CBO: Obama Budget Adds $5.2 Trillion To Deficit, $1 Trillion In New Taxes

CBO: Obama Budget Adds $5.2 Trillion To Deficit, $1 Trillion In New Taxes – Big Government

The Congressional Budget Office (CBO) says President Barack Obama’s 2014 budget would add $5.2 trillion in deficits over the next ten years and contains nearly $1 trillion in new taxes.

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The Obama budget, which was delivered two months after the legally-required deadline, is larded with accounting gimmicks that count as savings war and disaster contingency funds that were never going to be spent. Obama’s budget also assumes sequester-related cuts will all be restored.

But Obama claims his budget is devoid of budgeting tricks.

“The numbers work,” says Obama. “There’s not a lot of smoke and mirrors in here.”

Congressional Republicans are not buying it.

“This new [CBO] report shows that the President’s budget doesn’t come close to solving the problem,” said House Budget Committee Chairman Paul Ryan (R-WI). “The federal government will take in a record haul over the next ten years. And the President wants yet another massive tax hike. But under his plan, we’ll keep adding to the debt – at an alarming rate.”

House Minority Whip Steny Hoyer (D-MD) defending the Obama budget and said the plan offers taxpayers a “big and balanced approach.”

“This is an important validation of the President’s and Democrats’ efforts to restore fiscal discipline through a big and balanced approach while maintaining our ability to invest in a competitive economy and a growing middle class,” said Hoyer.

Obama’s past budgets have resulted in politically embarrassing defeats. In 2011 and 2012, the Senate Democrats and Republicans unanimously rejected Obama’s proposed budgets.

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CBO: America Will Never See Full Employment Under Obama

CBO: America Will Never See Full Employment Under Obama – CNS

The Congressional Budget Office is now projecting that the U.S. economy will never achieve full employment during the eight years Barack Obama serves as president.

That would make Obama the only American president during the post-World War II era who never presided over a year in which the U.S. economy offered full employment to the American people.

The CBO defines “full employment” to be when the national unemployment rate is at or below what it calls the “natural unemployment rate.”

The natural unemployment rate, according to CBO, is the “rate of unemployment arising from all sources except fluctuations in aggregate demand. Those sources include frictional unemployment, which is associated with normal turnover of jobs, and structural unemployment, which includes unemployment caused by mismatches between the skills of available workers and the skills necessary to fill vacant positions and unemployment caused when wages exceed their market-clearing levels because of institutional factors, such as legal minimum wages, the presence of unions, social conventions, or wage-setting practices by employers that are intended to increase workers’ morale and effort.”

In a blog entry published last week, CBO Director Doug Elmendorf said “we think it will take four more years to get back close to full employment.”

In fact, baseline data CBO released last month indicate that the “natural unemployment rate” will be 5.5 percent through the rest of Obama’s presidency and that actual unemployment will never drop below 6.0 percent in any quarter between now and the end of 2016.

According to CBO, unemployment will remain above 7.0 percent through the third quarter of 2015. It will then drop to 6.8 percent in the fourth quarter of 2015, and gradually decline to 6.0 percent by the fourth quarter of 2016.

In the first quarter of 2017, when the next president is being sworn into office, the unemployment rate will drop to 5.8 percent, CBO projects. That would still be above the natural unemployment rate of 5.5 percent.

Finally, in the first quarter of 2018, according to CBO’s projections, unemployment will drop to 5.5 percent. At that point, a year after Obama has left office, the U.S. economy will finally achieve full employment for the first time since 2007.

Thus, according to CBO’s projections, America will never see full employment under Obama even though the CBO has increased what it considers to be the natural unemployment rate during Obama’s tenure. From the first quarter of 1999 through the first quarter of 2008, CBO calculated that the natural unemployment rate was 5.0 percent. Thus, for the economy to achieve full employment during that nine-year span, actual unemployment had to fall to 5.0 percent or lower.

Despite this higher standard, the economy did achieve full employment on a number of occasions from 1999 through 2008. This included, on average, the entire years of 2000, 2001, 2006 and 2007.

During the tenures of each American president from Harry Truman through George W. Bush – according to the average annual unemployment rates published by the Bureau of Labor Statistics and the natural unemployment rate calculated by CBO – there was at least one year in which the U.S. economy achieved full employment.

To see a complete list of the average actual annual unemployment rates compared to the natural unemployment rate for the years from 1988 onward click here.

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CBO: U.S. To Add $7 Trillion More In Debt In Next Decade

CBO: U.S. To Add $7 Trillion More In Debt In Next Decade – Hot Air

The good news from yesterday’s CBO report is that we may actually end up with a sub-trillion-dollar deficit this year. The annual deficit for FY2013 will come in at $845 billion, the first time in five years that it’s been less than the 13-figure mark. However, that depends on keeping the law at the status quo – including the sequester:

CBO forecast that the deficit for fiscal 2013, which ends September 30, will shrink slightly to $845 billion after four straight years above $1 trillion. The reason is an improving economy and higher taxes paid by wealthy Americans.

The CBO analysis, which will feed into Congress’ bitter debate over how to tame deficits, assumes that $85 billion in automatic spending cuts will launch as scheduled on March 1… It forecast a $616 billion deficit in fiscal 2014 and a $430 billion deficit in fiscal 2015, equivalent to 2.4 percent of U.S. gross domestic product at that time, a level that many economists view as sustainable.

And that’s about the extent of the good news, too, and even that’s qualified. Those figures assume that Congress will not pass any more “doc fixes” and cut Medicare/Medicaid reimbursements substantially, as current law requires. If Congress passes more delays in already-scheduled cuts in reimbursements, those deficits will grow significantly.

By the way, that’s the bad news. Deficits will grow substantially anyway:

But deficits will rise steadily from mid-decade, nearing $1 trillion again by 2023, according to the forecast. The 10-year cumulative deficit is forecast at $6.958 trillion.

“Deficits are projected to increase later in the coming decade, however, because of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt,” the CBO said in the report.

Again, that’s assuming we don’t pass any more “doc fixes,” which are the only thing keeping providers in the Medicare/Medicaid business at all. Meanwhile, the economy will remain stuck in stagnation, and joblessness will get worse, too:

It said the fiscal tightening from these across-the-board cuts and from higher taxes will slow economic growth to an anemic 1.4 percent by the end of 2013, causing the unemployment rate to edge higher to 8.0 percent by then from about 7.9 percent currently.

Nor was that the only bad news from the CBO yesterday. Remember those federal subsidies that will fuel ObamaCare’s push to make health insurance universal? The ten-year cost for that program jumped by nearly a quarter-trillion dollars:

The Congressional Budget Office on Tuesday quietly raised the 10-year cost of ObamaCare’s insurance subsidies offered via the health law’s exchanges by $233 billion, according to a Congressional Budget Office review of its latest spending forecast.

The CBO’s new baseline estimate shows that ObamaCare subsidies offered through the insurance exchanges – which are supposed to be up and running by next January – will total more than $1 trillion through 2022, up from $814 billion over those same years in its budget forecast made a year ago. That’s an increase of nearly 29%.

The CBO upped the 10-year subsidy cost by $32 billion since just last August.

In part, this jump is because more people will get insurance via the exchanges than it had forecast. Where the CBO had seen 22 million enrolled in an exchange in 2022, it now figures 25 million will be.

That explains only part of the cost hike. The rest is largely the result of the CBO’s sharp increase in what it expects the average subsidy will be.

Take a look at the chart from IBD:

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The calculation of average subsidy has risen 38.7% in three years – and we haven’t even implemented the system yet.

Think about that, and now think about what amount of debt we’ll really be adding in ten years.

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Obama: ‘We Got Back Every Dime’ Of Bailout; CBO: Bailout Will Lose $24 Billion

Obama: ‘We Got Back Every Dime’ Of Bailout; CBO: Bailout Will Lose $24 Billion – CNS

President Barack Obama said on Thursday that “we got back every dime we used to rescue the financial system.”

According to the Congressional Budget Office, however, the government will lose about $24 billion on the bailout.

“We got back every dime we used to rescue the financial system, but we also passed a historic law to end taxpayer-funded Wall Street bailouts for good,” Obama said in Miami Thursday.

The Congressional Budget Office – based on figures from Obama’s own Office of Management and Budget – gives a different assessment.

“The cost to the federal government of the TARP’s transactions (also referred to as the subsidy cost), including grants for mortgage programs that have not yet been made, will amount to $24 billion,” said the CBO report, which was released on the same day Obama spoke.

TARP is the Troubled Asset Relief Program – the formal name of the government’s financial bailout program passed in October 2008.

CBO said that the cost of TARP “stems largely from assistance to American International Group (AIG), aid to the automotive industry, and grant programs aimed at avoiding home mortgage foreclosures,” noting that the losses will be so large they will eclipse the financial gains the government will realize from bailing out other large financial institutions.

In fact, CBO reported that as of now $65 billion in TARP funds remain outstanding.

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CBO: Obama Stimulus Plan May Have Cost As Much As $4.1 Million Per Job

CBO: Obama Stimulus Plan May Have Cost As Much As $4.1 Million Per Job – The American

The Congressional Budget Office in a new report:

When [the American Recovery and Reinvestment Act] was being considered, the Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation estimated that it would increase budget deficits by $787 billion between fiscal years 2009 and 2019. CBO now estimates that the total impact over the 2009–2019 period will amount to about $831 billion.

By CBO’s estimate, close to half of that impact occurred in fiscal year 2010, and more than 90 percent of ARRA’s budgetary impact was realized by the end of March 2012. CBO has estimated the law’s impact on employment and economic output using evidence about the effects of previous similar policies and drawing on various mathematical models that represent the workings of the economy…

On that basis CBO estimates that ARRA’s policies had the following effects in the first quarter of calendar year 2012 compared with what would have occurred otherwise:

– They raised real (inflation-adjusted) gross domestic product (GDP) by between 0.1 percent and 1.0 percent,

– They lowered the unemployment rate by between 0.1 percentage points and 0.8 percentage points,

– They increased the number of people employed by between 0.2 million and 1.5 million,

– They increased the number of full-time-equivalent jobs by 0.3 million to 1.9 million. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.)

OK, so without the stimulus, there would be anywhere from 200,000 to 1.5 million fewer people employed right now? That means the current cost-per-job created is somewhere between $4.1 million and $540,000.

At the very least, I think the CBO report should raise more questions about whether $831 billion of temporary tax cuts and government spending was the best use of that money back in 2009. It should also make Washington cautious about further such stimulus measures if the U.S. economy should slip back into recession. Better we try what Sweden did.

And, again, here is the CBO’s take on the long-run impact of the stimulus:

In contrast to its positive near-term macroeconomic effects, ARRA will reduce output slightly in the long run, CBO estimates – by between zero and 0.2 percent after 2016. But CBO expects that the legislation will have no long-term effects on employment because the U.S. economy will have a high rate of use of its labor resources in the long run. ARRA’s long-run impact on the economy will stem primarily from the resulting increase in government debt.

To the extent that people hold their wealth in government securities rather than in a form that can be used to finance private investment, the increased debt tends to reduce the stock of productive private capital. In the long run, each dollar of additional debt crowds out about a third of a dollar’s worth of private domestic capital, CBO estimates.

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Thanks Barack… CBO Says ObamaCare Could Cost 20 Million Americans Their Health Coverage

CBO: Health Law Could Cause As Many As 20M To Lose Coverage – The Hill

As many as 20 million Americans could lose their employer-provided coverage because of President Obama’s healthcare reform law, the nonpartisan Congressional Budget Office said in a new report Thursday.

The figure represents the worst-case scenario, CBO says, and the law could just as well increase the number of people with employer-based coverage by 3 million in 2019.

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The best estimate, subject to a “tremendous amount of uncertainty,” is that about 3 million to 5 million fewer people will obtain coverage through their employer each year from 2019 through 2022.

The new report adds more detail to this week’s update of the law’s coverage provisions, which CBO released Tuesday. Compared to a year ago, the law is now anticipated to cover 2 million fewer people but cost $50 billion less over 10 years, after factoring penalties paid by individuals and businesses that don’t get or provide healthcare coverage.

Republicans immediately responded after the new numbers came out because they appear to violate Obama’s pledge that people who like their health plans will be able to keep them. Last year, CBO’s best estimate was that only 1 million people would lose employer-sponsored coverage.

“President Obama’s string of empty promises is quickly becoming a disappointing trail of broken promises,” House Budget Committee Chairman Paul Ryan (R-Wis.) said in a statement. “He promised Americans that his overhaul of the health care sector would not jeopardize the health coverage of those who liked what they had. As nonpartisan analysts made clear today, millions of Americans will soon learn the hard way that Washington’s overreach into their health care decisions will result in sharp disruptions to their coverage and their care.”

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Daily Benefactor News – CBO: Taxes Will ‘Shoot Up By More Than 30 Percent’ Over Next 2 Years

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CBO: Taxes Will ‘Shoot Up By More Than 30 Percent’ Over Next 2 Years – CNS

The amount of money the federal government takes out of the U.S. economy in taxes will increase by more than 30 percent between 2012 and 2014, according to the Budget and Economic Outlook published today by the CBO.

At the same time, according to CBO, the economy will remain sluggish, partly because of higher taxes.

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“In particular, between 2012 and 2014, revenues in CBO’s baseline shoot up by more than 30 percent,” said CBO, “mostly because of the recent or scheduled expirations of tax provisions, such as those that lower income tax rates and limit the reach of the alternative minimum tax (AMT), and the imposition of new taxes, fees, and penalties that are scheduled to go into effect.”

The U.S. economy, CBO projects, will perform “below its potential” for another six years and unemployment will remain above 7 percent for another three.

“The pace of the economic recovery has been slow since the recession ended in June 2009, and the Congressional Budget Office (CBO) expects that, under current laws governing taxes and spending, the economy will continue to grow at a sluggish pace over the next two years,” said CBO. “That pace of growth partly reflects the dampening effect on economic activity from the higher tax rates and curbs on spending scheduled to occur this year and especially next. Although CBO projects that growth will pick up after 2013, the agency expects that the economy’s output will remain below its potential until 2018 and that the unemployment rate will remain above 7 percent until 2015.”

According to the CBO report, federal tax revenues equaled $2.302 trillion in fiscal 2011, and will increase to $2,523 trillion in fiscal 2012, $2,988 trillion in fiscal in 2013, and $3,313 trillion in 2014.

As a percentage of GDP, according to CBO, federal tax revenues were 15.4 percent in fiscal 2011, and will be 16.3 percent in 2012, 18.8 percent in 2013, and 20.0 percent in fiscal 2014.

In dollar terms, the anticipated increase in federal tax revenue from fiscal 2011 ($2.302 trillion) to fiscal 2014 ($3.313 trillion) is $1.011 trillion. That is an increase of 43.9 percent.

From just 2012 to 2014, the increase in federal tax revenues from $2.523 trillion to $3.313 trillion equals $790 billion – or 31.3 percent.

The anticipated percentage increase in federal tax revenue is not only large when calculated in dollar terms but also when calculated as a share of GDP. The jump from 15.4 percent of GDP in fiscal 2011 to 20.0 percent of GDP in fiscal 2014 equals an increase of 29.8 percent. The jump from 16.3 percent in fiscal 2012 to 20.0 percent in fiscal 2014 equals an increase over two years of 22.7 percent.

Federal tax revenues have averaged “about 18 percent of GDP for the past 40 years,” according to CBO. So, in the next two years federal tax revenues will rise from a level that is below the modern historical average to a level that is above it.

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CBO: Stimulus Almost Doubled U.S. Debt

CBO: Stimulus Almost Doubled U.S. Debt – Washington Examiner

A new report from the Congressional Budget Office (CBO) finds that President Obama’s economic stimulus program helped nearly double U.S. debt.

The 2011 Long-Term Budget Outlook, released Wednesday morning, reports that the “the combination of automatic budgetary responses” and Obama’s stimulus “had a profound impact on the federal budget.” According to CBO projections, before Obama’s stimulus became law, federal debt equaled 36 percent of GDP and was projected to decline slightly over the next few years. Instead, thanks in large part to the stimulus, debt reached 62 percent of GDP by 2010.

Other lowlights from the report include:

* Debt will reach 70 percent of GDP by the end of this year – the highest percentage since World War II.
* Spending on Medicare, Medicaid, and Social Security will reach 15 percent of GDP by 2035 – spending on all government programs has averaged 18.5 percent over the past 40 years.
* Total government spending is set to hit 27 percent of GDP by 2035.
* Taxes are set to grow from 19 percent of GDP in 2013, to 23 percent by 2035.
* Americans “at various points on the income scale would pay a larger percentage of their income in taxes than people at the same points do today.”
* The effective marginal tax rate on labor income would rise from about 25 percent now to about 35 percent in 2035.

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CBO: Insurance rates will rise under ObamCare

H/T Ace of Spades

Via Hot Air

The CBO report stresses that the increase in premiums will be offset by subsidies for those who qualify, but that means that American taxpayers will be footing the bill for the increase.  The report also calls into question — again — one of the primary funding mechanisms for ObamaCare:

Individual insurance premiums would increase by an average of 10 percent or more, according to an analysis of the Senate healthcare bill.

The long-awaited report by the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) also concluded that subsidies provided by the legislation would make coverage cheaper for those who qualify. …

Though Republicans will seize on the projections that insurance premiums for individuals would increase, Democrats will highlight the conclusion that the legislation would lower premiums by 56 to 59 percent for those individuals who would receive subsidies to buy insurance on the exchange created by the legislation. Of those who participate in the exchange, 57 percent would be eligible for subsidies. The subsidy would cover about two-thirds of their premiums, the report says.

This exchange, open to individuals and small-business employees, would provide coverage to just 17 percent of the marketplace, the report notes.

So, overall the vast majority will be paying more, and will be hit with the taxes to pay for that 17% who will benefit from the subsidies. I thought Obama wanted to CUT health care costs?