Um, I Think The Braintrust Left Something Out. Again.

From today's Tribune-Review:

The Obama administration might be painting a rosy picture of the federal deficit — the lowest thus far under Barack Obama's tenure — but the Congressional Budget Office is ringing the alarm bells. It reminds that the federal debt that today is 74 percent of the economy will explode to 106 percent by 2039. Spending and deficits must be curbed, the CBO warns. But, of course, that's anathema to “progressives,” who can't seem to wrap their brains around the Law of Diminishing Returns. [Bolding in original.]

But take a look at the report.  On page 5 (page 5!!) we read:

The unsustainable nature of the federal tax and spending policies specified in current law presents lawmakers and the public with difficult choices. Unless substantial changes are made to the major health care programs and Social Security, spending for those programs will equal a much larger percentage of GDP in the future than it has in the past. At the same time, under current law, spending for all other federal benefits and services would be on track to make up a smaller percentage of GDP by 2024 than at any point in more than 70 years. Federal revenues would also represent a larger percentage of GDP in the future than they have, on average, in the past few decades. Even so, spending would soon start to outpace revenues by increasing amounts (relative to GDP), generating rising budget deficits. As a result, federal debt held by the public is projected to grow faster than the economy starting a few years from now, and because debt is already unusually high relative to GDP, further increases could be especially harmful.

To put the federal budget on a sustainable path for the long term, lawmakers would have to make significant changes to tax and spending policies: reducing spending for large benefit programs below the projected levels, letting revenues rise more than they would under current law, or adopting some combination of those approaches. [Emphasis added.]

And what do you think "letting revenues rise more than they would under current law" could possibly mean?

The next page offers up an explanation.  In a discussion of two competing scenarios (do we do this sooner or later?) the CBO's authors use other language to describe what "letting revenues rise" means.  First the "sooner" scenario:

The sooner significant deficit reduction was implemented, the smaller the government’s accumulated debt would be, the smaller policy changes would need to be to achieve a particular long-term outcome, and the less uncertainty there would be about what policies would be adopted. However, if lawmakers implemented spending cuts or tax increases quickly, people would have little time to plan and adjust to the policy changes, and those changes would weaken the economic expansion during the next few years. [Emphasis added.]

And then the "later" scenario:

Reductions in federal spending or increases in taxes that were implemented several years from now would have a smaller effect on output and employment in the short term. However, waiting for some time before reducing federal spending or increasing taxes would result in a greater accumulation of debt, which would represent a greater drag on output and income in the long term and would increase the size of the policy changes needed to reach any chosen target for debt. [Emphasis added.]

Isn't it interesting how the braintrust, in informing its loyal readers about the impending budgetary doom described by the CBO, left out the part about the possibility of avoiding said doom by increasing taxes?

Yea, they want you to know the fullest picture possible of the CBO report.

More On The Trib's Op-Ed Dishonesty

Take a look at this, from today's Tribune-Review:

The Congressional Budget Office is predicting that the debt of the United States will be twice the size of our economy by 2037. (It's now 73 percent of the GDP). And it more than suggests that tax hikes should be a part of the "solution."

And then:

There is no more compelling argument for spending cuts (real cuts, not simply reductions in the rate of spending increases) and real tax cuts (rate reductions that have the private capital-fueled stimulative effect that government spending in no way can mimic).

The historical record of such actions' success is indisputable. And that success has come in administrations both Republican and Democrat over the last century.

Buuuuut...when you actually take a look at the CBO Report, you'll see the depths of the mendacity at play here.

In the report, the CBO is comparing two separate scenarios:

• The extended baseline scenario, which reflects the assumption that current laws generally remain unchanged; that assumption implies that lawmakers will allow changes that are scheduled under current law to occur, forgoing adjustments routinely made in the past that have boosted deficits.
• The extended alternative fiscal scenario, which incorporates the assumptions that certain policies that have been in place for a number of years will be continued and that some provisions of law that might be difficult to sustain for a long period will be modified, thus maintaining what some analysts might consider “current policies,” as opposed to current laws.

Doesn't give us that much detail there, does it?  Luckily, the CBO gives us a few more details about the scenarious.  Here's the first:

• Under current law, revenues would rise steadily relative to GDP because of the scheduled expiration of cuts in individual income taxes enacted since 2001 and most recently extended in 2010; the growing reach of the alternative minimum tax (AMT); the tax provisions of the Affordable Care Act; the way in which the tax system interacts with economic growth; demographic trends; and other factors. Revenues would reach 24 percent of GDP by 2037—much higher than has typically been seen in recent decades—and would grow to larger percentages thereafter.
• At the same time, under this scenario, government spending on everything other than the major health care programs, Social Security, and interest—activities such as national defense and a wide variety of domestic programs—would decline to the lowest percentage of GDP since before World War II.

And the conclusion for that scenario?

That significant increase in revenues and decrease in the relative magnitude of other spending would more than offset the rise in spending on health care programs and Social Security.

If you look carefully, they're talking about the tax benefits of "Obamacare" and letting the Bush tax cuts expire.  Nothing about the doubling of the debt by 2037.

That's the other scenario.  By the way, the CBO says, of these scenarios:

Those scenarios span a wide range of possible policy choices, and neither represents a prediction by CBO of what policies will be in effect during the next several decades.

So right there, there are TWO bits of dishonesty from Scaife's braintrust. One, that the "doubling of the debt by 2037" is a prediction and two that it's the only "prediction" they make. THe CBO report is more of a "if we do this, then this happens, if we do that, then that happens."

Now let's take a look at that second scenario.  Guess what happens there?

• Almost all expiring tax provisions are assumed to be extended through 2022. Specifically, for this scenario, CBO assumed that the cuts in individual income taxes enacted since 2001 and most recently extended in 2010, which are now scheduled to expire at the end of calendar year 2012, would be extended;

Ah...the Bush tax cuts.  There's other stuff in there, but that's the big one.  This scenario is where the bad stuff occurs:

Under those policies, federal debt would grow rapidly from its already high level, exceeding 90 percent of GDP in 2022. After that, the growing imbalance between revenues and spending, combined with spiraling interest payments, would swiftly push debt to higher and higher levels. Debt as a share of GDP would exceed its historical peak of 109 percent by 2026, and it would approach 200 percent in 2037.

Funny how the braintrust didn't say that.

Let the Bush tax cuts expire, leave the Health Care Reform Act alone and the debt settles down a bit, extend the Bush tax cuts and the debt explodes:



And yet our friends at the Trib are using the report to push for more tax cuts and more spending cuts.

See what I mean?  Dishonest.