It’s the economy, stupid: New deficit projections pose risks to Obama’s agenda
The devil is in the details. But who’s paying attention?
Reuters reports:
President Barack Obama’s domestic policy proposals will face the reality of skyrocketing deficits on Tuesday when officials release two government reports projecting huge budget shortfalls over the next decade.The White House budget office and the Congressional Budget Office (CBO), a non-partisan arm of Congress, release updated economic forecasts and deficit estimates on Tuesday, providing further fiscal fodder to opponents of Obama’s nearly $1 trillion healthcare overhaul plan.
. . .The White House has confirmed that its deficit estimate for the 2009 fiscal year, which ends September 30, will inch down to $1.58 trillion from $1.84 trillion after eliminating billions of dollars originally set aside for bank rescues.
Looking forward, an administration official told Reuters the 10-year budget deficit projection will jump by about $2 trillion to roughly $9 trillion from an original forecast of $7.1 trillion.
Just off by $2 trillion. What’s the big deal?
UNSUSTAINABLE TRAJECTORY
“We’re still on a long-run trajectory that’s not sustainable,” said Rudolph Penner, a fellow at the Urban Institute and former CBO director from 1983-1987.
“In an ideal world they would be doing a lot more to get health costs under control and, in my view, we wouldn’t be talking about expanding coverage right now,” said Penner, who describes himself as a moderate Republican.
The CBO had previously forecast that deficits between 2010 and 2019 would total $9.1 trillion, generating heat for the White House, which stuck to its original $7.1 trillion forecast earlier this year. The new number will bring White House projections into line with the CBO, the official said.
Every year and every election, for as long as anyone can remember, every president and every politician has talked about bringing “costs under control.” We have yet to see it. Only broken campaign promises and the false hope for “change.” But there is something you can believe in: The government beast must be fed — and the bigger it gets, the more it needs to consume.
Many economists think it is unlikely that the government can curtail spending, which means taxes would have to rise to cover the increasing costs of providing retirement benefits and healthcare to older people. That could slow economic growth.
Stanford University economics professor John Taylor, an influential economist, told Reuters Television on Friday the U.S. budget deficit poses a greater risk to the financial system than the collapse in commercial real estate prices.
“Unlikely that the government can curtail spending…” Nooo, really?
That’s going out on a limb with speculation. After all, here in ‘progressive’ California, we were able to…reform, umm, balance, err….nevermind. More taxes means more spending. Period. And typically getting less for it, too. That’s why government is the opposite of capitalism.
Tax-paying voters should always remember this fact and demand that fiscal responsibility must be demonstrated BEFORE we agree to pay more. It’s not about agenda, it’s about accountability.
August 24th, 2009 at 8:51 am
Eventually the point will come, when the government dragon cannot be fed enough, and will collapse. China figured this one out and turned to its own form of capitalism by privatizing its manufacturing and their economy has taken off.
August 24th, 2009 at 10:21 am
OTOH, don’t be a bit surprised if Zero’s in-house budget schleps forecast that their previous $7.1T forecast was off by $2T THE OTHER DIRECTION, and in fact it will “only” bulge the already bloated deficit by $5.138T!
Then, the only trouble his people will have is convincing citizens that those forecasters were independent and not taking pressure to cook the books, and an evil way to divert attention from the real problem which is with the program to begin with.
August 24th, 2009 at 4:50 pm
I’m writing names in my little black book. When the shit hits the fan….
August 25th, 2009 at 3:37 pm
Well, the projections came out today and didn’t change much, although His Hollowness says he’s going to reduce the projected deficit.
What he doesn’t say is that he’ll have to do it on the backs of the middle class.