The CBO has announced that the federal budget DEFICIT for this year will be $1.28 Trillion….no real surprise to anyone on this planet! What is most troubling about the CBO estimate is the assumptions they made to predict the deficit for the out years. Their geniuses forecast that the economy will grow 2.3% in 2011 and 2.7% in 2012! Prominent private economists have forecast much lower growth for the balance of this year and 2012! Bank of America forecast 1.7% for this year and 2.3% for next year. JPMorgan’s estimates are even lower! So why does it matter? If economic growth is anemic or falls to zero, as some expect, the ASSUMED tax revenue for Uncle Sam will come in well below the CBO’s revenue estimates…..and the deficit will grow even larger in 2012! There is nothing on the worldwide economic horizon that would indicate a turnaround in economic activity. Europe is a total mess….and gettng worse! Growth in China and India has stalled; and Brazil, once the king of South American growth, is on shaky ground! The only way for the federal government to balance its budget is to reduce expenses dramatically over the next 5-10 years. And, if the recent past is any indicator of the future, we are in deep do-do! Obama’s reckless spending appetite, Congress’ failure to cut entitlement programs, and businesses’ reluctance to invest the trillions sitting on the sidelines make for a bleak picture for any improvement in America’s unemployment and economic outlook! Therefore, the national debt (almost $15 Trillion) will continue to increase as the budget deficits persist…turning America into Greece within a decade!
Obama has promised to release his “jobs” program around Labor Day! Why it has taken this administration so long to take the lead on “jobs” is beyond me! I guess it is beyond them, too! Obama spent the first year of his presidency ramming Obamacare through Congress! He spent no time on the economy. If fact, his proposed budget was panned 97-0 in the Senate earlier this year. This week they announced the elimination of a few, inconsequential regulations that they spin as help to the economy. For every regulation they have eased/eliminated, there are probably 10 more that need to be eliminated or have not been written yet. The Dodd/Frank Financial bill has only just begun writing the regulations for the financial industry! And, nobody knows how many new regulations will come from the 2,600 page nightmare that is called Obamacare! God help us all!
Obama’s plan will call for: 1) more money for infrastructure (all those shovel-ready jobs that weren’t so shovel-ready during the $800 billion stimulus package); 2) more investment in clean energy (already tried and failed – more hot air); and 3) more taxes from the rich to pay the bills (as if the rich weren’t paying enough already). He will spin his program as “shared sacrifice” (easy for him on Martha’s Vineyard) and will challenge the GOP (the party of NO) to help him redistribute the wealth in America.
Am I a cynic…..you bet! If you are waiting for a comprehensive budget reduction package from Obama, forget it! And I have some lakefront property on the border of Mexico/El Paso, Texas that would interest you, too!
NOTE: Another assumption of the CBO is that ALL of the Bush Era Tax Cuts will expire…..effectively raising taxes on ALL taxpayers! The politics of a re-election will not tolerate a tax increase for the middle class….ergo, the deficit and national debt problem will be even WORSE than predicted! Obama is willing to tax the rich….but, not the middle class!