Deficits SOAR - regardless of Obama's rosy assumptions

[calfoxwc]

Deficits soar even with rosy assumptions in new Obama budget

 

By David Lightman | McClatchy Newspapers WASHINGTON — The White House on Monday projected 2009 and 2010 federal budget deficits far higher than it forecast just two and a half months ago, even as it continued to defy most experts and predict that the economy is headed for a strong comeback starting late this year.

 

Economists scoffed at the latest administration predictions.

 

"If they keep playing this game, they're going to have real credibility problems," predicted Brian Bethune, the chief U.S. financial economist at IHS Global Insight, an economic research firm.

 

The new administration budget said that the fiscal 2009 deficit would reach $1.84 trillion, or $89 billion more than forecast in February, while the 2010 figure now is estimated at $1.26 trillion, or $87 billion above the previous number. The fiscal 2008 deficit was $459 billion.

 

The new figures dwarf the $17 billion in budget reductions and program terminations that President Barack Obama proposed with a flourish last week, reductions that Congress is unlikely to approve in full.

 

Budget Director Peter Orszag, writing on his blog, explained that the latest changes, which are the final pieces of Obama's rollout of his $3.6 trillion fiscal 2010 budget, reflect "upward technical revisions" caused largely by lower-than-expected revenues and higher-than-anticipated costs for rescuing financial institutions.

 

As it has done since it took office in January, however, the administration tried to stay upbeat. Monday it offered new plans for cutting health care costs and in the new budget still maintained its February economic assumptions, which are rosier than nearly any other economists foresee.

 

The White House still is projecting that the nation's economy will shrink by 1.2 percent this year and increase by 3.2 percent next year. In addition, it projects that "by the end of this year," the economy will be growing at a 3.5 percent annual rate.

 

The nonpartisan Congressional Budget Office predicts a gross domestic product decline of 3 percent this year, but 2.9 percent growth next year, while the April consensus of 50 blue-chip private economists sees a 2.6 percent decline in 2009 and only 1.8 percent growth next year.

 

The administration's assumptions, Orszag said, will be revisited this summer, "the traditional point" when an administration makes such revisions.

 

The biggest discrepancy involves unemployment, which reached 8.9 percent last month. The White House sees the number declining to an average of 7.9 percent next year, well below the CBO's 9 percent estimate and the blue chip 9.5 percent.

 

"The (Obama) unemployment number is crazy," said Roberton Williams, senior fellow at the Urban Institute-Brookings Institution Tax Policy Center.

 

The Office of Management and Budget explains the discrepancy by saying that its assumptions are based on data available as of late January. The jobless rate that month was 7.6 percent. It reached 8.9 percent in April, the government reported Friday.

 

The CBO issued its forecast in March and the blue-chip predictions came out last month; in a revision Monday, the blue-chip forecast turned slightly more pessimistic.

 

The differences can be significant in assessing the federal deficit's future path, because recovering economies mean more jobs and more revenue and less government spending.

 

Even with its more optimistic economic scenario, the administration projects record deficits for years to come. The annual deficit would drop to $512 billion by 2013, but then would begin to go up again, reaching $779 billion by 2019, as the costs of Social Security and government health care programs soar, the administration projects.

 

It's a grim picture, analysts said.

 

"Even using their . . . economic assumptions — which now appear to be out of date and overly optimistic — the administration never puts us on a stable path," said Marc Goldwein, the policy director of the nonpartisan Committee for a Responsible Federal Budget.

 

Global Insight's Bethune said that Obama could face a growing political problem. His public relations initiatives stress his devotion to slashing spending. In recent months, the president has vowed to cut at least $100 million in wasteful spending, trim $17 billion in unnecessary programs and overhaul Congress' system of using earmarks, or special funding for local projects. Monday, the Council of Economic Advisers reported that the economy was on track to create or save the 3.5 million jobs promised in this winter's $787 billion economic stimulus.

 

However, Republicans are pouncing eagerly on what they view as budget hypocrisy.

 

"The president's recent proposal for some modest reductions in government spending was a start, but the administration acknowledged today that since the president took office, their projections for the deficit grew five times faster than the proposed cuts would save," said Senate Minority Leader Mitch McConnell, R-Ky.

 

Obama, analysts suggested, should be more circumspect, because taming this budget is proving unusually difficult.

 

"So many things are in motion," Bethune said, including weak banks, weaker American auto companies, fragile consumer confidence and so on. "Their economic assumptions could become an issue; it's not a good way to go."

 

To Goldwein, the latest budget news was more confirmation that Obama needs to make hard choices to cut popular programs.

 

"The president made clear that he understands the critical importance of fiscal discipline," he said. "Now we need to see some action."

[calfoxwc]

This is dangerous territory, folks. Obama's lofty and vague verbage seems to be right out of

 

the leftwing books he studied under his fav socialist profs.

 

"oopsie" doesn't make it, when after his vaunted eloquent teleprompter reading,

 

he underestimates the damage done to our country via the deficit, by 1/5 of what it

 

really is.

 

And, it's going to get worse. These are financially dangerous times.

[Mr. T]

Here is a good article on Obama's Frozen economy.

 

http://www.businessweek.com/managing/conte...0714_683791.htm

[calfoxwc]

OMG -

 

That is really an outstanding article, T. Nice find.

 

I believe we're all in trouble.

 

 

The utopian socialist/lib view that we need

 

cap n trade to just make nicey nice to planet earth...

 

it's the emotional reaction to a problem.

 

Slam it, the prob is bad-replace with eh...good stuff someday??

 

. But the consequences, skyrocketing inflation, unemployment,

 

social stress, skyrocketing crime, are not considered possibilites.

 

It's like some kind of utopian blindness or something.

 

but, I think it's an outstanding article, don't listen to me rant.

[Mr. T]

15 to 1, that is what is predicted, they will have to print 15 dollars to every 1 dollar now in existence to complete all of the spending that Obama & the dems have ran through, and thats before they even okayed the new 2010 budget.

[calfoxwc]

Obama, has, I heard, quadrupled the Fed deficit in 5 months.

 

The dreams of utopia based on his socialist learnings in college

 

is biting him, and the entire country, in the rear end.

 

I remember some libs getting outraged over the deficit while

 

Bush was waging the war on terror after 9/11.

 

Now, it's like "deficit? It's better now that Obama is pres."

 

Caution: Bad times ahead, I think. Hope not.

[Westside Steve]

The American spirit isnt built upon fear but the ability to take on any challenge and prevail in the face of adversity.

 

There is no denying these are trying times but I will continue to be optimistic knowing we have some pretty bright minds working on this and it will turn around.

 

Uh good.

 

It is no secret that I wasnt a fan of Bush but I never wanted him to fail ,I was just really pissed with his choices that werent in our best interests without regard for what most Americans wanted.

 

So you wanted all his policies to get passed?

I doubt that.

 

This isnt left or right this is our country in a very trying time in its history give it some time or keep on bitching ,your choice.

 

So you admit you bitched about the Bush policies you felt were bad for the nation.

Understandable.

Why is that out of bounds today?

WSS

 

 

[Westside Steve]

So you admit you bitched about the Bush policies you felt were bad for the nation.

Understandable.

Why is that out of bounds today?

WSS

 

 

 

 

Nothing is out of bounds in politics but most of the threads on here are rehashing the same things over again when there is no merit to them but what the hell lets just keep posting it.

Most of my arguments with Bush had to do with foreign policy on Iraq and disregarding Afghanistan.

 

Seems to me there's been a raft of tax cuts medicare prescription SS etc carping too.

But that aside.

 

Though I'm tempted to listen to what the guys on the ground say what do you see in the conquest of Afghanistan that benefits us?

And the odds of doing it in the wake of the Brits and Russkies failure?

 

WSS

[calfoxwc]

Nothing is out of bounds in politics but most of the threads on here are rehashing the same things over again when there is no merit to them but what the hell lets just keep posting it. Dan

***************************************************

Halliburton. A billion times Halliburton. Post an article about the weather,

 

and Halliburton and Cheney came up.

 

Doing the wrong things are okay if it's a "bright mind" that's doing it...

 

Bush was bashed long before he was ever pres, and it never let up, only got worse and worse and...

 

but sure, I can see now, how we should be quiet, not bitch, and not find fault.

 

"everything is beautiful, when libs get their way....."

[ballpeen]

Not to mention that I am not so sure these "bright" minds are all that bright.

[Mr. T]

Government knows best, that is what all the liberals and socialist like obama assume.

 

when has the federal government ever stepped in and fixed the economy?

 

The last time any president did that was back in the 80's when Reagan fought for tax cuts and loosening regulations on american businesses so that they would be able to compete.

 

And what does the majority leadership in DC do now? They want more regulations spend more money and tax those who they feel are rich.

 

you cant keep robbing from the rich and expect the economy to turn around, just today I read an article of how the recession is soon to be over? When will that happen? After everyone who is unemployed gets tossed off of unemployment and then the liberal media will say unemployment is down for the first time since Obama took office, wow his stimulus really worked while the rest of us are standing there wondering if we are having enough money withheld to pay the tax man at the end of the year.