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Then Know That $8.6 Trillion Is A Lowball Figure!

If you believe that there is some kind of fiscal equivalence between the Bush era and the Obama era then you need to review the latest report from the CBO (Congressional Budget Office).

The total public debt held at the end of 2009 (George W. Bush’s last budget) was $7.5 trillion, but in its most recent budget report the White House forecasts budget deficits totaling $8.6 trillion over the next decade which would in fact be the good news, because the CBO estimates that even that mind-boggling projection is too low and it estimates that the cumulative deficit from 2010-2020 will most likely be much closer to $9.8 trillion.

So What’s A Difference Of $1.2 Trillion Between Friends?

$1.2 trillion is roughly the same as the combined deficits of Bush’s first four years in office, and we’re only talking about the ‘additional’ amount of total deficits in the decade to come.

The $1.2 Trillion Underestimate Is The Good News

And here are the numbers that should really worry you!

$9.8 trillion, which according to the CBO will be the cumulative budget deficit from 2010-2020 based on Obama’s stated plans.

* In other words, we are set to have an average $1 trillion deficit over the next ten years, after never having breached $1 trillion even once, before Bush’s final budget.

$3.8 trillion, will be the additional budget deficits from 2010-2020 if Obama’s plans are enacted, compared to just leaving the budget on auto-pilot, and that’s according to the CBO.

90% – is what the public debt will be as a share of the total economy by 2020 given Obama’s plans, and according the CBO the current figure is 53%.

80% which according to the CBO is the amount by which the White House has overestimated next year’s economic growth.

* The White House forecasts 4.3% in 2011and the CBO forecasts 2.4%

24.1% which represents the average proportion of GDP that the federal government will spend from 2010-2020 given Obama’s plans, and according to CBO.

*The 40-year historical average was 20.7% so we are talking about a federal government in 2020 that will be one-sixth larger than ever before.

And All Of The Above Assumes

That there will be no national emergencies over the next 10 years.
No terrorist attacks.
No natural disasters.
And that we will have a decade of uninterrupted economic growth.

How much would you bet on the above?

And if you wondered why tea parties are becoming so popular then please understand that if the Obama administration’s plans are brought to fruition that we will be looking at, an expansion of government, and a deficit debt that is an order of magnitude far greater than anything we’ve seen before, and that the country could be damaged, perhaps irreparably.

Obama is on record as saying that he doesn’t want the U.S. to be a hegemony, and that might be the one thing at which he succeeds during his 4 years in office!

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“The Bank Bailouts Have Created More Risk in The System”.

Neil Barofsky, who is the special inspector general for  TARP (The Troubled Asset Relief Program)  states quite clearly in a quarterly report that was released to Congress last Sunday, January 31, 2010 that the problems that led to the last financial crisis have not yet been addressed, and in some cases have actually grown worse.
“Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car”.

And referring to the “Too big to fail approach” he added, “The government’s bailout of financial institutions deemed “too big to fail” has created a risk that the United States could face a worse fiscal meltdown in the future, and the $700 billion financial bailout has encouraged more risk-taking because bank executives, who are still receiving massive bonuses, figure the government will come to the rescue the next time they steer their ships nearly aground”.

The report warns that these supports mean the government has done more than simply support the mortgage market, and in many ways has become the mortgage market, with the taxpayer shouldering the risk that had once been borne by the private investor.

“The government has stepped in where the private players have gone away and if we take government resources and replace that market without addressing the serious underlying concerns, there really is a risk of artificially pushing up home prices in the coming years”.

The report also revealed that, while the Obama administration pledged to spend $75 billion to prevent foreclosures, that only a tiny fraction of it amounting to just over $15 million has been spent so far and figures indicate that under the Making Home Affordable program, only about 66,500 borrowers, or only 7% of those who signed up had completed the process as of December.

And it might be worth noting that even though there are growing calls for another stimulus bill, in spite of the fact that only 30% of the first $700 billion has so far made its way into the system and the real jobless rate is now at 17.5% if the jobless that have given up looking for work are included.

Sen. Susan Collins, R-Maine, who is the ranking member of the Senate Homeland Security and Governmental Affairs Committee said, “The market mentality now seems fixed that the U.S. government will continue to step in and bail out giant financial institutions. The IG’s findings confirm my decision to oppose releasing $350 billion in TARP funds last year and my recent vote to terminate the program altogether”.

And Rep. Darrell Issa, R-Calif., who is the ranking member on the House Oversight and Government Reform Committee added, “The SIGTARP’s report is just another reminder of how Congress and the administration have ignored the role that politics and government played in causing the housing crisis and the economic collapse while pursuing other regulatory reforms will not fix the underlying problem”.

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