The Entitlement ‘Elephant of Debt’ in the Congressional Room

Bipartisan Elephants, Endless Debt and Entitlements, Cats without Food … Oh My!

What IS all this fuss about?

Sometimes a picture is worth a 1000 rants.



The Long-Term Budget Outlook

JUNE 2010 – (Revised August 2010)


Image: Federal Debt Held by the Public as a Percentage of Gross Domestic Product

Under Two Budget Scenarios

CBO — The Long-Term Budget Outlook (pdf)

OK sometimes not … What does that Picture mean to me?

2035, Haah!  that’s like a quarter century from now …  you got to be kidding me …

First a little recent history …

Proactively acting to prevent a future disaster of epic proportions, President Obama earlier this year by Executive Order, created this Bipartisan Commission to slay those hypothetical future dragons.  Uncontrollable Federal Debt and the ogre of Entitlement Growth, among others.

National Commission on Fiscal Responsibility and Reform

President Obama created the bipartisan National Commission on Fiscal Responsibility and Reform to address our nation’s fiscal challenges. The Commission is charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run.

Vice President Joe Biden, Erskine Bowles, and Alan Simpson watch as President Barack Obama signs an executive order creating the bipartisan National Commission on Fiscal Responsibility and Reform in the Diplomatic Room of the White House, Feb. 18, 2010.

Proactively acting … usually a good thing — especially when dealing with immediate urgent problems.

Listening to, and acting upon nonpartisan studies, like those of the Congressional Budget Office (CBO) are generally a good idea too.

So what has the CBO to say on those Dangers Looming in our Collective Futures?



CBO — The Long-Term Budget Outlook (pdf)

Summary  (Page 11 of 90)

The Outlook for Major Health Care Programs and Social Security

CBO projects that if current laws do not change, federal spending on major mandatory health care programs will grow from roughly 5 percent of GDP today to about 10 percent in 2035 and will continue to increase thereafter.[1] Those projections include all of the effects of the recently enacted health care legislation, which is expected to increase federal spending in the next 10 years and for most of the following decade.[2] By 2030, however, that legislation will slightly reduce federal spending for health care if all of its provisions are fully implemented, CBO projects.


Under current law, spending on Social Security is also projected to rise over time as a share of GDP, albeit much less dramatically. CBO projects that Social Security spending will increase from less than 5 percent of GDP today to about 6 percent in 2030 and then stabilize at roughly that level.

All told, CBO projects, the aging of the population and the rising cost of health care will cause spending on the major mandatory health care programs and Social Security to grow from roughly 10 percent of GDP today to about 16 percent of GDP 25 years from now if current laws are not changed. (By comparison, spending on all of the federal government’s programs and activities, excluding interest payments on debt, has averaged 18.5 percent of GDP over the past 40 years.)

Page x    (Page 12 of 90)

Alternative Long-Term Scenarios

In this report, CBO presents the long-term budget picture under two scenarios that embody different assumptions about future policies governing federal revenues and spending.


The first long-term budget scenario used in this analysis, the Extended-Baseline Scenario, adheres closely to current law. It incorporates CBO’s current estimate of the impact of the recently enacted health care legislation on revenues and mandatory spending. […] Under this scenario, the expiration of most of the tax cuts enacted in 2001 and 2003, the growing reach of the alternative minimum tax  […]

Those rising rates, combined with the tax provisions of the recent health care legislation, would push total revenues to 23 percent of GDP by 2035 — much higher than has typically been seen in recent decades — and to larger percentages thereafter.


That significant increase in revenues and decrease in the relative importance of other spending would offset much — though not all — of the rise in spending on health care programs and Social Security. As a result, debt would increase from its already high levels relative to GDP, as would the required interest payments on that debt. Federal debt held by the public would grow from an estimated 62 percent of GDP this year to about 80 percent by 2035.


The budget outlook is much bleaker under the Alternative Fiscal Scenario, which incorporates several changes to current law that are widely expected to occur or that would modify some provisions of law that might be difficult to sustain for a long period.


CBO assumed for this scenario that most of the provisions of the 2001 and 2003 tax cuts would be extended, that the reach of the alternative minimum tax would be kept close to its historical extent, and that over the longer run, tax law would evolve further so that revenues would remain at about 19 percent of GDP, near their historical average.

Under that combination of policy assumptions, federal debt would grow much more rapidly than under the extended-baseline scenario. With significantly lower revenues and higher outlays, debt would reach 87 percent of GDP by 2020, CBO projects. After that, the growing imbalance between revenues and noninterest spending, combined with spiraling interest payments, would swiftly push debt to unsustainable levels. Debt as a share of GDP would exceed its historical peak of 109 percent by 2025 and would reach 185 percent in 2035.

Table 1-1

Assumptions About:  Individual Income Taxes

Extended-Baseline Scenario: As scheduled under current law

Alternative Fiscal Scenario: Through 2020, tax cuts from EGTRRA and JGTRRA are extended (except for rate reductions that apply to high-income taxpayers) and AMT relief is extended; thereafter, individual income taxes are adjusted to keep total revenues constant as a share of GDP

And NOW, another one of those 1000-word pictures, with context:


Image: Federal Debt Held by the Public as a Percentage of Gross Domestic Product

Under Two Budget Scenarios — with Annotations implied from Report Text.

Some simple Take-away points, from the CBO study:

Extended-Baseline Scenario

2001 and 2003 Tax Cuts EXPIRED

2035 Federal Debt 80% of GNP

Alternative Fiscal Scenario

2001 and 2003 Tax Cuts EXTENDED

2035 Federal Debt 185% of GNP

Keep pampering the behinds of the Wealthy — and Federal Debt rockets to 185% of GNP.

Make the Wealthy pay their ‘fair share’ — and Federal Debt remains in its “historic ballpark”.

Tough Decision, eh?

SOOOO … Is the Bipartisan Commission actually Listening to, and acting upon that nonpartisan study of the CBO, which spells out the simple corrective course that is needed?   [ie. let the Bush Tax Cuts for the Wealthy expire.]

Well, you be the judge of the “Fiscal Responsibility” festivities.

Here are the Minutes Highlights from a recent meeting of the National Commission on Fiscal Responsibility and Reform (aka. Catfood Commission), when they were presented with the CBO Future Scenarios:

Meeting Minutes (pdf)

Third Meeting of the National Commission on Fiscal Responsibility and Reform

June 30, 2010

Dirksen Senate Office Building

9:30 am – 12:00 pm

Meeting Start: 9:36 am

Sen. Simpson opens meeting with a word on the passing of Senator Robert Byrd



CBO Director Doug Elmendorf

Presents the 2010 Long-Term Budget Outlook from CBO

The healthcare projections are unchanged

The alternative fiscal scenario incorporates changes in law that are expected to occur: ext. of 2001 and 2003 tax cuts, continued AMT relief, Medicare payments to physicians



Rep. Schakowsky

 – Thinks that the alternative baseline presented in the 2010 Long-Term Budget Outlook is a departure by the CBO from past practices of projecting based on existing legislation; Thinks the scenario is predicting future congressional action;

Sen. Simpson

 – Notes that it was the unanimous decision of this commission that they would use CBO figures


Mr. Cote

 – Appreciates the alternative baseline; Wants to confirm that the problem is a structural issue and a demographic issue and that it has been coming for a long time


Rep. Ryan

 – Mentions to the chairmen that the Commission ought to have a discussion about what baseline to use; Ryan argues for using the CBO alternative baseline;


Sen. Conrad

 – Wants to confirm that what is going to be necessary to solve this problem is either a 25% increase in taxes or a 20% reduction in spending, or some combination thereof

Mr. Elmendorf

 – Confirms the order of magnitude


Sen. Conrad

 – Notes that according to Carmen of Reinhart, when a country gets to the level of gross debt at 90% of GDP that it starts to have an impact on growth rates

Mr. Elmendorf

 – CBO focuses on debt held by the public, and projections of unified spending, and doesn’t generally talk about gross debt


Sen. Crapo

 – Wants to clarify the assumptions used in the alternative baseline

Mr. Elmendorf

 – Explains that CBO assumes that the Medicare payments rise with the Medicare costs index which measures the rise in cost of inputs that doctors use

Sen. Gregg

 – How do you see a congress binding a future congress to a future plan?

Mr. Elmendorf

 – Confidence in future changes would require some public commitment from a large collection of elected


Sen. Baucus

 – Notes that in March CBO estimated that the healthcare legislation would reduce deficit; Questions the wisdom of the CBO in making predictions about what aspects of legislation would be followed; Says that the Commission’s challenge is to prove CBO wrong and keep from backsliding, at least on the healthcare side

Sen. Simpson

 – Says he didn’t come to this commission to raise taxes, but that they have to be on the table; Notes that no matter what anyone thinks of the current healthcare bill, it won’t get us there; Thinks they can solve Social Security

Meeting End: 12:02

Maybe IF the Senator’s own Pension Plans were tied to these Entitlement Citizen Support Programs — Maybe then, they’d take it a bit more seriously, and quit treating it like a political football — just another Election Year Wedge Issue, for newly-minted Deficit Hawks to squawk about.

IF you’re fed up with the biases of Alan Simpson, Max Baucus, and Paul Ryan, deciding YOUR Future Quality of Life — a Future that you’ve earned from YOUR Lifetime of FICA TAX Payments —

Then take a moment to sign these Petitions which call for an END this farse of a “proactive” Commission;  It’s time to change the National Discussion:

======== ACTION Requested =========

Stop the Catfood Commission


They are NOT part of the Operating Budget.

Social Security Revenues have their OWN Trust Fund — that is separate from the National Debt — or should be kept so.

Alan Grayson has a mini-site on this at


Campaign for America’s Future has a petition too:…

In addition, several progressive groups have demanded that Simpson be fired due to his decidedly very biased partisan remarks:…


AND THEN get educated — PAY ATTENTION TO what this Catfood Commission is doing with YOUR FUTURE — it matters.

Home of the Commission

Then, Speak out, as your Constitutional rights granted you, as an American Citizen, expects you to do.

Thanks for taking the time.