Obama Budget Increases Deficit
The Congressional Budget Office (CB0) released a forecast for the Federal deficit that shows a significant worsening of the projected national debt. This comes while President Barack Obama is planning to pass the largest Federal budget in history of $3.55 trillion for 2010. The CBO report adds to growing uncertainty even among Democrats that President Obama’s ambitious spending plan is a perilous path to ruin rather than recovery.
Democratic Congressional leaders were hoping for some improvement to embolden their plan to write sweeping legislation of social change and spending. Democratic disappointment is evidenced by the split off of 15 Democratic Senators led by Senator Evan Bayh (D-IN) who appear to no longer to believe their political futures lie with the massive spending proposed by President Obama and endorsed by House Speaker Pelosi and Senate Majority Leader Reid.
Despite the nearly $800 billion stimulus plan and monetary policy by the Federal Reserve the CB0 predicts the economy will actually continue to “deteriorate for some time”. Republicans have opposed the stimulus program saying it will create unmanageable debt that will be borne for generations to come and give China who is now the major U.S. creditor too much power over American interests.
Today White House Press Secretary Gibbs was heavily assailed from reporters about the significant difference between the Presidents suggestion that half of the deficit can be repaid in four years while many other authorities including the CBO and the respected Brooking Institute say that only further deficit will occur. Gibbs responded that the White House forecasts are really just slightly higher then the CBO estimate but appear to be greater because of the effect of time. He said that no one can make good predictions far into the future and that the White House was confident that they could ultimately produce more economic growth by investing heavily now in education and health care. Many experts say that the amount of Gross Domestic Product (GDP) going into debt payment under the Obama plan could reach as high as 15% which would basically put a halt to any economic growth.
Two different reports now contest the optimistic and some are saying unrealistic predictions of the Obama administration. The CBO report sees contraction of the economy until next year and then a gradual increase to 4% in 2011. Despite the hope that the economy will start to grow again next year the forecast for the increasing deficits was actually increased to $9.3 trillion from 2010 to 2019. In February the Brookings Institute published The Economic Crisis and the Fiscal Crisis: 2009 and Beyond, an independent forecast by Alan Auerbach and William Gale, which predicted that even if the economy returned to full employment and the stimulus package was stopped after two years the deficit will still average at least $1 trillion per year for the next 10 years. They were even more troubled by a “bleaker long term”. Saying that for the first time in history the possibility of a default occurring on the Treasury debt could occur.
President Obama’s optimism that big government will help the economy is unwarranted and dangerous. The American taxpayer has seen billions of dollars wasted in the TARP program which has to date been of no real significance in benefit. Despite good intentions government is never efficient at replacing private commercial enterprise with public ones. Thousands of pages of law have been written of which not a single member of Congress has read according to statements made by California Congressional Representative Maxine Waters today on MSNBC. She admitted they rely on unelected staff to write and read the law the affect the pocket book of everyday Americans.
There is a lot wrong with corporate leadership and corporations need to return to owner based not management based principles. However, this does not mean that we should put the future of the American economy solely in the hands of government. This week’s revelations of the problems of government managing AIG and Citigroup should be prove enough. If they had never received a bailout they would declared bankruptcy and their executives would never have gotten taxpayer subsidized bonuses.
The American public must demand that Washington change course immediately for a path to fiscal responsibility.
Thanks for reading Contempo Magazine blog which discusses issues for McAllen, the Rio Grande Valley, and America from a conservative Hispanic point of view. Tony Magaña grew up in McAllen Texas, attended Texas A&M University, served as an officer in Army Reserve, and holds a doctorate from Harvard University. The co-founder of Contempo Magazine has participated in Valley business for over 20 years. He is a member of the National Association of Hispanic Journalists and also writes for the American Daily Revew
