The Congressional Budget Office's Grim New Budget Report

Pointing to a few positive projections in the Congressional Budget Office's latest budget report, many proclaimed the U.S. economy and federal budget on the road to recovery. Problem almost solved! Unfortunately, this assessment is ridiculously shortsighted; it is also a dangerous misrepresentation of the nation's fiscal situation.

But here's the catch: The good news ends there. According to the CBO, if current law remains unchanged, the federal government will add $7 trillion in debt over 10 years, which adds up to $26 trillion by 2023. By then, even under a very rosy GDP growth scenario, the debt held by the public would amount to 77 percent of the economy. That's larger than at any other time since 1950, and nearly double the nation's 40-year average.

The deterioration comes in part from yet another increase in the projected cost of Obamacare. According to the CBO, the law will now cost $1.3 trillion over the decade -- rather than the $900 billion projected while the bill was being debated. More than $230 billion of this increase is attributed to a rise in the 10-year cost of the insurance subsidies offered via the law's health care exchanges. The report estimates the subsidies' costs at nearly 29 percent higher than it did in 2010; this translates to a per-enrollee average cost estimate increasing from $3,970 to $5,510.

While overall spending is projected to rise each year in dollar terms, it will fall relative to the size of the economy. But as the CBO warns, "Although outlays are projected to decline from 22.8 percent of GDP in 2012 to 21.5 percent by 2017, they will still exceed their 40-year average of 21.0 percent."

Spending on entitlements will continue to outpace all other spending. Despite federal revenues slightly increasing during the decade, the government will still have to borrow 24 cents of every dollar it spends.

Of course, all of the policy uncertainty in Washington, not to mention the CBO's required current law projections, will not yield perfectly accurate forecasts. If lawmakers were to make changes to current law -- say, repeal the sequester cuts or fail to implement some of the "savings" in the president's health care law -- then deficits and debt would be significantly higher than the amounts reported under the current law baseline.

For example, under the alternative scenario CBO projects that deficits would rise by a total of $1.3 trillion by 2023 and yield cumulative deficits of $9.5 trillion; debt would reach 87 percent of GDP by the end of 2023; and spending would average 22.9 percent of GDP.

According to the CBO, if lawmakers chose to prevent those automatic cuts each year without making other changes that reduced spending by offsetting amounts, total deficits would exceed $8 trillion over the 2014-to-2023 period -- $1 trillion more than is projected in the CBO's current baseline.

If Republicans are serious about reaching a balanced budget and maintaining it in the long run, they must make large changes to significant parts of the government. Even the CBO director, Douglas Elmendorf, acknowledges the need for true reform: "We have a large budget imbalance. Small changes will not be sufficient to put the budget on a sustainable path."