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Monday, February 1, 2010

It's the Deficits Stupid

The administration came out with their deficit projections for FY 2011 and they are staggering.

President Obama sent Congress a $3.8 trillion budget Monday for fiscal year 2011, pushing a plan that includes new jobs-creation programs but is projected to add nearly $1.3 trillion in deficit spending on top of the current year's projected $1.6 trillion deficit.

According to the plan, the 2011 deficit of $1.267 trillion would fund nearly the entirety of the year's discretionary spending, which is $1.415 trillion or 37 percent of the government's total outlays. Mandatory spending on items such as entitlements and interest payments make up the rest.

This is the FY 2011 budget so this includes the so called spending freeze. That should put to rest the so called effectiveness of this freeze. If these projections materialize, this will be the biggest deficit ever.

The nexis of the president's problems start and end with this deficit. It's the easiest way to explain his problems. The president claims that these deficits are necessary to stimulate the economy. It's true. Almost everyone agrees that deficits are a natural and necessary parts of recessions. It's not true, however, that deficits must reach these levels.

People are afraid of the consequences, long and short term, of these massive deficits. As a result, they've rejected his entire agenda. As long as we see $1 trillion deficits and more the president will have this as an anchor.

The president in his remarks again tried to blame Bush for this. He claimed, again, that he inherited this deficit. That's of course non sense. This is the FY 2011 budget. This is a full year after Bush left office. This has nothing to do with Bush. These deficits are his responsibility and his alone. The folks aren't stupid and still blaming Bush is now just boring.

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