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Let's dive into the 176 page Congressional Budget Budget Office report on the US Economic Outlook: 2019 to 2029 to see what fantasies we can find.

"Over the 2020–2029 period, deficits are projected to average 4.4 percent of GDP, totaling $11.6 trillion. Such deficits would be significantly larger than the 2.9 percent of GDP that deficits averaged over the past 50 years."

That is a start in the right direction. It implies $1.16 trillion deficits as far as the eye can see.

The problem is debt rises far faster than deficits because deficits ignore unfunded liabilities like Social Security. The CBO uses this sleight-of-hand magic every year.

If they project $1.16 trillion deficits as far as the eye can see, the total will be worse.

Front Loaded Tax Cuts

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Despite the fact the CBO expects income tax revenue to jump starting 2025, they expect deficits to be smooth through 2029. What's up with that?

Smooth as Clockwork

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Apparently, there will be no recessions, no inflation, and no deflation in the next decade.

I sympathize somewhat. It is impossible to pencil in recessions when it is impossible to predict the timeline.

But to pass the tax cuts, Congress had to make economic assumptions that are highly questionable at best.

Baseline Projections vs Historical Trends

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I seriously question these deficit projections. One hard recession in 10 years will kill the whole shebang.

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Also check out that net interest expense projection. The national debt is $22 trillion and rising. The CBO assumes trillion dollar deficits as far as the eye can see. Does 3.0% seem realistic?

Age 65 and Older

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Social Security Projections

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At some point the percentage of those over 65 will crash as boomers die off. But there are also "Medicare for All" proposals to keep spending escalating.

Even the base assumption seems highly optimistic due to the flatline in the population percentage of those under the age of 64.


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Despite very unfavorable boomer demographics, the CBO projects the deficit to increase a mere 0.5% on average over the next 10 years.

Federal Debt Projections

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That chart rings true. We are on a hyperbolic debt path.

That's as much as I can take. Inquiring minds may wish to slog through all 176 pages for more hidden gems.

Mike "Mish" Shedlock