Monday afternoon at the Associated Press, aka the Administration's Press, Andrew Taylor predictably described the House's passage of the Ryan Budget in shrill terms (in order of appearance): "A slashing budget blueprint"; "Sweeping budget cuts"; balances the budget "at the expense of poor people and seniors"; "sharp cuts to domestic programs"; "staking out a hard line for the future"; and "tough cuts." Naturally, he failed to disclose that the Ryan budget increases the federal government's total outlays in each and every fiscal year from 2015 to 2024, with the final projected year coming in at $4.995 trillion, or 42 percent above the $3.523 trillion in spending the Congressional Budget Office predicted yesterday for fiscal 2014.
In the process of performing the AP's usual hatchet job, Taylor let loose with a howler about the federal government's ability to continue on its current financial path. The AP reporter may also have inadvertently let something slip into his narrative about the viability of a cherished government program, something which is a deep, dark secret to most Americans, but is quite well-known to those who watch things more closely:
Here's Taylor's tall tale about the government's projected path:
(Aside: There's absolutely no bias in that tag line, is there? /sarcasm)
Democrats countered with a plan that would leave Obama's health care plan and rapidly growing health programs like Medicare intact, relying on $1.5 trillion in tax hikes over the coming decade to bring deficits down to sustainable but still-large levels in the $600 billion range.
Who says that annual $600 billion deficits are sustainable, especially considering the fact, as demonstrated in last night's post on March's single-month deficit (at NewsBusters; at BizzyBlog), that reported deficits are consistently lower than the growth in the national debt?
The current debt held by the public of $12.585 trillion is about 73 percent of the nation's estimated gross domestic product of $17.154 trillion (assuming annualized 1.5 percent growth during the first quarter of 2014). That's not terribly far from the 90 percent level economists believe is problematic, especially when you consider that the percentage has grown from about 34 percent to its current level since Congressional Democrats passed their first budget after gaining control, and from about 43 percent since President Barack Obama was first inaugurated. (Note: The percentages just cited are slightly below those presented at the link because the graphic did not consider the government's revised definition of GDP which had been released a few months earlier.)
Also relevant: If Ben Bernanke's and now Janet Yellen's Federal Reserve wasn't "buying" (i.e. creating money out of thin air to buy) the vast majority of the government's increased level of debt, who would? The Fed's current rate of treasury debt purchases is $30 billion a month, or $360 billion per year — about 70 percent of the current fiscal year's projected deficit. Does Taylor really believe that the Fed's "quantitative easing" can go on forever?
Here's a strong argument for why Ryan's budget is far too timid, and the government's current path can't survive: The Ryan budget, for all of its alleged ugly cuts, still has the nation spending $659 billion (Table S-3 at link) on interest alone in 2024. His budget pegs the status quo figure at $851 billion. Both numbers assume that the current historically low interest rates stay the way. A two percentage-point increase would blow both Ryan's and the status quo figures up to well over $1 trillion per year — and we're supposed to believe that the world's confidence in our ability to pay wouldn't be shaken?
It's incredibly irresponsible for Taylor to present projected $600 billion annual deficits as presumptively sustainable. They're not.
Taylor's slip may have really been a significant tell:
Republicans say the new "premium support" system for future Medicare retirees who are now 55 or younger would prevent the budget from spiraling out of control as more baby boomers retire and the present system collapses.
That statement seems to accept the Republicans' unfortunate but almost definitely correct premise that continuation of the status quo guarantees that Medicare's collapse. Barring miraculous economic growth, it does, and it seems that Taylor just admitted as much. If so, welcome to the club, buddy.
Cross-posted at BizzyBlog.com.