U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, said that the Congressional Budget Office's (CBO) annual Budget and Economic Outlookdemonstrates the urgent need to restrain Washington spending and bring much-needed reforms to government, and said President Obama's call for tax hike gimmicks will do little to confront the debt or replace the automatic spending cuts known as the sequester.
"While CBO was ringing the alarm about the severity of America's debt, President Obama again punted on providing the leadership America deserves to confront our debt crisis. Calling on Congress to undo these automatic spending cuts through gimmicky tax hikes isn't leadership and isn't a plan," said Hatch. "As CBO found, revenue is set to hit more than 19 percent of our economy over the next decade --close to 7 percent above the historic average -- so it's pretty clear we have a spending problem, not a tax problem. After running up the debt by nearly $6 trillion from massive spending increases since taking office, the President should get serious and work with Congress to replace the sequester with meaningful spending reductions -- not tax hike gimmicks that get us nowhere,"
Under the Budget Control Act that Congress passed and President Obama signed into law in 2011, automatic spending reductions would occur starting on March 1, 2013 totaling approximately $1 trillion over ten years. According to the Joint Committee on Taxation (JCT), changing the tax treatment of commercial aviation would generate $3 billion in revenue -- filling in just over a week of the sequester. Previous attempts by Senate Democrats to raise taxes on American energy were defeated on a bipartisan basis. Furthermore, if the President and Congressional Democrats were to try and close the deficit with tax increases on high-income taxpayers, such as those whose statutory rates were hiked in the fiscal cliff deal, they would fail even if they tried to confiscate all those taxpayers' income.
"When it comes to our debt, we need to focus on structural entitlement reforms. Medicare and Medicaid are growing at an unsustainable rate -- growing larger than the economies of Germany, France, the United Kingdom, Italy and Spain combined," said Hatch, who's put out five common sense entitlement reform proposals. "The Democrats' answer to avoiding the sequester is closing a so-called loophole on corporate jets? That's just absurd. The American people don't need more gimmicks and unserious talking points -- they need a concrete deficit reduction plan and a President willing to lead."
Today, CBO reported:
Following President Obama's tax increases, revenues are projected to exceed their historic average by an amount equal to 1.2 percent of the size of our entire economy. "
revenues are projected to grow from 15.8 percent of Gross Domestic Product (GDP) in 2012 to 19.1 percent of GDP in 2015--compared with an average of 17.9 percent of GDP over the past 40 years."
CBO projects that outlays will fall temporarily, but will still exceed the historic average and will remain on an upward trajectory, fueled by unsustainable entitlement spending. " outlays [spending] are projected to decline from 22.8 percent of GDP in 2012 to 21.5 percent by 2017, [but] they will still exceed their 40-year average of 21.0 percent After 2017, if current laws remain in place, outlays will start growing again as a percentage of GDP will reach about 23 percent of GDP in 2023 and are on an upward trajectory."
CBO projects increased deficits, while President Obama alleges that we have cut deficits by over $2.3 trillion. "The deficits projected in CBO's current baseline are significantly larger than the ones in CBO's baseline of August 2012. At that time, CBO projected deficits totaling $2.3 trillion for the 2013-2022 period; in the current baseline, the total deficit for that period has risen by $4.6 trillion."
Rather than pursuing policies to grow the private sector, Obama's tax and spend policies serve only to ramp up growth in federal debt, which CBO projects will increase, in total, from $16.0 trillion in 2012 to over $26.0 trillion in 2023. "Under current law, debt held by the public is expected to increase by more than 75 percent between 2012 and 2023, and debt held by government accounts is expected to rise by nearly 30 percent. As a result, gross federal debt is projected to reach $26.1 trillion at the end of 2023."
Federal outlays for the big three entitlement programs -- Medicare, Medicaid and Social Security -- will account for almost half of all federal spending by 2023. "Most of the government's mandatory spending consists of outlays for Social Security and the federal government's major health care programs. Those outlays are projected to grow from 10.2 percent in 2014 to 11.7 percent in2023, accounting for about half of all federal spending by the end of the period."
Medicare spending will total more than $8 trillion over the next 10 years. (Table 1-3) This year alone, Medicare will grow by 4 percent compared to 2012. "Medicare's outlays will increase by 4 percent (or $21 billion) in 2013, CBO estimates."
Medicaid spending will total more than $4.3 trillion over the next 10 years. (Table 1-3) This year alone, Medicaid will grow by 6 percent compared to 2012. "In 2013, Medicaid outlays will increase by $15 billion (or 6 percent), CBO estimates."
Total spending on both Medicare and Medicaid will exceed more than $12 trillion in the next decade. To put this in perspective, this is bigger than the combined gross domestic product (GDP) of France, Spain, Germany, Italy and the United Kingdom.
Counter to the President's promise, CBO found that than more than a million Americans in the individual health insurance market and more than 7 million with employer-sponsored health insurance will lose their current coverage over the next decade as a result of the President's health law. (Table A-2)