Barack Obama is ready to turn the page on the $1 trillion deficits that once defined his presidency. That’s easy for him to say — he’ll no longer be in office when everything blows up.
Yes, Monday’s Congressional Budget Office report is consistent with his State of the Union assurances of “a growing economy, shrinking deficits, bustling industry and booming energy production.” Especially shrinking deficits: the annual discrepancy between federal spending and revenues is projected to drop to $468 billion.
While that’s still a big number, it’s the lowest of the Obama administration and amounts to only about two percent of the economy. Deficits peaked at $1.4 trillion.
That’s the good news. The bad news is the deficit begins spiking again in 2017, the year Obama’s successor will be sworn into office, before returning to $1 trillion a year in 2025.
All that red ink comes without another Great Recession, with the country’s biggest wars supposedly ending, without any new big-ticket spending items.
Medicaid spending will be double what it was when Obama took office, thanks in part to Obamacare. Spending on the health care exchanges, a mere $15 billion in 2014, will be just under $100 billion annually in only two years.
Between 2016 and 2025, the Obamacare Medicaid expansion will cost $920 billion and $1.1 trillion on health insurance subsidies. That’s a rounding error away from $2 trillion.
Think about that the next time you read a White House statement about “deficit-reducing health care reform.” Obama has been pretending you can be Calvin Coolidge and Lyndon Johnson simultaneously for quite some time.
The CBO estimates 31 million people will still be uninsured.
Federal spending on entitlements and interest payments on the debt will gobble up 100 percent of tax revenues by 2030, leaving deficits to pay for national defense and all the remaining discretionary spending.
Some of this is due to projected higher interest rates, which if true will nearly quadruple interest payments on the debt by 2025. But health care accounts for a third of the total spending growth over the next ten years.
In 2013, Social Security paid out nine percent more than it received in noninterest income. That’s expected to nearly double, averaging 17 percent over the next decade.
By 2039, the net federal debt will exceed the nation’s economy. The gross debt already does.
All this should temper our enthusiasm for the short-term deficit reduction of the last couple years. The long-term fiscal picture still looks dire.
The baby boomers’ retirement isn’t Obama’s fault. The fact that the major federal retirement programs are all still structured the way they were for the baby boomers’ parents and grandparents is partly his fault. And the costs of Obamacare are almost entirely his fault (Congress deserves its share of the blame too).
After six years of blaming George W. Bush for all the country’s problems, Obama is ready to take credit for things getting better.
Bush dug a deeper hole for Obama than many conservatives are willing to admit. But by the standard Obama has set, he doesn’t get to turn the page so quickly. We should judge his presidency by the size of the hole he digs for the next president.
From the looks of things, that will be a hole big enough to fit trillions of dollars.
W. James Antle III is managing editor of The Daily Caller and author of the book Devouring Freedom: Can Big Government Ever Be Stopped? Follow him on Twitter.