When Doing Nothing Is The Best Thing To Do
Sometimes stalemate is a good thing. Today’s fiscal report from the Congressional Budget Office makes that very clear, as Ezra Kline reports:
The Congressional Budget Office just released the latest edition of its long-term budget outlook (pdf), and it shows the same thing as always: If Congress lets the Bush tax cuts expire or offsets their extension, implements the Affordable Care Act as scheduled and makes or offset the Medicare cuts prescribed by the 1997 Balanced Budget Act — which CBO calls the “extended baseline scenario” — the national debt will be totally manageable.
If Congress passes laws extending the Bush tax cuts without offsetting the cost, repealing the Affordable Care Act and its cost controls and protecting doctors from Medicare cuts without making up the savings elsewhere — the “alternative fiscal scenario” — the national debt will be totally out of control.
Here’s the CBO statement … more words, same message:
One long-term budget scenario used in this analysis, the extended-baseline scenario, adheres closely to current law. Under this scenario, the expiration of the tax cuts enacted since 2001 and most recently extended in 2010, the growing reach of the alternative minimum tax, the tax provisions of the recent health care legislation, and the way in which the tax system interacts with economic growth would result in steadily higher revenues relative to GDP. Revenues would reach 23 percent of GDP by 2035—much higher than has typically been seen in recent decades—and would grow to larger percentages thereafter. At the same time, under this scenario, government spending on everything other than the major mandatory health care programs, Social Security, and interest on federal debt—activities such as national defense and a wide variety of domestic programs—would decline to the lowest percentage of GDP since before World War II.
I’m not convinced that Klein’s “totally manageable” characterization is correct … but the CBO makes it clear that doing nothing (letting the Bush tax cuts expire, not repealing health care bill, etc) is the best thing to do. (Well, raising taxes on the upper 1% might be “better” but that is not going to happen.)
The CBO is clear: proposals put forth by the GOP as “helping” the economy do the opposite (emphasis added):
Under those policies, federal debt would grow much more rapidly than under the extended-baseline scenario. With significantly lower revenues and higher outlays, debt held by the public would exceed 100 percent of GDP by 2021.
Read the CBO report and then read their lips.