Congressional Budget Office Director Peter Orszag is playing a role he admittedly hates: the grim economist. The CBO released the annual summer update to its Fiscal Outlook for 2008 to 2018.
On the "Director’s Blog," Orszag explains the economic report and gives it context, including what the takeover of mortgage giants Fannie Mae and Freddie Mac means for the federal budget. The blog, in my opinion, is a great resource and worth a regular read.
Here are some bullets from the update — note health care costs nearly top the list of the nation’s fiscal concerns:
CBO estimates that the deficit for 2008 will be $407 billion higher than last year’s $161 billion. As a share of the
economy, the deficit is projected to rise to 2.9 percent of GDP this
year, up from 1.2 percent of GDP in 2007.
Over the longer term, the fiscal outlook continues to depend mostly on
the future course of health care costs as well as on the effects of a
growing elderly population. CBO estimates that federal spending on
Medicare and Medicaid will grow to 6 percent of the GDP in 2018 and 12
percent of the GDP by 2050.
The reality is this over the next 4 years:
– The next president is going to have keen up the drunken spending spree by Bush and the Republican Congress and other major assoiciated issues (bailout of Fannie and Freddie Mae which my bet is likely to reach the S&L bailout levels when all is finished, 2 foreign wars, etc) by RAISING TAXES and CUTTING SPENDING so neither candidate is being honest or truthful about the likely fiscal reality picture over the next 4 years.
I read the analysis on the amount of money being spent for private contractors in the Iraq War. This presents a dire precedent for attempts to end this war and gives back room justification for creation of another war. In the past, military personnel would simply resume their civilian lives after a conflict, and arms factories would convert back to civilian use, but now the private contractor is already doing their full time civilian job and plants have been created specifically for the war. It’s going to be tough for lobbyist dependant politicians to cut the funds off. Of course the GDP will show this spending as it shows more spending for prisons – which will be glossed over in the political speeches as a, “success” for the economy.