In a rare moment of agreement with President Obama, House Speaker John Boehner in March admitted that "we have no immediate debt crisis." But despite Tuesday's analysis from the Congressional Budget Office (CBO) showing that the near and mid-term U.S. debt picture has improved over the last six months, Speaker Boehner has apparently changed his mind.
Of course, you'd never know about the dramatically brighter national debt forecast for the next decade from Boehner's statement:
"CBO's latest report serves as yet another warning that Washington must act now to rein in our massive deficits and debt, which are hurting our economy, costing jobs, and jeopardizing the American Dream for our kids and grandkids. Ten thousand baby boomers are retiring every day, and as CBO notes these deficits and debt are unsustainable. Republicans have demonstrated leadership in tackling this problem, passing a budget that balances over 10 years. The president and his party should be honest with the American people about the fiscal challenges we face, and demonstrate the courage necessary to work in a bipartisan way to solve our spending problem."
Like House Budget Chairman Paul Ryan ("In the weeks ahead, I hope we work together to heed CBO's warning. We must provide relief to the families we serve. We should start by delaying Obamacare and paying down the debt to help grow the economy"), Boehner has it exactly backwards.
After all, as the CBO explained in May, after slashing $2.5 trillion from the next decade's red ink in just the past two years, the U.S. national debt as a percentage of the American economy has stabilized. (The dramatic slowdown in the rate of increase of health care costs could very well brighten the picture further.) May's 2013 deficit projection was now $642 billion, half the level Barack Obama faced on the day he first took the oath of office in 2009. And as the agency revealed this week, for the next decade U.S. national debt will remain at sustainable, stable levels:
The economy's gradual recovery from the 2007-2009 recession, the waning budgetary effects of policies enacted in response to the weak economy, and other changes to tax and spending policies have caused the deficit to shrink this year to its smallest size since 2008: roughly 4 percent of GDP, compared with a peak of almost 10 percent in 2009. If current laws governing taxes and spending were generally unchanged--an assumption that underlies CBO's 10-year baseline budget projections--the deficit would continue to drop over the next few years, falling to 2 percent of GDP by 2015. As a result, by 2018, federal debt held by the public would decline to 68 percent of GDP.
It is true that CBO estimates that by 2023, "the budget deficit would grow to almost 3½ percent of GDP under current law, and federal debt held by the public would equal 71 percent of GDP and would be on an upward trajectory." But despite the mythmaking of John Boehner, Paul Ryan and their GOP allies, Obamacare has nothing to do with making Uncle Sam's debt worse. In fact, CBO has consistently concluded that the Affordable Care Act will reduce, not increase, the debt over the next decade:
On net, CBO and JCT estimate, repealing the ACA would increase federal budget deficits by $109 billion over the 2013-2022 period. Repealing the coverage provisions discussed in this report would save $1,171 billion over that period, but repealing the rest of the act would increase direct spending and reduce revenues by a total of $1,280 billion.
Boehner and Ryan's tall tales don't end there. The Speaker's claim that "our massive deficits and debt...are hurting our economy [and] costing jobs" similarly turns the truth on its head. The entire crisis over the so-called "fiscal cliff" and the budget sequester isn't that the federal government is reducing the debt too slowly but instead much too fast. In March, Boehner said of the $1 trillion, ten year axe being taken to the U.S. budget:
"I don't know whether it's going to hurt the economy or not. I don't think anyone quite understands how the sequester is really going to work."
John Boehner may not know how many jobs will be lost, but virtually everyone else in Washington does. On February 13, 2013, CBO Director Douglas Elmendorf testified to the House Budget Committee about the economic blow from the first year of $1.2 trillion, decade-long sequester:
"The sequester alone will reduce GDP growth this year by 0.6 percentage points, lowering GDP at the end of the year by that 0.6 percent. We think that would reduce the level of employment at the end of the year by about 750,000 jobs."
If John Boehner's Republicans are really serious about jump-starting the economy and creating jobs, now is the time to be adding to the national debt. After all, as Speaker Boehner has acknowledged, "we have no immediate debt crisis."
(This piece originally appeared at Perrspectives.)
