CBO: Hard choices ahead on debt - News and Current Events | futures.io
futures.io futures trading

Go Back   futures.io

> Futures Trading, News, Charts and Platforms > Traders Hideout > News and Current Events

CBO: Hard choices ahead on debt
Started:June 5th, 2012 (03:23 PM) by kbit Views / Replies:167 / 0
Last Reply:June 5th, 2012 (03:23 PM) Attachments:0

Welcome to futures.io.

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community. It's free and simple, and we will never resell your private information.

-- Big Mike

Thread Tools Search this Thread

CBO: Hard choices ahead on debt

Old June 5th, 2012, 03:23 PM   #1 (permalink)
Elite Member
Aurora, Il USA
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
kbit's Avatar
Posts: 5,839 since Nov 2010
Thanks: 3,275 given, 3,321 received

CBO: Hard choices ahead on debt

The Congressional Budget Office on Tuesday painted a stark picture of the country's fiscal future, which will be determined in part by tough choices lawmakers face in the coming months on the federal budget.

The CBO, the nonpartisan official beancounter in Washington, painted two scenarios for Congress.

The first assumes laws currently in place rule the day. That means lawmakers do nothing to lessen the effects of the so-called fiscal cliff and allow $7 trillion in tax hikes and spending cuts start to take effect in January.

Under that scenario over the long run, debt falls to 53% of the size of the economy by 2037 from more than 70% today. Tax revenue would rise to 24% of GDP in 25 years and keep growing. That would be well above the 18.3% historical average.

Simultaneously, spending in vast portions of the federal budget would shrink dramatically. Other than Medicare, Medicaid, Social Security and interest, spending would fall to the lowest percentage of GDP since before World War II.

But entitlement spending would continue to increase because of the aging population and the rising cost of health care.

Specifically, spending on the major health care programs would nearly double to 10% of GDP in 2037 from more than 5% today. Social Security spending would rise much less sharply to more than 6% in 2030 from 5% today.

Related: Fiscal cliff likely to cause recession

By 2037, entitlement programs would account for 16% of GDP -- nearly as high as the historical average for all federal spending minus interest costs.

Then there's the second scenario analyzed by CBO -- the one many consider to be a more realistic outlook.

In that scenario, Congress largely leaves many of today's policies in place. Among them: The Bush tax cuts. Protection for the middle class against the Alternative Minimum Tax. A rollback of scheduled payment cuts for Medicare doctors.

The agency also assumes lawmakers cancel the nearly $1 trillion in spending cuts set to take effect next year.

So what happens?

First, spending on health care entitlements would be slightly higher, accounting for 10.4% of GDP.

Debt would be pushed to more than 90% of GDP by 2022, cross its historical high of 109% by 2026 and continue rising to nearly 200% by 2037. And that doesn't account for any negative effects that such high debt might have on the economy.

Despite growing demand for entitlements, revenues would level off at 18.5% of GDP, a little above the historical average. And spending on everything except the entitlement programs and interest would also hew to its historical average.

CBO made a point of noting in its report that today's high levels of debt are not solely due to the recent surge in spending and drop in revenues that resulted from the 2008 financial crisis and economic downturn.

"The growing debt also reflects an imbalance between spending and revenues that predated the recession," the agency said.

And under the current policy scenario that imbalance would be exacerbated.

In a separate report last month, the CBO estimated that allowing fiscal cliff policies to take effect all at once would likely cause a recession in 2013.

CBO: Hard choices ahead on debt - Yahoo! Finance

Reply With Quote


futures.io > Futures Trading, News, Charts and Platforms > Traders Hideout > News and Current Events > CBO: Hard choices ahead on debt

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Upcoming Webinars and Events (4:30PM ET unless noted)

NinjaTrader 8: Programming Profitable Trading Edges w/Scott Hodson

Elite only

Anthony Drager: Executing on Intermarket Correlations & Order Flow, Part 2

Elite only

Adam Grimes: Five critically important keys to professional trading

Elite only

Machine Learning Concepts w/FIO member NJAMC

Elite only

MarketDelta Cloud Platform: Announcing new mobile features

Dec 1

NinjaTrader 8: Features and Enhancements

Dec 6

Similar Threads
Thread Thread Starter Forum Replies Last Post
Week Ahead: Debt Dominates but the Economy Will Matter Quick Summary News and Current Events 1 July 31st, 2011 05:48 PM
Week Ahead: Debt Talks, Earnings Will Whip Up Volatility Quick Summary News and Current Events 0 July 17th, 2011 06:10 PM
'Nothing But Bad Choices' Ahead for Greece: El-Erian Quick Summary News and Current Events 0 June 20th, 2011 12:54 PM
Debt Limit D-Day Means Tough Choices for President Obama Quick Summary News and Current Events 0 May 16th, 2011 02:00 PM
Week Ahead: All Eyes on Europe's Sovereign Debt Crisis Quick Summary News and Current Events 0 June 4th, 2010 11:50 PM

All times are GMT -4. The time now is 09:16 AM.

Copyright © 2016 by futures.io. All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts

Page generated 2016-10-26 in 0.06 seconds with 19 queries on phoenix via your IP