Economics, Taxes and Spending

To infinity and beyond! This is the debt chart Obama and Geithner should be ashamed of

Testifying before the House Budget Committee today, U.S. Treasury Secretary Tim Geithner told Chairman Paul Ryan the following: “We’re not coming before you to say we have a definitive solution to that long-term problem. What we do know is we don’t like yours.”

Actually, President Obama sort of did have a definitive solution. He created a debt commission, which devised a long-term debt reduction plan. Which the president rejected. And instead, we get this new budget proposal, which makes no effort to deal with Medicare, Medicaid, and Social Security—the long-term drivers of U.S. federal debt. The debt curve never gets bent, as the above White House (!) chart shows. (Yes, the chart comes from the White House’s Office of Management and Budget.) It just goes up and up and up—until the heat death of the universe or the economy is struck by a Greek-style debt crisis.

Here’s what the bipartisan Committee for a Responsible Federal Budget says about the president’s plan:

Over the long-term, the President’s budget would not constrain rising debt, as retirement and health care costs continue growing faster than the economy. According to the Administration’s own estimates, debt would grow as a share of the economy past 2022 exceeding 93 percent by 2035 and nearly 125 percent by 2050. These levels would be both economically constraining and ultimately unsustainable.

Well, the president’s budget at least cuts $4 trillion in debt over ten years, as the White House claims, right? Again, the CRFB:

Well, the answer depends on what savings are compared against, and what is counted as savings – but in no case does the President have comparable deficit reduction to the Fiscal Commission. To reach his $4.3 trillion in savings through 2021, the President’s budget counts $1.6 trillion (excluding interest) of already-enacted savings. In addition, it includes two elements which the Fiscal Commission assumed in its baseline – a drawdown of the wars ($740 billion through 2021) and the expiration of the upper-income tax cuts ($830 billion through 2021). If the Commission’s plan were scored the same way as the President’s $4.3 trillion, we estimate it would save roughly $6.5 trillion through 2021.

Well, at least the president’s budget keeps the debt problem from getting any worse over the next decade, right? Not really. Despite $1.7 trillion in tax increases, debt as a share of GDP—already at a historically high level—actually ticks up a bit to 76.5 percent from 67.7 percent in 2011 and 74.2 percent in 2012.

And even to achieve this, the Obama White House has to assume rosy economic growth. As the CRFB says:

OMB’s economic assumptions are somewhat more optimistic than CBO’s, as well as the Blue Chip consensus ranges. The Administration projects real GDP growth to be 2.7 percent in 2012 and 3.0 percent in 2013, compared to 2.2 percent and 1 percent, respectively, from the CBO. Importantly, much of this difference is due to the fact that CBO assumes a temporary economic contraction in 2013 due to all the tax cuts expiring and the automatic spending sequester going off at the same time in the start of 2013. However, OMB continues to be more optimistic than CBO beyond this contractionary period, with estimated growth rates of 2.5 percent per year by the end of the decade as opposed to 2.4 percent by CBO. On the whole, these faster growth rates likely lead to a more favorable fiscal picture than what CBO would show using its economic projections. By our estimates, if OMB were to employ CBO assumptions debt would stabilize at about 80 percent of GDP as opposed to 76 percent.

My baseline case has been that Obama has no interest in being Clinton 2.0, the Debt Cutting President. He wants to be FDR 2.0, the Expanding Welfare State President. He wants that to be his legacy. Let Ryan or Chris Christie or Marco Rubio be the Austerity President in 2017. And what does Geithner care? He’s on his way out this year. At one point during the hearing, Ryan brought out this chart illustrating the impact of the Ryan debt plan, the one Geithner said “we don’t like”:

And here was the exchange between Geithner and Ryan, after Ryan pointed out the terrifying budget baseline (in red):

GEITHNER: You could have taken [the chart] out [to the year] 3000 or to 4000. [Laughs]

RYAN: Yeah, right. We cut it off at the end of the century because the economy, according to the CBO, shuts down in 2027 on this path.

And that’s no joke, Mr. Geithner.

James Pethokoukis is a columnist and blogger for the American Enterprise Institute. He is also an official contributor on CNBC television, a global business and financial channel. He can be reached at or on Twitter: @JimPethokoukis

Previously, Pethokoukis was Washington columnist for Reuters Breakingviews, as well as business editor and economics columnist for U.S. News & World Report.

49 thoughts on “To infinity and beyond! This is the debt chart Obama and Geithner should be ashamed of

  1. obumbbumb will disassociate himself with this and get away with it because the other machine: the GOP helped him get there and he will associate this disaster with the GOP. GOP is so stupid and spineless to let him. What financially sound country can one move to if this maniac is voted in another 4 years?

  2. GEITHNER: … [Laughs]

    pitiful. Cruising on the Titanic and that big rip below the waterline has overwhelmed the pumps and the First Mate makes a funny. In the Liberal Reality, they can always print and borrow their way to prosperity. In the real world: NOT SO MUCH!

    • When the Titanic first hit the iceberg, great chunks of ice fell and landed on the deck of the ship. The bourgeois first 1st class revelers, so convinced that the ship as unsinkable, simply laughed the whole incident off, played with the ice by throwing it at each other, and some even put the ice in their drinks to make a toast to the iceberg.

  3. There really should be only one response to this chart, and it would be directed at President Barack [downgrade] Obama and the rest of the Socialists in his administration:


    Whew! Glad to get that out of my system, I need some strong drink…

  4. And this does not account for rising interest rates. Would like to see an example of what it would look like if interest rates were at some historical common rates… I think it would show we are done for now.

  5. Really,You folks honestly think a clown like Geithner gives 2 sh__s about the economy or anyone but himself and the cronies he hangs with.When he leaves he will walk into a cush job somewhere kissing someones _ss doing nothing and getting 6 large for doing it.WELCOME to the NEW/Old America,Chicago Style.

  6. Has little timmy paid his tax bills yet?

    What do americans do when they find their entire government is crooks and liars?

    Entire: each and every elected and non-elected officals, and many of the underlings.

    Water the tree of liberty.

  7. Simply stated, the Left doesn’t care about increasing debt because their social policies eventually require it. Always. And once deficit spending begins, it only ever trends upward to sustain those policies. Geithner is laughing because this is all so obvious as to not need an explanation.

    • Meanwhile, the right totally cares about debt, as evidenced by the runaway spending clocked up under 2 terms of a republican president that generated no interest or comments whatsoever until inauguration day 2009.
      Yeah, that was some stellar principles you put on display there for everyone.

      • Bush spent tooo much money. So is the answer spend at a rate multiples of that? Is a stimulus to pay off unions and political cronies is the answer?
        All spending bills originate in Congress, who has controlled 2/3 of the government since 1997. Which party originated the spending bills during Bush?
        The level of spending is insanity. In less than a generation we’ll be worse off than Greece is today. My granddaughter will retire in 2027. What type of life will she have then” Social Security??? Medicare??? an employer pension???? They will all be broke. Is that what you are advocating?

  8. You’re creating a false choice here, between the two charts. The projection assumes nothing will be done, but you could have drawn that line at any point in history, when the debt was trending upward, and it would have look just as dire. That’s the problem with straight line predictions. What interest rate does Ryan predict on the debt? What are his revenue projections? Any time you see a straight line like this, then you know the person responsible for it is lazy.

    Of course there will be a solution to the projected debt problem, but it won’t be Paul Ryan’s, because then we’ll be looking at another chart of senior citizens living in poverty with no health care.

    He has no proof that his plan will properly fund health care for those who can’t pay for it.

  9. They don’t care that the chart is scary.

    They know that the daddy party will fix it. Then they can pillory the opposition with it.


  10. Obviously they SHOULD be ashamed – but how can those 2 that have no shame COULD be ashamed of this (or anything)?

    Barack “Builder Of Caliphate” Obama and Tim “Tax Cheat” Geithner – what a pair.

    • No! When will YOU get it? The President is not bent on destroying Democracy? This is nothing but a mythical illusion utlized by some folks in this Country who could not stand that THIS President, THIS man, won the election and likely will do so again!

      • Dude, YOU are the mythical illusion of sanity as you have none. Go home troll, lie to someone that doesn’t have a clear coherent thought in their heads as they might just buy your tripe.

    • Technically, we are supposed to be living in a Constitutional Republic, not a Democracy. That is because our Founding Fathers knew a couple of things. They knew that we needed a rule of law, rather than mob rule; and they knew what would happen when the masses figured out they could vote themselves goods from the public treasury. Sadly, as we become more and more a practicing democracy, the country is going down the crapper.

  11. Monetary illiteracy is rampant with most of these commentators here (and Americans in general)

    Go ahead then and vote for Pres. Geithner – VP Bernanke & Co (yes, BHO is just their puppet)

    Reelect this teleprompter joke of a president but remember what Pres. Garfield said that holds so true for Geithner and his ilk: Whoever controls the volume of money in any country is absolute master of all industry and commerce…

    And, keep dreaming of the free enterprise and constitutional government of yesteryears in the US

  12. Why print charts laying accolades at Ryan’s feet, when in reality, the President DID present a budget plan, which was agreed to by Speaker Boehner only to be rejected by Eric Cantor because it had reveunue generating stimulus provided by allowing the Bush Tax cuts to expire? Why not print the FULL story on this issue and the current state of the economy? Tell me when the GOP will finally get the news that despite all of the fear-mongering, lying about the legitimacy of the President serving this Country as Commander-In-Chief, and marginalizing his accomplishments, here is the rest of the story: There have been 23 months of consistent private-sector non-farming job growth, 10 straight quarters of consistent increased GDP, the Auto Bailout worked, and General Motors is once again the World Wide leader in auto manufacturing. All economic indicators point to recovery and for you folks to not even mention what a heap of trash this President was handed when he was sworn in is disingenuous at best, and dishonest at worst. In addition, for you to neglect to mention that the GOP was hijacked by the most hateful demographic of our electorate is also disingenuous. Don’t believe me? Just look at the signs held at those rallies! Take a look at the supposed “Grass roots” effort of this group of people, when in actuality, the Koch Brothers along with Fox News paid for people to travel to these events. And what did they do when they got there? Well, they showed so much disrespect for the PRESIDENT OF THE US, our Country, that while the rest of the world observed they had to wonder who really was controlling this Country. Thankfully, our President STILL kept it all together, despite the consistent accusations that he was “not born in the United States,” or “he is just not one of us.” The dividers of this Country are not the moderates, liberals or progressives; they are the conservatives. But no worries! Why do I say this? Because the more you people continue to publish just one half of the story (the side that suits your argument) the reality is this: Currently 51% of the American people approve of this President’s job performance. Compare THAT to the current Congressional approval of 11%. Or, why not compare how our President competes with Mitt (take every single position known to man) Romney, and observe how the President beats him according to ALL polling data by at least 8 points. Santorum (the contraception candidate) does worse. Gingrich, even worse. There is Mitt Romney in his own home state of Michigan losing his primary or predicted ot lose it: Why? Because he opined that the auto bailout was the wrong move. One would think he would wake up and smell the roses when he went back to campaign in his home state (forget that he has five home states), but he didn’t! What does he do? He attacks labor! Santorum continues preaching about contraception angering women beyond pale. Gingrich utilizes dog whistle politics telling Americans that those “living in the poorest of the poorest neighborhoods,” don’t have any role model to work? They ought to be tasked with cleaning their own schools? The hidden message? Those black people are taking YOUR money and that Black President is assisting them in doing so. You have called him everything from a socialist, to a muslim, to a marxist, to a bleeding heart liberal, yet, he still prevails. You want to know why? Because nobody is buying what you are selling any longer. Get your party back from it being taken hostage and then, just maybe then, you folks can win an election. Until then, we will see you all in 2016.

    • This is pretty hilarious from your comment….”The dividers of this Country are not the moderates, liberals or progressives; they are the conservatives.”

      Did you read any of your post? You called the right liars, hateful, and racist. Also, you responded to an article about the budget deficits with a whole bunch of rhetoric and no ideas. If you want people to get on board with your thinking, offer them an idea to get behind not just bash the other guy.

      Finally, if you actually think Obama had intentions of addressing entitlements, could you name me one, just one entitlement reform Obama is endorsing (just looking for ones that improves the long term deficits not ones that just increase spending)

    • Wow. So much wrongin so little space. Where to start…

      Obama DID NOT propose a budget plan during negotiations with Boehner. The ONLY budget plan he has proposed until this recent joke was defeated in the Senate 97-0. He couldn’t even get his own party to vote for it.

      Your contention that there has been job growth is ludicrous. While there has been tepid growth in the private sector, unemployment continues to rise. The administration touts lower unemployment by removing the unemployed WHO HAVE QUIT LOOKING from the numbers. There are MORE unemployed now than when Obama took office.

      The Stimulus failed abysmally.

      Obamacare is a dangerous travesty on course to bankrupt the economy and seriously endganger our liberty. 1200 waivers for cronies? IPAB? The most recent trampling on the First Amendment?

      And you contend that Fox and the Koch brothers pay people to show up at protests? Pls provide any evidence of that. Where if you do a simple Google search there is video of people telling journalists that they were paid to show up and protest by unions and other liberal groups at protests in Wiscinsin, Indiana, and elsewhere. The hate is on the left, not the right.

      NO poll has Obama at 51%. If you look at the Real Clear Politics average of polls, about half him underwater and half have him up a point over his negatives. However, if you look at his strongly approves vs strongly disapproves, he’s toast. And please don’t forget that half of Congress is controlled by Democrats…the do nothing half. The House has passed a budget, the Senate none for well over 1000 days. The House has passed 31 job creation related bills…Reid has brought NONE up for a vote in the Senate.

      The auto bailout DIDNT WORK. GM and Chrysler still owe taxpayers $133 billion and are you aware that both are exempt from taxes?

      Boeing? Illegal appointments?

      And yes, PLEASE look at the signs from Tea Party rallies vs those from Occupy sites and the labor protests everywhere. Additionally, look at the sites when the Tea Partiers leave vs Occupy or union thugs. Or which are law abiding and which have rape, assault, property damage, and general disregard for civil discourse.

      I don’t know where you get your polling data but once again I’ll direct you to the RCP recap of polls. Obama beats Romney by 6 and Santorum by 7. He should be up by 20 given the negative nature of the GOP primary. Once there is a GOP candidate, it will be Reagan/Carter all over agaln.

      I think John Wayne said it best, “Life is tough. It’s even tougher when you’re stupid.”

    • We have insulted Obama? While the world watched? Seems to me it wasn’t very long ago that ALL Liberals/Progressives were chanting the same meme “The most patriotic thing we can do is to insult President Bush”. what is that you say? When the next President is Obama, now if we do the most patriotic thing around and insult him, that’s racist? Was it racist for Clinton? Was it racist for Carter? Was it ever racist before? No, because you are the racist. And while we are at it, if Obama gets to blame Bush for the economy, then I think Bush gets to blame Clinton for receiving fellatio in the Oval Office rather than ensuring our military and national defense were a priority during his 8 years in office. Seems to me like Bush had to react to something that was YEARS in the making, under Clinton, who “balanced the budget” by gutting Defense. We can all go on back and forth all day, but in a nutshell, Obama has been an economic disaster and the only response Liberals/Progressives have is to play the race card, because if Obama was white, there would be no defense for his miserable record.

    • Man it must hurt to be that stupid… No ideas, no basis of truth. Just more rhetoric, conjecture and half truths twisted to fit your needs. You have your master’s talking points down to the letter.

      • Oh, and the budget that your moonbat messiah presented didn’t even see the light of day, when they DID vote on it, it never made it past the Senate as it was voted down 97-0. GET IT YET?

  13. Any one who makes a 70 year forecast on financial matters must have their brains up their arse. They should be lucky to be able to forecast five years ahead with any accuracy. So when you read the comments about the forecasts, consider the source. Mostly BS.

  14. What is pushing debt past 2040? The youngest boomers will be 80; IOW, dead. I’ve been assuming that generations’ old age care and upkeep were driving this whole mess. When they’re gone, where will the spending be allocated? Someone please explain the impetus for the chart path past 2035.

  15. This website is all obvious distortions this administration will it be blamed for what happens beyond 2016?
    It big ship it does not do hair pin turns, in regards to 2027 and when the financing of bonds exceeds the ability to pays their interest, then cuts come and hard, because there would be no other choice.

    The previous administration did this, they started the wars then this admin shifted the cost of the war into the budget, the previous hid it. Conservatives for such self proclaimed moralist sure have no trouble lying, they also seem to have to patriotism either doing all they can to undermine the administration through consumer confidence, that actually hurt the nation and prevent recovery.

    Considering what this administration inherited and how they are managing, I’d say give them four more years.

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