When the Congressional Budget Office speaks . . . well, OK, it depends what it says.

When the CBO “scored” the budget impact of ObamaCare, Democrats shouted from the rooftops that their health care boondoggle was going to reduce the deficit by more than $80 billion. Never mind that the CBO is required to accept whatever phony baloney numbers Democrats give them, and “score” their bills accordingly.

The CBO said it! That makes it true!

So will official Washington jump at the latest report from the CBO – one that isn’t filled with phony baloney Democratic numbers?

The CBO has issued a report that spells out, in detail, the danger facing the country as a result of the massive explosion in public debt that has occurred over the past several years. The report, prepared by Jonathan Huntley of the CBO’s macroeconomic analysis division, really doesn’t say anything a lot of people aren’t already saying.

We all know that we can’t sustain annual deficits in excess of $1 trillion. (Well, apparently President Obama doesn’t, because he’s proposing just that for the next decade.) But the CBO goes into some useful detail about the likely consequences of our current fiscal course, and perhaps just as importantly, applies the imprimatur of a highly respected federal institution.

The expected impact of soaring debt on private-sector wealth creation is especially troubling:

One impact of rising debt is that increased government
borrowing tends to crowd out private investment in productive
capital, because the portion of people’s savings
used to buy government securities is not available to fund
such investment. The result is a smaller capital stock and
lower output and incomes in the long run than would
otherwise be the case.

The effect of debt on investment can be offset by borrowing
from foreign individuals or institutions. But additional
inflows of foreign capital also create the obligation
for more profits and interest to flow overseas in the
future. Thus, although flows of capital into a country
can help maintain domestic investment, most of the gains
from that additional investment do not accrue to the
residents.

The report also looks at what happened in three nations – Ireland, Argentina and Greece – who recently experienced fiscal crises because they let their spending and borrowing get out of control. You’ve probably heard about Greece, but to make a long story short, the situation in all three countries is a big heaping helping of not good.

Huntley’s report concludes by saying that the only solution to the problem is to cut spending and/or raise taxes. I would argue that the second part of the equation should read “raise revenue,” because the key here is to take in the money you need, and there’s no reason that has to be done by raising tax rates. But in official Washington, raising tax rates and raising revenue are seen as one and the same.

While some of the details are useful, the only thing that’s really news about the CBO report is that it was issued by the CBO. If the federal government’s borrowing and debt accumulation has gotten so out of control that the CBO felt the need to write such a report, it suggests we’ve reached a critical enough stage that Congress cannot continue kicking this can down the road much longer.

Surely, the current Democratic majority will not be too happy to read this report, except insofar as they think they can use it to justify higher tax rates – particularly on the producers in society. But if and when Republicans find themselves in the majority on Capitol Hill next year, they can use the CBO report to back up their assertion that the time has finally come to get federal spending under control.

Of course, that assumes Republicans have any intention of making such an assertion. They certainly didn’t during the last six years of their previous stint in the majority.

There is one House Republican, Paul Ryan of Wisconsin, who has already thought this through and put together a plan to solve the problem. So far, many of his fellow Republicans are giving only the most lukewarm of embraces to his plan because their pollsters are telling them it’s trouble.

News flash: Federal debt has reached a critical stage. Even the CBO is now on record as saying so. Maybe we’re finally reached the point where policy-makers who are serious about the problem are going to get a chance to do something about it.

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