Factually, this is incorrect. Taxes are 3% of GDP below their historical average (15%), Spending is 4% higher than historical average. Taxes are also proejcted to increase quickly as the the economy recovers, but spending will not fall back to historical average.
Source: CBO’s new longterm outlook.
http://www.cbo.gov/ftpdocs/120xx/doc12039/01-26_FY2011Outlook.pdf
Looking at table E-9, I’d guess the big jump in mandatory spending as a percentage of GDP is because the denominator (the economy) went down, not because spending went way up.
Is there a projection in there of how much is actual above-trend spending increase, and how much is the economy collapsing re: the spending/GDP ratio?
For the specific 4% number - are you taking spending circa 2009-today? Keep in mind that there was a lot of one-time stuff in those spending numbers which spiked spending; that stuff isn’t ongoing. Likewise the GDP part of that number is smaller; if we hold spending steady while tanking GDP spending as a percentage of GDP goes up.
edit: beaten by McCullough.
It’s not one-time though! That’s what’s scaring the beejezurs out of policy folks. What’s scaring folks even more is the idea that a) while the baseline is silly on Iraq/Afghan war spending it’s b) extremely doubtful that some cuts like the SGR will ever take place. So it’s both optimistic/negative at same time. I haven’t finished reading the whole thing but I’d love to see a more realistic/alternative baseline where we spend less on the wars and don’t implement SGR or have the AMT tax effect etc.
From opening chapter on spending:
In the Congressional Budget Office’s (CBO’s) baseline
projections, federal outlays total $3.7 trillion in 2011,
about $250 billion (or 7 percent) more than the amount
recorded for 2010. Those outlays equal an estimated
24.7 percent of gross domestic product (GDP), a larger
share than last year and well above the 20.8 percent average
share of the past 40 years. As the economy expands in
the next few years, federal spending is projected to
decline modestly relative to GDP through 2014 before
turning up again—averaging 23.5 percent of GDP over
the next decade, under the assumptions that govern baseline
projections.1
jeffd: First, don’t underestimate the Democrats beholden status to the rich. Remember, they refused to let the tax cuts to the wealthiest expire when they had the chance. They have recently talked a much better game than they have walked.
Secondly, the CBO report is very sobering. I’m trying to find where the numbers are crunched on each aspect, such as letting the Bush era tax cuts expire, what is the impact of that piece alone? I’m not sure it is at all simple to increase the expenditures enough without unintended consequences and the cuts part is also hard and politically (and practically) challenging.
Again, the CBO report in its entirety is both interesting and scary.
Haven’t played with it yet, but that’s a cool link I had not seen -thanks.
EDIT: Cool, I just gave us a surplus. Wonder how accurate those numbers are? Also how accurate the editorials are, for example, on capping Medicare growth, it states “this would crack down on many hospitals and doctors with the highest costs.”
solved. 100 billion surplus in 2015, 60 billion in 2030.
well, that was easier than expected. the jeffd way solved most of the problem. left the military, social security, domestic and foreign programs and investment taxes alone.