Another budget report lays it on the line

Under its “Extended-Baseline Scenario,” the CBO projects debt to rise from 69 percent of gross domestic product today to 75 percent by 2020 and 84 percent by 2035. But under its “Alternative Fiscal Scenario,” which makes more realistic assumptions about the actual policies lawmakers might extend, the CBO projects debt to grow to 97 percent by 2020, and to 187 percent by 2035, spiraling out of control thereafter.

“The levels of debt projected in the alternative scenario are completely unsustainable,” the CRFB reports, “and the projections under current law will almost certainly prove to be wildly optimistic. Both highlight the need for a comprehensive deficit reduction plan that … addresses the long-term drivers of debt — health care and retirement spending.”

This growing imbalance is primarily fueled not by inadequate tax collections, but “by growing levels of spending, which under both scenarios will far exceed their historical averages of below 21 percent of GDP — reaching 23.2 percent and 33.9 percent of GDP by 2035 in the Extended-Baseline Scenario and Alternative Fiscal Scenario, respectively.”

And that growth will come primarily from increases in entitlement spending — Medicare, Medicaid, the new medical “exchange subsidies” and Social Security — as well as from higher interest costs resulting from growing levels of debt.

Democrats are now apparently insisting on massive tax increases as the primary tool to impose a modicum of fiscal sanity on Washington. That’s folly — and it would accomplish the opposite. Besides, even with revenues from crippling individual tax collections reaching unheard-of levels, deficits still persist, health care spending continues to grow and the budget does not reach balance.

Without massive spending cuts, debt is projected to surpass the size of the economy in only 10 years, and to be twice the size of the economy by 2037. “No reasonable person can view this scenario as sustainable,” the CBO noted.

Unfortunately, many Washington fixtures of both parties continue to respond with an answer that will sound eerily familiar to anyone who’s ever dealt with a junkie or an alcoholic: “I agree we need to get this spending under control. But too much austerity might shock the economy, so first we need another influx of spending … “

That’s the same formula that got us where we are today.

“Policymakers must aim to reduce the deficit by at least $4 to $5 trillion over the next decade in order to put the debt on a downward path,” the CRFB insists. This must include “meaningful reforms to slow the growth of entitlement spending over the medium and long-run.”

And the check is in the mail.