CBO Director Douglas Elmendorf's blog has some interesting and troubling information for taxpayers.
First, and perhaps this is not a shock to all of you, federal spending is up when compared to spending at this same point last year:
Spending other than that for the TARP and deposit insurance was $187 billion (or 11 percent) higher in the first six months of this year than during the same period last year. Outlays for several major entitlement programs have increased significantly: Spending for unemployment benefits rose by $39 billion (or 83 percent) because of high unemployment and the extension of eligibility for such benefits. Medicaid rose by $17 billion (or 15 percent). More than $10 billion of that growth stemmed from a provision in the American Recovery and Reinvestment Act (ARRA) that increased federal payments to states beginning in February 2009. Payments for Social Security benefits increased by $23 billion (or 7 percent) and outlays for Medicare rose by $12 billion (or 6 percent). Outlays for net interest on the public debt grew by $26 billion (or 31 percent) compared to the first six months of fiscal year 2009. That increase is largely attributable to adjustments for inflation to indexed securities, which were negative early last year. Spending has also risen for a variety of other programs, including food and nutrition assistance, the State Fiscal Stabilization Fund (created by ARRA), student financial aid, and veterans’ programs. In contrast, federal assistance to Fannie Mae and Freddie Mac has totaled about $34 billion less so far this year than last year at this time.
Second, revenues are down: "CBO estimates that total receipts were about $37 billion (or 4 percent) lower in the first half of this fiscal year than collections in the first half of 2009."
Third, cost estimates for the recently adopted health care reform bill are just that -- estimates. According to Elmendorf, "Nevertheless, estimates of the effects of comprehensive reforms are clearly very uncertain, and the actual outcomes will surely differ from our estimates in one direction or another. (emphasis added)" Anyone betting that the costs will come in UNDER estimate? Anyone?
Fourth, while the health care bill provides more money for Medicare, that might not mean what you might think that it would mean. If you thought it meant more spending on Medicare benefits, it appears that you would be wrong:
The legislation will improve the cash flow in the Hospital Insurance trust fund (that is, Part A of Medicare) by more than $400 billion over 10 years. Higher balances in the fund will give the government legal authority to pay Medicare benefits longer, but most of the money will pay for new programs rather than reduce future budget deficits and therefore will not enhance the government’s economic ability to pay Medicare benefits.
Finally, as if all that news wasn't bleak enough, it turns out that Social Security is still going broke. Accoding to Elmendorf, "This year, for the first time since the Social Security reforms of the early 1980s, benefit payments from the trust funds will exceed the trust funds’ receipts from the public (which consist mostly of revenues from payroll taxes and exclude interest on Treasury securities held by the trust funds)." Take a look at the following chart from CBO:
Total Surplus or Deficit of the Social Security Trust Funds (in billions)
If you think that things aren't too bad because of how the blue line looks, kind in mind that the interest paid to the Social Security Trust Fund is money that the government pays to itself. It has to come from somewhere -- and somewhere is probably your pocket. As Emeldorf notes, "the resources to redeem government bonds in the trust funds and thereby pay for benefits in some future year will have to be generated from taxes, other government income, or government borrowing in that year." Of course they could raise the interest rate they pay the trust fund and make it really, really solvent.