The President’s difficulties in positioning himself as the champion of a jobs renaissance were compounded by two new reports on the nation’s fiscal condition, one by the Congressional Budget Office (CBO), another by the General Accountability Office (GAO).
The CBO analysed the President’s proposed budget for the next fiscal year and estimates the federal deficit over the next decade will clock in at $9.5 trillion (£5.8tr), a mere $2.3 trillion (£1.4tr) higher than the White House estimate. And the GAO, re-assessing the nation’s long-term outlook, concluded that the fiscal situation has deteriorated. If the nation’s debt is to be stabilised at 62% of GDP, an immediate tax increase of 15%, or a spending cut of 13%, or some combination of the two is needed.
The Peter G Peterson Foundation, a sort of budget watchdog and nag, concludes that even under a set of optimistic assumptions, “large and persistent deficits still lead to an unsustainable growth in debt… and a steady growth in net interest payments to service this growing debt”. By 2030, unless the President and Congress come to grips with the fiscal situation, net interest payments and entitlements (pensions, healthcare costs) will consume almost the entire budget, leaving nothing for spending on defence, education and other programmes.