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Brian Beutler follows up on the idea of doing nothing in terms of the deficit right now, letting the Bush tax cuts expire without imposing an austerity agenda on the nation, drastically slashing domestic spending. Doing nothing now, letting the tax cuts expire, implementing the Affordable Care Act, makes the national debt "totally manageable," according to the CBO.

Beutler expands on it with what he terms the chart of the day, from the Congressional Budget Office.

CBO chart
[T]he [CBO] forecast also presents another opportunity to remind people that the medium-term budget outlook is perfectly fine if Congress adheres to the law as it's currently written. That means no repealing the health care law, for one, but more significantly it means allowing the Bush tax cuts to expire, and (unfathomably) allowing Medicare reimbursement rates for doctors to fall to the levels prescribed by the formula Congress wrote almost 15 years ago. In other words, no more "doc fixes."

Helpfully, CBO juxtaposed these two alternative futures in a pair of graphs and, just as last time, it projects that deficits will disappear entirely by the end of President Obama's second term (if he gets a second term) if Congress were to just sit on its hands and do nothing.

The extended baseline scenario is the "do nothing" approach, adhering to current law. The alternative scenario is what happens if government were to "continue today’s underlying fiscal policy," e.g. repeal the ACA, extend the Bush tax cuts yet again.

Long-term, there could be some problems with doing nothing, and short-term it would mean not just reverting to the Clinton tax rates for the rich, but also the middle class, so there would be a tax hit for us, too. But weighing a bit of a tax hike against drastic cuts to domestic spending that could mean friends and family suffer even more economically, might make that sting a little less. Particularly in light of the fact that the sacrifice would finally actually be shared by everyone, not just the poor and middle class.

Originally posted to Daily Kos on Fri Jun 24, 2011 at 12:50 PM PDT.

Also republished by Social Security Defenders.

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Comment Preferences

  •  I have a great idea! (20+ / 0-)

    I'll bet tax revenues would increase if more people were paying federal payroll taxes. And there are a TON of people who are unemployed, right?

    How about we get them jobs? Then they'd be paying taxes, and revenues would pick up, and PRESTO! No more deficit.

    No need to thank me. It was really not that big of a deal.

    Paul Ryan = Eddie Munster - Coolness

    by Auntie Neo Kawn on Fri Jun 24, 2011 at 12:53:52 PM PDT

  •  Would we need to raise the debt limit... (4+ / 0-)

    ....if the Bush tax cuts weren't extended?

    Just curious.

    Ideology is an excuse to ignore common sense.

    by Bush Bites on Fri Jun 24, 2011 at 12:53:58 PM PDT

  •  But, but, but... (6+ / 0-)

    then the rich wouldn't get more tax cuts and then there would be no new jobs.

  •  Does this work for other stuff too? (10+ / 0-)

    Because doing nothing is one of my chief skills.

  •  Breaking: Congress will disappear if the deficit (2+ / 0-)
    Recommended by:
    semiot, historys mysteries

    does nothing!!!

    So the debt limit and the CR's to keep the government open will be the hostages de jure.

    Happy little moron, Lucky little man.
    I wish I was a moron, MY GOD, Perhaps I am!
    -Spike Milligan

    by polecat on Fri Jun 24, 2011 at 12:55:43 PM PDT

  •  I would be happy to see my tax cut expire ... (8+ / 0-)

    ... if it means the wealthiest will have to let theirs expire.

    "It does not require many words to speak the truth." -- Chief Joseph, native American leader (1840-1904)

    by highfive on Fri Jun 24, 2011 at 12:58:51 PM PDT

    •  Can't we count that as "shared sacrifice?" (6+ / 0-)

      Obama -- and later every politician alive -- has been going on about "shared sacrifice." So let's actually fucking share, this time! Let the Bush tax cuts expire on EVERYONE. This should have happened in 2010. Better yet, Obama could have kept his word and REPEALED them.

      Think how amazing this is: For the first time SINCE CARTER, we had a President who campaigned on RAISING TAXES win an election. And when he won? He ended up cutting taxes even further -- even the Estate Tax. We controlled everything and we EXTENDED the Bush tax cuts. We even had the support of the American people to do the opposite.

      I give up. I'm not kidding. I'm done.

      Forgive me.

      An Inspirational Poem: Follow me on Twitter @Sloopydrew! Tell me you're from DKos and I'll also follow you!

      by sloopydrew on Fri Jun 24, 2011 at 01:11:44 PM PDT

      [ Parent ]

  •  does anyone know? (0+ / 0-)

    Considering Obama's tax cuts for the middle class in 2009 increased the Bush tax cut for the middle class, are the "Bush" tax cuts now basically "Obama tax cuts for the middle class" and "Bush tax cuts for the other class"?

    GOP = Goodluck Old People

    by MartyM on Fri Jun 24, 2011 at 12:59:11 PM PDT

  •  One little problem with the top graph . . . (5+ / 0-)

    GOPers will latch on to their immediate issue of tax rates as percentage of GDP. From 15% in 2010, it moves up to about 23% in 2035. Of course, they'll be more elegant about it and just scream "TAXES AS A PERCENTAGE OF GDP ARE KILLING US IN OUR BEDS!!!"

    The whole thing might work in the abstract, but thus far, GOPers have got something like 65% of the country thinking that tax rates are destroying democracy. And there ain't a single Democrat in Washington that seems to be bothered by that.

    •  Nobody likes taxes. (2+ / 0-)
      Recommended by:
      terabthia2, chrississippi

      Everybody likes what taxes (or deficits) buy for them.

      Courage is contagious. - Daniel Ellsberg

      by semiot on Fri Jun 24, 2011 at 01:30:42 PM PDT

      [ Parent ]

    •  Economic illiteracy is the hallmark of America (0+ / 0-)

      The Republicans have been attacking economic literacy at the university level since the mid 70's.  And there was NEVER any fundamental macro economics courses offered in the K12 system.  In the K12 system the students learn to relate to government as they would a family and a family budget.  ""home economics" is all there is.  They then proceed to relate to government as a "business". This is totally WRONG but it is what most people are taught.

      Republicans continue to enforce the belief that tax revenue is burnt in a furnace or spent on war.  They do this at the same time they are saying that it is used for social insurance.  The American public is unable to fend off these pig shit pronouncements because they have not the faintest idea of how fiat money works and how government can use its position to assure domestic prosperity.

  •  "We gotta fix the deficit that WE (3+ / 0-)
    Recommended by:
    missliberties, semiot, wbgonne

    are intending to cause by extending the Bush tax cuts!"

    That really is what they're saying.

    Fight until we win. Then we can begin arguing about the details. - Kwickkick (RIP) 2009

    by RickMassimo on Fri Jun 24, 2011 at 01:05:51 PM PDT

  •  the link to the CBO report is analysis from 2009 (0+ / 0-)

    so I am missing something here. I don't think that their current analysis looks like this, even their extended baseline scenario.

    do you have a link to the more current report?

  •  Has anyone seen the Bully Pulpit anywhere? (3+ / 0-)
    Recommended by:
    wbgonne, semiot, JamieG from Md

    It seems to have been misplaced.

    I appreciate the fact that the President is meeting with Reid and McConnell to move the negotiations along, but does that preclude him from addressing the public directly and outlining his priorities both forcefully and with a degree of regularity?

    There shouldn't be any doubt among voters where his line in the sand is...what constitutes a deal breaker for him.  I'll bet, however, if someone were to poll on that question, the vast majority of respondents would say they aren't sure.

    That's a big waste of presidential influence, IMHO.

    "In a nation ruled by swine, all pigs are upwardly mobile." Hunter S. Thompson

    by Keith930 on Fri Jun 24, 2011 at 01:06:16 PM PDT

    •  i think we know that answer by now (1+ / 0-)
      Recommended by:
      Keith930

      obama doesn't believe in the bully pulpit

      which is one reason obama is in the wrong job

      if only president obama could become candidate obama

      instead of this hapless chauncey gardiner character watching the country go down the tubes like a deer caught in the headlights

      i think the sad fact is that we are not going to get any help from obama

      obama must be bullied into action

      "make me do it," is what obama said

      and we should

      blue dogs eat shit

      by wbgonne on Fri Jun 24, 2011 at 01:15:00 PM PDT

      [ Parent ]

      •  It's a big reason why so many Dems (1+ / 0-)
        Recommended by:
        wbgonne

        Feel so free to vacillate on these issues...there's no risk of contradicting the president's positions when he doesn't voice them in public in a way that leaves little doubt where he stands.  When nobody is at the wheel, the car tends to drift out of the lane.

        "In a nation ruled by swine, all pigs are upwardly mobile." Hunter S. Thompson

        by Keith930 on Fri Jun 24, 2011 at 01:31:58 PM PDT

        [ Parent ]

        •  bulls-eye (0+ / 0-)

          and if you and i can figure it out it's really hard to imagine that the wh doesn't know

          why no course correction? either obama is simply incapable of presidential leadership or he is actually achieving the policy outcomes he wants

          any other possibilities?

          blue dogs eat shit

          by wbgonne on Fri Jun 24, 2011 at 01:36:26 PM PDT

          [ Parent ]

  •  can obama and the dems do nothing correctly? (1+ / 0-)
    Recommended by:
    chrississippi

    please notice the subtle double entendre

    unfortunately, the answer is likely no

    compromise at any cost!

    blue dogs eat shit

    by wbgonne on Fri Jun 24, 2011 at 01:06:56 PM PDT

    •  Seems like they got themselves into a trap. (0+ / 0-)

      If they had let the Bush tax cuts lapse when they were due to lapse, it looks like they might not have had to raise the debt limit.

      But they extended the tax cuts, and now they have to renegotiate the debt limit.

      The 3-D chess board must have been missing when they agreed to extend the Bush cuts.

      Ideology is an excuse to ignore common sense.

      by Bush Bites on Fri Jun 24, 2011 at 01:15:02 PM PDT

      [ Parent ]

      •  i hate to say this (1+ / 0-)
        Recommended by:
        wsexson

        but i really don't think this "trap" was no accident

        obama and the wh knew what would happen when they extended bush's tax cuts

        i believe obama painted himself into a corner on purpose

        and now he'll claim he has no choice but to accept the gop deal

        i also believe this has been arranged for months

        obama wants to cut the social safety net and he does not intend to raise taxes

        that's just who he is (i really wish he had told us in 2008)

        blue dogs eat shit

        by wbgonne on Fri Jun 24, 2011 at 01:21:05 PM PDT

        [ Parent ]

      •  if they were fish (2+ / 0-)
        Recommended by:
        wbgonne, wsexson

        they'd bait their own hook for you.

        "In a nation ruled by swine, all pigs are upwardly mobile." Hunter S. Thompson

        by Keith930 on Fri Jun 24, 2011 at 01:33:41 PM PDT

        [ Parent ]

    •  yadda yadda yadda... (0+ / 0-)

      yadda yadda yadda...

  •  In 30 minutes Dan Choi and Kansas Equality will (0+ / 0-)

    be rallying outside the State House in Topeka for full equality rights for the LGBT community.

    They are risking arrest.

    Dan is also raising funds for LGBT homeless youth. Will you pledge $1 for every bigot who comes out spewing hatred in opposition to full equality?

    http://www.dailykos.com/...

  •  Imagine the graph without spending on 2 wars. (1+ / 0-)
    Recommended by:
    historys mysteries
  •  Nothing is too much for the Dems (4+ / 0-)

    I've made this joke before, but I'll make it again, as it fits this thread:

    In 2010 the Democrats proved, by extending the Bush tax cuts, that they were literally incapable of doing nothing.

    Remember when Obama promised to REPEAL the Bush tax cuts? Oh, that was a good one!

    We haven't seen a Democrat in the White House since 1979. Will we ever see one in there again?

    An Inspirational Poem: Follow me on Twitter @Sloopydrew! Tell me you're from DKos and I'll also follow you!

    by sloopydrew on Fri Jun 24, 2011 at 01:07:39 PM PDT

  •  doing nothing? Its what government does best. n/t. (0+ / 0-)

    Socialist Fuckstick No. 308273

    by culturejammer on Fri Jun 24, 2011 at 01:12:18 PM PDT

  •  This exact figure and nearly exactly the same (1+ / 0-)
    Recommended by:
    semiot

    diary is top of the wreck right now.  

    I know I'm yelling at the wind, but why not just move Vyan's diary over to the FP.

    Sigh.

  •  We've come to a sorry pass (2+ / 0-)
    Recommended by:
    semiot, wbgonne

    when nothing is the best we can hope for.

    Kinda makes you nostalgic for the days of yore:

  •  nevermind, I found it here: (0+ / 0-)
  •  As a result the house will move to defund CBO nt (6+ / 0-)

    We agree our hair is on fire, we disagree with Paul Ryan's plan to use a sledgehammer to put out the fire

    by JML9999 on Fri Jun 24, 2011 at 01:14:24 PM PDT

  •  I am all for it (5+ / 0-)

    It simple and easy.

     I don't mind paying more taxes overall for the general well being of the nation.

     This just proves the theory that this is all about saying "We are broke" repeatedly as a fake mandate for the GOP agenda of privatizing medicare and ss.

    ~a little change goes a long way~

    by missliberties on Fri Jun 24, 2011 at 01:15:18 PM PDT

  •  AMT fix also goes (2+ / 0-)
    Recommended by:
    semiot, historys mysteries

    I'm not saying this isn't a good idea, but the AMT (alternative minimum tax) would hit a lot of people.  The issue is that the AMT was originally supposed to just apply to the wealthy, but it was never indexed for inflation.

  •  Sorry ... BUT (0+ / 0-)

    Okay after going through the actual report I have to say I would not put money on anything in the report actually happening.

    Basically it looks like they just plug in some numbers into a spreadsheet without actually looking to see if the numbers make sense. Any idiot can forecast - even smart people have a lot of trouble forecasting correctly.

    Let us look at the underlying assumptions:

    1. Unemployment the next five years 9.4,8.4,7.6,6.8,5.9,5.3, then 5.3% or less forever. If you take unemployment down that far then yes it will help. If it takes longer, or does not happen, the numbers blow up pretty fast.

    2. Growth - they forecast about 3.5% real growth per year over the next 5 years. Looks high to me considering the fiscal drag that is coming.

    3. Inflation: under 2% the next 4 years (HAH!) no way, unless there is another recession. If you get 3.5% growth you will have inflation above 2%, guaranteed.

    4. Interest rates. They seem to use a % of GDP approach that at first glance at least seems to understate the cost of servicing the debt.

    Overall don't trust the numbers. The idea that eliminating the tax cuts would help is correct. The idea that it would eliminate the deficit is fantasy!!!!

    "I can live with doubt and uncertainty and not knowing. I think it's much more interesting to live not knowing than to have answers which might be wrong". Feynman

    by taonow on Fri Jun 24, 2011 at 01:26:23 PM PDT

  •  those charts are deceptive (0+ / 0-)

    under the baseline scenario, deficits would still be significant (the chart doesn't include interest on the debt, among other problems):

    Under the assumptions of CBO’s extended-baseline
    scenario, annual budget deficits would decline to
    3.0 percent of GDP by 2014. After that, deficits would
    generally equal between 3 percent and 4 percent of GDP.
    Debt held by the public would remain high by historical
    standards, growing to 84 percent of GDP in 2035 (see
    Figure 1-2) and staying fairly close to that level in later
    decades.

    that's from page 13 of this: http://www.cbo.gov/...

  •  We can't have this. (0+ / 0-)

    Maybe shorting US treasuries would put and end to this silly "Baseline Scenario" escape plan.

    Courage is contagious. - Daniel Ellsberg

    by semiot on Fri Jun 24, 2011 at 01:26:50 PM PDT

  •  I have made this 'disagree' comment before (0+ / 0-)

    And so I shall make it again: Repealing the Sustainable Growth rate for medicare, NOT implementing it, is the way to go. Currently as written if congress were to stop the 'doc fixes' the reimbursement from medicare to healthcare providers would fall 27%, which is not a politically feasible pay cut. Physicians would simply stop seeing medicare patients, and said patients would immediately pressure their congress representative to start paying their goddamn doctors so they will start seeing them again. That's just the reality.
        Instead, the sustainable growth rate ought to be repealed and it be paid for by a medicare surtax. Politcally painful? yes. Does it require congress to actually do something? yes. But it is the right thing to do and would fix the problem.

    An empty head is not really empty; it is stuffed with rubbish. Hence the difficulty of forcing anything into an empty head. -- Eric Hoffer

    by MichiganChet on Fri Jun 24, 2011 at 01:32:41 PM PDT

  •  Actually, it will not sting at all (1+ / 0-)
    Recommended by:
    JamieG from Md

    Joan says, "But weighing a bit of a tax hike against drastic cuts to domestic spending that could mean friends and family suffer even more economically, might make that sting a little less."

    I actually thought about it long and, especially in the light of the fact that during Clinton years these taxes had no effect on the Middle class.

    I firmly believe that now, like then, tax increases back to Clinton levels, will not sting Middle class.
    Here is my logic.

    Essentially, right now businesses outsourced wage increases to the government.  Indeed, every 1% in tax cuts is 1% less that employer has to raise taxes.  It has subversive effect on the Middle class as whole, too.  Instead of demading of wage increases from employer, we are collectively waiting for yet another tax cut to augment salary, like the 2% SocSec holiday.

    So, what would happen if ALL taxes are raised?  If accompanied by a stern statement, it would indicate to the employees that they should demand wage increases in the place where it belongs, i.e. from the employer.

    That will actually be good for economy, since the employers, pressed with higher wage demands on the profits, will turn to technical innovation to increase productivity and sustain aforementioned profits, just like in the 90s.

  •  Only "little people" share (0+ / 0-)

    The way my wealthy friends tell it "only" you little folks share. None of that applies to them the erstwhile "producers" they don't share or sacrifice , these are words for Socialist types not business folks. We can forget about trying to convince these people they were the bullies in the schoolyard that came up and took your candy from you and then warned you there would be consequences if you whined about it to the "other kids" or wose ratted them out to the teachers.

    "It's better to die on your feet then live on your knees" E. Zapata

    by Blutodog on Fri Jun 24, 2011 at 01:36:15 PM PDT

  •  Perhaps we should call it... (0+ / 0-)

    THE SEINFELD DEFICIT!!!

    Yadda yadda yadda...

  •  It just takes a little bit of this (0+ / 0-)

    a liitle bit of that, it started with a kiss and now were up to bat...

    (with apologies to Michelle Branch)

    Obama will need a little bit of entitlement reductions (this) a liitle bit of tax increases (that), it started with, wait, that's where the analogy breaks down: who makes the first move towards the kiss (long-term debt reduction)? Whoever does, and the other side recipocrates, then we (the nation) is up to bat towards making improvements to our economy...in the long-term. Who will make the first move?

    Now as progressive, I hope that's more "that" than "this"...but let's get grooving...

    Just having fun on a Friday afternoon...

    If you get a chance, check out my podcasts

    http://www.karltrautman.com

  •  a question (0+ / 0-)

    I don't see the interest on the debt in this chart?

    it is currently 6% of budget..

    any help here?

  •  God please protect us from Congress (0+ / 0-)
  •  Fascinating and informative (0+ / 0-)

    This is the kind of info and visuals we need much more of! Obama and Goolsbee (or his replacement) need to be out there with their whiteboards showing this. Really good stuff

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