Everything You Need to Know About the CBO Report on National Deficit, Future Debt

The media, much like politics, has a spectrum of partisan ideologies that targets consumers of different political persuasions. Fox News is to conservatives what MSNBC is to liberals.

Media is meant to be informative and provide the essentials to a lively debate. It is a disservice to the public when the big story of the day, no matter what it is, becomes politicized to the point that one side portrays the other side as blatantly wrong and begins to question their opponent’s sanity.

The big story is sometimes hidden behind other current events, both foreign and domestic. The economy can seem like a “wonky” topic where the eyes of the general public glaze over whenever GDP and trillion-dollar deficits are mentioned. The media’s coverage of the strife in the Ukraine and the Middle East or the humanitarian crisis at home have a greater visual impact.

Not as much effort was put into covering the CBO’s latest national deficit projections.

Al Kamen, a Washington Post columnist, pointed out that the debt and deficit debate was at its most vitriolic during Obama’s first midterm elections. The tea party blamed the administration’s out-of-control spending as the greatest threat to the nation’s future. However dominant this was for that election cycle, it did not last long enough to make Obama a one-term president.

It worked well in 2010, but Romney’s attempt at using the national debt clock as a campaign tool failed primarily because Obama’s narrative of the improving economy was aided by the media.

In Kamen’s column, Brooking Institution’s Bill Galston pointed out that the tea party wing of the GOP had “an enormous investment in the proposition that ‘spending’ remains out of control and fear that acknowledging the lower deficit would reduce the power of their narrative.”

Leading up to the CBO report, the White House projected decreased national deficits below $600 billion. Obama’s budget officials claimed that as a victory, but a victory does not mean the battle is won.

The CBO even acknowledges that the “waning budgetary effects of policies enacted in response to the weak economy [Bush’s TARP and Obama’s stimulus], and other changes to tax and spending laws [2011’s Budget Control Act and the ensuing sequester] have caused the deficit to shrink this year to its smallest size since 2007.”

In this case, 3 percent of GDP is better than 10 percent in 2009, but by 2018, or the middle of the next president’s first term, the national deficit will begin to grow again.

In the nearly two weeks since the report was released, the media attempted to put the deficit in a historical context, recalling the extraneous post-World War II debt-to-GDP ration of over 100 percent.

So much of President Obama’s first term was spent on fixing the economy and lowering the unemployment rate. According to Obama and his economic advisers, the best way to accomplish this was to increase spending — so much, in fact, that it was very common to see deficits surpass a trillion dollars on an annual basis.

In a Forbes’ opinion post, Akash Chougule wrote:

The government obviously has other responsibilities, but health care entitlement spending is quickly crowding out the government’s ability to meet them, which will harm every American who depends on a variety of public services. The President can celebrate all he wants, but Americans are realizing the hard truth – he has continued to kick the can down the road, and the burden being placed on future generations is rapidly becoming insurmountable.

In full disclosure, Chougule is a policy analyst at Americans for Prosperity, a conservative-leaning organization with ties to the Koch brothers. He does point to other problems the government is facing, but the entitlement portion of the budget will become a bigger problem until it can be reformed.

Deficits are on the decline, but starting at such an exorbitant level means the problem will not dissipate anytime soon. As a matter of fact, the other constant in these CBO reports has been the fact that the debt is on an “unsustainable” path in the coming decade and beyond. That means Obama’s problem will extend to future administrations after his time in office is complete.

Debt is a serious problem when it involves just a single individual or a family. When it involves the whole country, the national implications for the future are dampened to the point of pessimism.

Nobody wants the United States to turn into Greece, but the White House is praising their handling of the economy while tempering their outlook with realism. The media picked up on the optimism to a certain extent, but was also quick to point to the other side of the debate. To a degree, that is a positive sign, but pressure still needs to be applied.

The key phrase in the CBO report is “under current law.” Therein lies the solution. If the president and Congress do not get together to turn around the long-term fiscal outlook right now, if the current law does not change for the better, the United States will face a much greater economic crisis.

Photo Source: Reuters