Talking the deficit talk, but – as usual – not walking the walk
Democrats and President Obama have been talking the talk about deficit reduction – yesirree. Why to hear them talk about what has to be done, you’d think they were the second coming of the Republican caucus.
But when it comes to walking the walk? Not so much:
A new White House forecast predicts that the federal budget deficit, which hit a record $1.4 trillion last year, will exceed that figure this year and again in 2011.
The $1.47 trillion budget gap predicted for 2010 — when 41 cents of every dollar spent by the federal government would be borrowed — represents a slight improvement over the administration’s February forecast. The estimated gap for next year, $1.42 trillion, is larger than what was predicted in February, primarily because of a drop in expected tax receipts from capital gains.
So here the government is in one of the biggest fiscal holes it has ever dug for itself, and the answer the Democrats come up with is “let’s dig it deeper and call it ‘fighting the deficit’”.
How else do you explain budgets like the one offered by the Obama administration and especially in light of Tim Geithner’s pronouncement yesterday (see below) that it was time for the private sector to start investing? Forty one cents of every dollar spent under this budget from President Obama will be borrowed.
Of course, Obama has told us that the goal is to balance the federal budget by 2015. That’s what he’s said – and for what its worth, that’s certainly a worthy goal. But you have to do more than try to talk it down. The action taken have to reflect that goal. And this budget doesn’t. Nor, really, do his future ones.
The Committee for a Responsible Federal Budget reviewed this year’s presidential budget proposal and the deficit reduction plan and this may come as a surprise to you, but it is all smoke and mirrors.
The budget proposes $3.8 trillion in spending and receipts of $2.6 trillion, resulting in a deficit of $1.3 trillion – or 8.3 percent of GDP. This is higher than the 7.4 percent deficit projected from the Administration’s proposals in its August Mid-Session Review (MSR) and significantly higher than the 6.0 percent deficit projected under their “current law” (BEA) baseline. It is a decrease from the 9.9 percent deficit in FY 2009, and the projected 10.6 percent deficit in FY 2010.
Over the ten year window from 2011 through 2020, deficits are estimated to total $8.5 trillion – or 4.5 percent of GDP. This is significantly higher the $5.5 trillion (2.8 percent of GDP) deficit projected under “current law” which assumes expiring policies would end as planned.
Or under the “current law”, deficit stays at 6% of GDP (still too much) but under the “deficit reduction/balanced budget” plan of the administration, it balloons up to 8.3% GDP (way freakin’ too much).
So we’re being sold a load of unicorns with this totally misleading nonsense being spouted by Obama and Democrats. Their budgets do only one thing for deficits (and the debt) – they add to them. And, if followed, by 2020, here is what the debt will be:
Under OMB’s new estimate of the President’s budget, the debt held by the public would grow continuously as a share of the economy, passing 60 percent this year, 70 percent in 2012, and 77 percent in 2020.
Now someone, anyone – tell me how this plan of theirs reduces the important number in all of this – the debt? Obviously it doesn’t. They’re talking about spending less borrowed money than they have previously, that’s all. And when you are spending trillions in deficits, dropping it down to 900 billion in deficit spending is “deficit reduction”.
Don’t let them sell you the bill of goods they’ve prepared here.
Cut spending, cut it now and do what is necessary to reduce the debt.