President Obama likes to boast about how the budget deficit has shrunk over the past three years; of course he doesn’t mention that it is primarily due to sequestration imposed by Congress in the Budget Control Act of 2011. Now, with a new Speaker of the House Paul Ryan at the helm, a new omnibus budget has blow a hole in the president’s talking points. This past week the Congressional Budget Office (CBO) reported that, as many had predicted, this coming year’s budget deficit will rise significantly to $544 billion.
The report also detailed a slowing economy paired with huge increases in government spending will mean a return to the rising deficits of Obama’s early years.
Over the coming decade, the CBO predicts deficits totaling $9.4 trillion. That’s up $1.5 trillion just from this summer, mostly due to last month’s tax legislation, which permanently extended several tax cuts that Congress had typically renewed temporarily.
The deficit increase is due to numerous government spending increases, particularly the retroactive extension of tax cuts that had expired at the beginning of last year, additional money for the Pentagon, Obamacare and a spending windfall for domestic agencies. This is the type of irresponsible government spending expected under a Democrat controlled Congress, but not with both the House and Senate under Republican control.
The picture gets even dimmer as the years move forward. As deficits rise over the decade and the national debt grows, interest rates are likely to be forced up, economic growth could slow, and policymakers may have no choice but to raise taxes and cut spending more sharply than if they acted now. Increases in interest rates are even more problematic when the debt service on the nearly $19 trillion national debt further drives deficits.
The CBO predicts that deficits will rise to about 5 percent of gross domestic product within 10 years, further depressing the economy.
“Such high and rising debt would have serious negative consequences for the nation,” CBO said.
Sadly the the CBO forecast likely underestimates true deficits over the years since they are required by Congress to assume that current spending policies will remain despite history showing that government spending never stays constant. CBO’s estimates also don’t take into consideration the potential for recession even though recent downturns in Europe and Asia portend a much gloomier outlook.
Speaker of the House Ryan said, “Efforts to tangibly cut spending won’t be part of the 2016 agenda. The House will pass another nonbinding budget but won’t seek to deliver real, binding spending legislation to the president. Clearly that’s going to take a Republican president because this president has continued to kick the can down the road and I see no change in his behavior.”
Ryan’s logic that Congress should give the president what he wants because he’d veto a responsible budget is in itself an act of total irresponsibility. Congress is supposed to do what’s best for the nation, not what fits any president’s agenda. Ryan failed to acknowledge that prior to this omnibus budget prior stopgap measures have kept spending at more economical levels allowing the deficit to shrink. Clearly Mr. Ryan isn’t the man most GOP voters thought he was.