Visualizing The Debt Deal
Tuesday August 2nd, 2011 • Posted by Craig Eyermann at 11:15am PDT • 8 Comments
How has the projected future of spending for the U.S. government changed as a result of the recent debt deal in Washington D.C.?
Stanford University’s John Taylor put together the following chart to illustrate the effect the two-part planned spending reductions that are called for in the just passed Budget Control Act of 2011 (BCA) will have as compared to President Obama’s Fiscal Year 2012 budget proposal, as well as the U.S. House of Representatives’ FY2012 budget resolution (aka the “Ryan Plan”) that passed earlier this year:
The two BCA tranches (“tranche” is a French word that means “slice” or “piece”) reflect the two steps of spending reductions specified in the Budget Control Act.
What we see is that after both parts of the spending reductions covered by the Budget Control Act are in place, the difference between President Obama’s original budget proposal and the Ryan Plan has been cut in half, which is perhaps the best we could have hoped for in a situation where we have such large differences within the government, with one side hoping to continue excessively high levels of spending and the other side aiming to return to historic levels of federal government spending with respect to the nation’s economic output.
As things stand today, the amount of federal spending provided for by the Budget Control Act is still well above the level of U.S. federal government spending that typical Americans can support through their taxes. It will still require major changes in Washington D.C. to truly put the United States federal government’s finances on a genuinely sustainable path.
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Robert Johnson says:
Is anybody really surprised at this? Another example of shady back-room politics. How much pork is hidden in this bill? Our so-called leaders are running our country into the ground, and we keep voting them back into office so they can do MORE damage. I guess the old saw is true: “we get the kind of government we deserve.”
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Bert says:
They need to get it down to ten trillion(debt), and falling. And, that needs to happen in the next 5 years. It’s sad, that we really have to nail their feet to the floor on this, but it seems like if you leave the politicians an ‘out’ to keep on a-spending, it’ll never stop. So, you establish a standard, a plan of action, and you follow it, and you make quarterly reports to the taxpaying public. Uncle Sugar can’t just keep printing billions per day forever without consequence. People are going to have to do the work necessary at the local and state level, to unload the federal government. If they need to make a state-by-state project out of it, then let no grass grow.
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Nice idea, Bert, but where the $1 trillion per year come from? It can’t be borrowed, obviously, so it would come from increased taxes. Total federal tax revenue is now about $2.1 trillion per year. A 50% increase in tax revenue would require tax rate increases of more than 50%, perhaps even double. This would kill the economy.
Even during the Clinton years when surpluses were reported, total debt continued to increase, due to phony Trust Fund accounting.
The debt will be extinguished by inflation and/or default. It will never be paid off nor even reduced substantially.
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[...] to truly put the United States federal government’s finances on a genuinely sustainable path,” writes Independent Institute Research Fellow Craig [...]
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[...] to truly put the United States federal government’s finances on a genuinely sustainable path,” writes Independent Institute Research Fellow Craig [...]
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AluminumKen says:
I’m all in favor of reducing the debt to $10-trillion over next 5-years. I have a simple solution. Lets go back to the people we owe this money, and ask them (as a patriotic gesture) to discount their debt by 50%. That would achieve our goal now, and we wouldn’t have to raise taxes on the wealthy or business. This shouldn’t be a problem since the American people are owed $9.8-trillion by our own government, and I know all those gun toting, flag waving, red blooded “Tee Party” types would jump at the chance to discount by 50% their 401, social security, ss disability, medicare, federal retirements, etc., trust fund bonds. I do hope they realize when the fight tax increases they are just cutting their own throats at ever getting paid back the money they are owed. That’ll be O.K. though, as they are so patriotic they won’t even wince at the thought that all their money was used during the Bush years to pay for their Prescription Drug Program, Tax Cuts, two wars, and all those nice cash tax rebates. Too bad their intelligence doesn’t match the loudness of their rhetoric. They have no clue their being sold out by those very same “Tee Party” nuts they put into office.
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[...] situation. It’s called a “death spiral“. And while the Budget Control Act of 2011 helped lessen the U.S. government’s financial rate of descent, it still has not resumed a healthy fiscal [...]
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