We’ve all been waiting to see the updated CBO Budget and Economic Outlook for 2013 and the next ten years. Most of the news articles are focusing their headlines on the deficit and debt numbers projected in the CBO report. But remember that the reason why CBO deficit projections always understate the reality is because they overstate the amount of revenue they expect to come into the Treasury.
CBO projects the gross federal debt to rise to $26.1 trillion by 2023, just under $10 trillion more than it is today. However, this fails to tell the full story. CBO is projecting revenues to climb to 19% of GDP, even as they predict lethargic economic growth and high unemployment for the foreseeable future. This is all the result of their ridiculous practice of statically scoring every dollar of a tax increase as a dollar more earned by the Treasury. To that end, they are projecting more revenue as a result of the Obama tax hikes.
This is why it’s important to focus on the spending figures in the report. The projected cost of the federal government during the 10-year budget period from 2014-2023 is $47.2 trillion. Spending will rise every year for every program (except for defense during the first few years), topping out at $5.94 trillion in annual spending in 2023. That’s a rate of growth of about 6.7% per year, trouncing the growth of the private sector.