Tuesday, May 19, 2009

At what point will Obama be "irresponsible"?

From 2010 to 2019, Obama projects annual deficits totaling $7.1 trillion; that's atop the $1.8 trillion deficit for 2009. By 2019, the ratio of publicly held federal debt to gross domestic product (GDP, or the economy) would reach 70%, up from 41% in 2008. That would be the highest since 1950 (80%).

The Congressional Budget Office, using less optimistic economic forecasts, raises these estimates. The 2010-19 deficits would total $9.3 trillion; the debt-to-GDP ratio in 2019 would be 82%.

But wait: Even these totals may be understated. By various estimates, Obama's health plan might cost $1.2 trillion over a decade; he has budgeted only $635 billion.

Next, the huge deficits occur despite a pronounced squeeze of defense spending. From 2008 to 2019, total federal spending would rise 75%, but defense spending would increase only 17%. Unless foreign threats recede, military spending and deficits might both grow.