Monday, July 28, 2008

U.S. Budget Deficit to Half a Trillion

... and that is with the war costs in an off the balance sheet account (just like our banks... and Enron - no I'm serious) Heck we just sent out $300B in the housing bill, with another $160B this spring so Americans would stimulate the economy and now Hank Paulson has an unlimited bazooka gun over and above the $300B to deploy into Fannie and Freddie - what's not to love?

And it assumes a recovered economy in '09. If you care about the long term health of the country (fiscally) and are a newer reader I recommend these 2 posts [May 23: David Walker on CNCB this Morning] & [Mar 26: Annual Spring Entitlement Warning Falls on Deaf Ears]

For those of you who have been around a while, away we go (is anyone shocked by this?)
  • The government's budget deficit will surge past a half-trillion dollars next year, according to gloomy new estimates, a record flood of red ink that promises to force the winner of the presidential race to dramatically alter his economic agenda.
  • The deficit will hit $482 billion in the 2009 budget year that will be inherited by Democrat Barack Obama or Republican John McCain, the White House estimated Monday. The White House in February had forecast that next year's deficit would be $407 billion. (missed it by THAT much)
  • That figure is sure to rise after adding the tens of billions of dollars in additional Iraq war funding it doesn't include, and the total could be higher yet if the economy fails to recover as the administration predicts. (translation: it will be higher yet)
  • The result: the biggest deficit ever in terms of dollars, though several were higher in the 1980s and early 1990s as a percentage of the overall economy.
  • Neither campaign is backing off campaign promises -- McCain to cut taxes and Obama to expand health and education programs -- in light of the bleaker new figures. (of course not - promise the American voter whatever it takes to get into office) "There's a total disconnect between today's report and what we're hearing on the campaign trail," said Robert Bixby of the Concord Coalition budget watchdog group.
  • But Democrats controlling Congress suggest that will have to change once President Bush's successor takes office. "Whoever becomes the next president will have a very, very sobering first week in office," said Senate Budget Committee Chairman Kent Conrad, D-N.D.
  • The administration said the deficit was being driven to an all-time high by the sagging economy and the stimulus payments being made to 130 million households in an effort to keep the country from falling into a deep recession. But the numbers could go even higher if the economy performs worse than the White House predicts
  • Monday's figures capped a remarkable deterioration in the United States' budgetary health under Bush's time in office.
  • The administration actually underestimates the deficit since it leaves out about $80 billion in war costs. In a break from tradition -- and in violation of new mandates from Congress -- the White House did not include its full estimate of war costs.
  • "The nation's economy has continued to expand and remains fundamentally resilient," said the budget office report.
Sure when you make the numbers fit your agenda the prose is even easier to create sweet whispers of wonderful songs of Kool Aid. [May 10: Finally Some Mainstream Reporters are Figuring Out the "Spin" from Government] [May 1: Is it an Official Recession? NY Post Says it Should Be]

The last post above is a good read in anticipation of the upcoming "better than expected" GDP report for 2nd quarter we are sure to receive as a blessing. When you jack around the input numbers to whatever you want, you can make the output land to wherever you wish. That's called "science" in this era...

Position: disgust

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