaimed moralist sure have no trouble lying, they also seem to have to patriotism either doing all they can to undermine the administration through consumer confidence, that actually hurt the nation and prevent recovery.
Considering what this administration inherited and how they are managing, I'd say give them four more years.
What is pushing debt past 2040? The youngest boomers will be 80; IOW, dead. I’ve been assuming that generations’ old age care and upkeep were driving this whole mess. When they’re gone, where will the spending be allocated? Someone please explain the impetus for the chart path past 2035.
Any one who makes a 70 year forecast on financial matters must have their brains up their arse. They should be lucky to be able to forecast five years ahead with any accuracy. So when you read the comments about the forecasts, consider the source. Mostly BS.
Well thanks to you and Mark Steyn for ruining my weekend! I just wanted to eat some waffles this morning!
Is there a reason that these charts don’t go back far enough to include the Great Depression?
Why print charts laying accolades at Ryan’s feet, when in reality, the President DID present a budget plan, which was agreed to by Speaker Boehner only to be rejected by Eric Cantor because it had reveunue generating stimulus provided by allowing the Bush Tax cuts to expire? Why not print the FULL story on this issue and the current state of the economy? Tell me when the GOP will finally get the news that despite all of the fear-mongering, lying about the legitimacy of the President serving this Country as Commander-In-Chief, and marginalizing his accomplishments, here is the rest of the story: There have been 23 months of consistent private-sector non-farming job growth, 10 straight quarters of consistent increased GDP, the Auto Bailout worked, and General Motors is once again the World Wide leader in auto manufacturing. All economic indicators point to recovery and for you folks to not even mention what a heap of trash this President was handed when he was sworn in is disingenuous at best, and dishonest at worst. In addition, for you to neglect to mention that the GOP was hijacked by the most hateful demographic of our electorate is also disingenuous. Don’t believe me? Just look at the signs held at those rallies! Take a look at the supposed “Grass roots” effort of this group of people, when in actuality, the Koch Brothers along with Fox News paid for people to travel to these events. And what did they do when they got there? Well, they showed so much disrespect for the PRESIDENT OF THE US, our Country, that while the rest of the world observed they had to wonder who really was controlling this Country. Thankfully, our President STILL kept it all together, despite the consistent accusations that he was “not born in the United States,” or “he is just not one of us.” The dividers of this Country are not the moderates, liberals or progressives; they are the conservatives. But no worries! Why do I say this? Because the more you people continue to publish just one half of the story (the side that suits your argument) the reality is this: Currently 51% of the American people approve of this President’s job performance. Compare THAT to the current Congressional approval of 11%. Or, why not compare how our President competes with Mitt (take every single position known to man) Romney, and observe how the President beats him according to ALL polling data by at least 8 points. Santorum (the contraception candidate) does worse. Gingrich, even worse. There is Mitt Romney in his own home state of Michigan losing his primary or predicted ot lose it: Why? Because he opined that the auto bailout was the wrong move. One would think he would wake up and smell the roses when he went back to campaign in his home state (forget that he has five home states), but he didn’t! What does he do? He attacks labor! Santorum continues preaching about contraception angering women beyond pale. Gingrich utilizes dog whistle politics telling Americans that those “living in the poorest of the poorest neighborhoods,” don’t have any role model to work? They ought to be tasked with cleaning their own schools? The hidden message? Those black people are taking YOUR money and that Black President is assisting them in doing so. You have called him everything from a socialist, to a muslim, to a marxist, to a bleeding heart liberal, yet, he still prevails. You want to know why? Because nobody is buying what you are selling any longer. Get your party back from it being taken hostage and then, just maybe then, you folks can win an election. Until then, we will see you all in 2016.
This is pretty hilarious from your comment….”The dividers of this Country are not the moderates, liberals or progressives; they are the conservatives.”
Did you read any of your post? You called the right liars, hateful, and racist. Also, you responded to an article about the budget deficits with a whole bunch of rhetoric and no ideas. If you want people to get on board with your thinking, offer them an idea to get behind not just bash the other guy.
Finally, if you actually think Obama had intentions of addressing entitlements, could you name me one, just one entitlement reform Obama is endorsing (just looking for ones that improves the long term deficits not ones that just increase spending)
Wow. So much wrongin so little space. Where to start…
Obama DID NOT propose a budget plan during negotiations with Boehner. The ONLY budget plan he has proposed until this recent joke was defeated in the Senate 97-0. He couldn’t even get his own party to vote for it.
Your contention that there has been job growth is ludicrous. While there has been tepid growth in the private sector, unemployment continues to rise. The administration touts lower unemployment by removing the unemployed WHO HAVE QUIT LOOKING from the numbers. There are MORE unemployed now than when Obama took office.
The Stimulus failed abysmally.
Obamacare is a dangerous travesty on course to bankrupt the economy and seriously endganger our liberty. 1200 waivers for cronies? IPAB? The most recent trampling on the First Amendment?
And you contend that Fox and the Koch brothers pay people to show up at protests? Pls provide any evidence of that. Where if you do a simple Google search there is video of people telling journalists that they were paid to show up and protest by unions and other liberal groups at protests in Wiscinsin, Indiana, and elsewhere. The hate is on the left, not the right.
NO poll has Obama at 51%. If you look at the Real Clear Politics average of polls, about half him underwater and half have him up a point over his negatives. However, if you look at his strongly approves vs strongly disapproves, he’s toast. And please don’t forget that half of Congress is controlled by Democrats…the do nothing half. The House has passed a budget, the Senate none for well over 1000 days. The House has passed 31 job creation related bills…Reid has brought NONE up for a vote in the Senate.
The auto bailout DIDNT WORK. GM and Chrysler still owe taxpayers $133 billion and are you aware that both are exempt from taxes?
Boeing? Illegal appointments?
And yes, PLEASE look at the signs from Tea Party rallies vs those from Occupy sites and the labor protests everywhere. Additionally, look at the sites when the Tea Partiers leave vs Occupy or union thugs. Or which are law abiding and which have rape, assault, property damage, and general disregard for civil discourse.
I don’t know where you get your polling data but once again I’ll direct you to the RCP recap of polls. Obama beats Romney by 6 and Santorum by 7. He should be up by 20 given the negative nature of the GOP primary. Once there is a GOP candidate, it will be Reagan/Carter all over agaln.
I think John Wayne said it best, “Life is tough. It’s even tougher when you’re stupid.”
We have insulted Obama? While the world watched? Seems to me it wasn’t very long ago that ALL Liberals/Progressives were chanting the same meme “The most patriotic thing we can do is to insult President Bush”. what is that you say? When the next President is Obama, now if we do the most patriotic thing around and insult him, that’s racist? Was it racist for Clinton? Was it racist for Carter? Was it ever racist before? No, because you are the racist. And while we are at it, if Obama gets to blame Bush for the economy, then I think Bush gets to blame Clinton for receiving fellatio in the Oval Office rather than ensuring our military and national defense were a priority during his 8 years in office. Seems to me like Bush had to react to something that was YEARS in the making, under Clinton, who “balanced the budget” by gutting Defense. We can all go on back and forth all day, but in a nutshell, Obama has been an economic disaster and the only response Liberals/Progressives have is to play the race card, because if Obama was white, there would be no defense for his miserable record.
Monetary illiteracy is rampant with most of these commentators here (and Americans in general)
Go ahead then and vote for Pres. Geithner – VP Bernanke & Co (yes, BHO is just their puppet)
Reelect this teleprompter joke of a president but remember what Pres. Garfield said that holds so true for Geithner and his ilk: Whoever controls the volume of money in any country is absolute master of all industry and commerce"
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