Morning Bell: President Obama Is Right, We Have A Spending Problem

Conn Carroll / January 27, 2010

Tonight in his State of the Union address, President Barack Obama is expected to propose a “freeze” on government spending. Obama’s spending “freeze” will only last three years, will not start until 2011, will only apply to a $447 billion slice of the federal government’s $3.5 trillion budget, and will not apply to any of the unspent $862 billion stimulus plan, his health care plan or the House of Representatives’ additional $156 billion stimulus plan. Despite all the loopholes, time limits and procrastination, the President should still be commended for beginning to acknowledge reality. And as a new report issued yesterday by the Congressional Budget Office (CBO) shows, the reality is this: the U.S. government has an insatiable spending problem.

The CBO’s summary of the report is bad enough: “Under current law, the federal fiscal outlook beyond this year is daunting … accumulating deficits will push federal debt held by the public to significantly higher levels. At the end of 2009, debt held by the public was $7.5 trillion, or 54% of GDP; by the end of 2020, debt is projected to climb to $15 trillion, or 67% of GDP.” But as bad as those numbers are, our fiscal health is actually worse. The CBO is forced by Congress to make a number of unrealistic assumptions about future revenue and spending changes. But their report makes up for this by including alternative projections that make more realistic assumptions. Heritage fellow Brian Riedl crunched those numbers and found: (more…)