When it comes to deficit reduction, President Obama and the mainstream press seem to have a fascination with the figure of $4 trillion. During last year’s first presidential debate, Obama falsely claimed, “I've put forward a specific $4 trillion deficit reduction plan,” even though he’d done nothing of the sort.
Now, the Wall Street Journal claims, “The Congressional Budget Office estimates it would take about $4 trillion in deficit reduction to bring the budget into balance by 2023.” But that’s not what the CBO says. In fact, the CBO describes the challenge we face as being about 75 percent — and $3 trillion — bigger than that. It writes, “For the 2014-23 period, deficits in CBO’s baseline projections”—which means projections under current law — “total $7.0 trillion.”
And why are we slated to amass $7 trillion in new deficit spending over the next decade (to go along with the $16 trillion in debt we’ve already accrued)? The CBO writes, “Deficits are projected to increase later in the coming decade…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 the debt.” In other words, they’ll rise because of federal health care programs — Obamacare, Medicare, and Medicaid — and rising debt payments.
Indeed, the CBO projects that discretionary spending will be only 11 percent higher in 2023 than it was last year — which means it will drop in real (inflation-adjusted) per-capita terms. One would hope this would mean we’d finally be starting to get our spending under control.
But such hope would survive only so long as it would take to look at federal health care expenditures, which are projected to increase from $825 billion last year to $1.845 trillion in 2023 — rising by a cool $1.020 trillion and 124 percent. Meanwhile, interest payments on the debt are projected to rise from $223 billion last year to $857 billion in 2023 — rising from 6 to 14 percent of all outlays. Under current projections, in other words, by 2023, every time an American taxpayer sends $1 into Uncle Sam, the first 14 cents won’t go toward any program whatsoever but will simply go to paying back prior borrowing.
Nor will that be the only unpleasant effect of our rising debt, which the CBO projects will increase by $10 trillion over that same span — from $16 trillion last year to $26 trillion in 2023. The CBO writes that our massive debt will cause “total wages” to “be lower than they would be if the debt was reduced” and “will decrease income in the United States relative to what it would be otherwise.” As Meghan Clyne writes, forget the children and grandchildren; our rising debts mean that today’s Americans, already mired in the hapless Obama economy, will have their earnings further constrained in the coming years by the federal government’s inability to control its appetite.
The solution? Repeal Obamacare (and its Medicaid expansions) and reform Medicare in a manner that introduces free market competition to bring down costs. In other words, adopt Paul Ryan’s budget.