Obama Fiscal Cliff Plans: $20 Trillion In Debt By 2017
COMMENTARY | President Obama’s Fiscal Cliff plans would land the United States in $20 trillion in debt by 2017. As previously reported by The Inquisitr, a new Gallup poll reveals that Americans support Obama in the “fiscal cliff” negotiations by a margin of 2-to-1 when compared against Republicans. But what many Americans probably don’t know is the relatively short term repercussions the President’s plan will have on the nation.
According to the US National Debt Clock the outstanding Federal debt currently stands at $16.45 trillion. Typically, whenever Congress and the President come up with any budget plan it is analyzed by the Congressional Budget Office (CBO). Unfortunately, the last time President Obama or the Democrats bothered to submit any details was back in August.
Forbes has compared the August CBO numbers against Obama’s current Fiscal Cliff plans to come to this conclusion:
“If we go over the fiscal cliff, the second Obama administration will accumulate $1.5 trillion in deficits for 2013-2017 ($300 billion per year), for a “modest” deficit of less than two percent of GDP. If Obama gets his full wish list and avoids the fiscal cliff, the CBO’s alternate fiscal policy projections yield a cumulated 2013-2017 budget deficit of $4.5 trillion. In this case,the second Obama administration will run annual deficits of almost a trillion dollars a year. Only this time round, Obama does not have the convenient excuse of a deep economic crisis inherited from the previous administration.”
This would bring the US national debt to over $20 trillion by time Obama is out of office. Forbes also points out that in the five points of contention the only one Obama desires the most — taxing the rich — lowers the five-year deficit, and that only by $300 billion (or $60 billion per year). The other four items on Obama’s wish list actually increase the five-year deficit by a combined $3.6 trillion. Assuming the United States doesn’t have its credit rating reduced, and the resulting debt interest rates increased, Forbes point out this chilling fact:
“To gain some perspective, the CBO projects social security to cost one trillion in 2018. Our interest payments on the national debt (at 5 percent [of $20 trillion]) would roughly equal the entire cost of social security!”
Even worse, these gloomy debt estimates do not take into account the high cost of Obamacare, which will likely add billions more to the debt pile threatening to engulf our nation.
Surprisingly, these types of numbers are not new. Neither are they the result of a compromise reached with Republicans in the House. As reported by The Washington Times, near the beginning of the year President Obama submitted his own budget for approval by Congress and even the Democrat-controlled Senate shot it down with a 99-0 vote. That budget plan was far worse than Obama’s current plan.
The old Obama budget plan called for many new taxes but even then the high level of Federal overspending would have increased by $640 billion per year, bringing the annual deficit to $1.97 trillion. This means that by 2017 if Obama had gotten his way there would have been $7.88 trillion in new debt, bringing the overall debt to $24.33 trillion!
Some Democrats claimed the Senate vote on the Obama budget plan was just political brinkmanship, but Republicans in the House said they faithfully reused all of the president’s numbers in the budget proposal. They even challenged Democrats to point out any errors in the numbers so they could correct them, which no Democrat did at the time.
Republicans do not escape a rebuke, either. As a comparison, the chief Republican alternative from the House GOP would create $310 billion in deficits, and three Senate Republican alternatives would all come in below $200 billion. That’s not exactly a balanced budget, although it certainly comes closer.
The so-called Plan B Fiscal Cliff budget plan ignored many of the upcoming problems and, unless other measures were taken, would have cost the economy up to 2.7 million jobs next year, according to the Congressional Budget Office, successfully tanking the economy. According to Forbes, “the top rate on ordinary income over $1 million would climb from 35 percent to 39.6 percent, while the rate on long term capital gains and dividends over that threshold would rise from 15 percent to 20 percent.” Republicans crafted their extra taxes on the rich in this way in order to avoid raising taxes on small businesses as well. Unfortunately, all of the other revenue gains would have come from cutting credits and programs that benefit mostly the poor and middle class.
Perhaps Plan B was not intended to cover all angles but it certainly didn’t cover some of the major important issues. Then again, neither does Obama and Democrat’s current plan. Still, the bottom line is that Congress is currently running a $1.33 trillion deficit. Taxing the rich at 100 percent of their income (as in, all of it!) would only cover around half of the amount necessary to cover that level of Federal spending. So either the poor and middle class will have to be taxed more to cover these costs or such spending will need to be cut. It’s going to hurt either way.
Do you still support President Obama’s Fiscal Cliff budget plans after seeing these numbers?
[Image By China Daily]