Michael Gerson: President Barack Obama adrift on a red-ink sea

BY MICHAEL GERSON Modified: March 1, 2013 at 3:44 pm •  Published: March 2, 2013
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One revealing stress test of a political viewpoint is the way it deals with facts that are large, consequential and ideologically inconvenient.

For conservatives, the challenge is climate change. A variety of studies, using increasingly refined methodologies, indicate that climate change is happening and that greenhouse emissions play a contributing role. But many on the right aren't comfortable with the policy implications. So some deny the science; more ignore or downplay it.

For liberals, the challenge is deficits and debt. President Obama now argues that we are “more than halfway toward the $4 trillion in deficit reduction that economists and elected officials from both parties say we need to stabilize our debt.” Economist Paul Krugman calls the deficit “a problem that is already, to a large degree, solved.”

Downplaying the debt — arguing that it has stabilized as a percentage of GDP in a 10-year window — has become an ideological commitment on the left. It is often accompanied by criticism of the “deficit scolds” who attribute moral content to a mathematical dispute.

But the problem with the debt deniers is primarily mathematical. According to the Congressional Budget Office, debt will stabilize — but at a historically high level and only for about five years. At that point, the upward trajectory will resume, reaching (under optimistic assumptions) 77 percent of GDP by 2023. Under a more realistic budget scenario, the CBO projects the figure will be more like 87 percent.

But then the retirement of the baby boom generation, high health costs, the expansion of federal health subsidies and rising interest payments really kick in. Under its more realistic assumptions, the CBO expects public debt to rise to 157 percent of GDP in 2032 and 200 percent in 2037, according to its latest Long Term Budget Outlook. The chart stops in 2043, prompting a note reading: “CBO does not report debt of more than 250 percent of GDP or projections based on debt above that level, such as interest outlays.” In other words, their economic model crashes. And the real economy would crash much sooner.

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