It seems that people in the United States are starting to get quite nervous about the projected Federal Government deficit. Granted Obama's budget has not yet passed Congress--but it seems as though by the time the Democratic majority has its way, the deficit will be worse still.
Obama has been deceitful with the numbers thus far. He has been deliberately duplicitous about the cuts that he is going to achieve in government spending. He has come out and said that the economy needs all this stimulative spending, but it's OK, because we are going to cut the deficit like you would not believe. Yes, that's right. His cuts are unbelievable.
Once your spending plans are committed, there are only two ways to cut a deficit. The first is by cutting spending elsewhere. The second is by raising taxes. Well Obama is showing up to be a first class cutter. He has factored in the "cut" to government spending that will result from withdrawing from Iraq. The "spin" is breathtaking: first, we will hypothetically project the cost of the military engagement in Iraq out ten years. Then we will remove that projected expenditure from the budget. Then we will show the people how earnest we are about cutting expenditure.
Although the cuts to spending are hypothetical, however, the actual spending will not be so imaginary. In fact the actual cost of his projected spend has been deliberately understated (according to critical commentators like Newt Gingrich, who knows a good deal about getting rid of government deficits).
Further, Obama has a rosy coloured crystal ball. He is expecting that the US economy over the next few years will grow at a rate not seen before in the last forty years. Well, that's what you can expect when you have Messiah at the helm, apparently. So, spending understated. Cuts overstated. Economic growth overstated. Revenue overstated. (As one commentator quipped, Rosy Scenario is once again the most popular gal in Washington.) Obama, like most liberals, has apparently no idea that increasing taxes on business will actually decrease economic output. Apparently he didn't read that in the law books at Harvard.
And that's just Obama. Wait until the Democrats get to massage his budget. Already some of the extra taxes announced by Obama (not the one's on business) have been flagged as "not a goer"--such as limiting tax exemptions on charitable giving. There goes a few hundred million from the revenue line of Obama's budget. Then there will be all the "earmarks" which will be added in. So the Congress will reduce the revenue and increase the spending.
End result: the deficit will be far worse than even Obama has announced already--and his deficit, we are told, would be greater than all the combined deficits of all US Presidents in its history. Way to go! In case you think that we are making this all up, consider the recently published conclusions of the Congressional Budget Office which has a statutory duty to be non-partisan in its analysis of all congressional spending proposals.
The Congressional Budget Office figures, obtained by The Associated Press Friday, predict Obama's budget will produce $9.3 trillion worth of red ink over 2010-2019. That's $2.3 trillion worse than the White House predicted in its budget.
Worst of all, CBO says the deficit under Obama's policies would never go below 4 percent of the size of the economy, figures that economists agree are unsustainable. By the end of the decade, the deficit would exceed 5 percent of gross domestic product, a dangerously high level.
The latest figures, even worse than expected by top Democrats, throw a major monkey wrench into efforts to enact Obama's budget, which promises universal health care for all and higher spending for domestic programs like education and research into renewable energy.
The dismal deficit figures, if they prove to be accurate, inevitably raise the prospect that Obama and his allies controlling Congress would have to consider raising taxes after the recession ends or paring back his agenda.
But without referencing the figures, Obama insisted on Friday that his agenda is still on track.
The US is facing huge structural deficits for decades to come. Mark Steyn gives us his inimitable take on the situation:
The Brokest Generation
Our kids are the ultimate credit market, and the rest of us are all pre-approved!
By Mark Steyn
Just between you, me, and the old, the late middle-aged, and the early middle-aged: Isn’t it terrific to be able to stick it to the young? I mean, imagine how bad all this economic-type stuff would be if our kids and grandkids hadn’t offered to pick up the tab.
Well, okay, they didn’t exactly “offer” but they did stand around behind Barack Obama at all those campaign rallies helping him look dynamic and telegenic and earnestly chanting hopey-hopey-changey-changey. And “Yes, we can!”
Which is a pretty open-ended commitment.
Are you sure you young folks will be able to pay off this massive Mount Spendmore of multi-trillion-dollar debts we’ve piled up on you?
“Yes, we can!”
We thought you’d say that! God bless the youth of America! We of the Greatest Generation, the Boomers, and Generation X salute you, the plucky members of the Brokest Generation, the Gloomers, and Generation Y, as in “Why the hell did you old coots do this to us?”
Because, as politicians like to say, it’s about “the future of all our children.” And the future of all our children is that they’ll be paying off the past of all their grandparents. At 12 percent of GDP, this year’s deficit is the highest since the Second World War, and prioritizes not economic vitality but massive expansion of government. But hey, it’s not our problem. As Lord Keynes observed, “In the long run we’re all dead.” Well, most of us will be. But not you youngsters, not for a while. So we’ve figured it out: You’re the ultimate credit market, and the rest of us are all pre-approved! . . . .
This is the biggest generational transfer of wealth in the history of the world. If you’re an 18-year old middle-class hopeychanger, look at the way your parents and grandparents live: It’s not going to be like that for you. You’re going to have a smaller house, and a smaller car — if not a basement flat and a bus ticket. You didn’t get us into this catastrophe. But you’re going to be stuck with the tab, just like the Germans got stuck with paying reparations for the catastrophe of the First World War. True, the Germans were actually in the war, whereas in the current crisis you guys were just goofing around at school, dozing through Diversity Studies and hoping to ace Anger Management class. But tough. That’s the way it goes. . . .
The Teleprompter Kid says not to worry: His budget numbers are based on projections that the economy will decline 1.2 percent this year and then grow 4 percent every year thereafter. Do you believe that? In fact, does he believe that? This is the guy who keeps telling us this is the worst economic crisis in 70 years, and it turns out it’s just a 1 percent decline for a couple more months and then party-time resumes? And, come to that, wasn’t there a (notably unprojected) 6.2 percent drop in GDP just in the last quarter of 2008?
Whatever. Growth may be lower than projected, but who’s to say all those new programs, agencies, entitlements, and other boondoggles won’t also turn out to cost less than anticipated? Might as well be optimistic, right? . . . .
I mentioned a few weeks ago the calamitous reality of the U.S. auto industry. General Motors has 96,000 employees but provides health benefits to over a million people. They can never sell enough cars to make that math add up. In fact, selling cars doesn’t help, as they lose money on each model. GM is a welfare project masquerading as economic activity. And, after the Obama transformation, America will be, too. The young need to recognize that this is their fight. They need to stop chanting along with the hopeychangey dirges and do something more effective, like form the anti-AARP: the association of Americans who’ll never be able to retire.
— Mark Steyn, a National Review columnist, is author of America Alone. © 2009 Mark Steyn
No wonder the Democrats, led by Speaker Nancy Pelosi thumped the table and insisted that General Motors had to survive, even if it cost the tax payer billions of dollars (and it will). She is clever enough to work out that GM is really a department of social welfare, an extension of government. Thus, like any government department with a budget deficit, it "deserves" more money to make up the shortfall.
This shameful circumstance reminds us little old Kiwis of the days when NZ Rail used to employ 19,000 people and ran huge repeated losses. The governments of the day surreptitiously acknowledged that this was vital to keep the unemployment numbers down. The United States has now been similarly corrupted.
GM has nothing to do with making cars, just as NZ Rail back in the day had nothing to do with running trains. Both alike use (and used) commercial activity to camouflage their core welfare function.
Upon such Faustian bargains modern America depends. Pity the children.
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