U.S. Federal Deficits Soar Past [Obama's] Previous Estimates
Congressional Budget Office says Obama's request would generate deficits averaging $1T a year over next decade -- $2.3T more than Obama predicted.Deteriorating economic conditions will cause the federal deficit to soar past $1.8 trillion this year and leave the nation wallowing in a sea of red ink far deeper than the White House had previously estimated, congressional budget analysts said today.
In a new report that provides the first independent analysis of President Obama's budget request, the nonpartisan Congressional Budget Office predicted that the administration's agenda would generate deficits averaging nearly $1 trillion a year over the next decade -- $2.3 trillion more than the president predicted when he unveiled his spending plan just one month ago.
And although Obama would come close to meeting his goal of cutting the deficit in half by the end of his first term, the CBO predicts that the nation's annual operating deficit would never drop below 4 percent of the overall economy over the next decade, a level administration officials have said is unsustainable because the national debt would grow too rapidly.
By the CBO's estimate, for example, the nation's debt would grow to 82 percent of the overall economy by 2019 under Obama's policies, compared with a pre-recession average of 40 percent. ...
But I thought that closing that loophole on hedge fund managers' income was going to pay for Green Jobs for everybody??? Surely, hedge fund managers are going to make gazillions and bazillions in the future, right?
Don't fear, the Democrats are resolute, and won't allow anything as uninspiring of Hope and Change as arithmetic to get in their way:
"Our priorities are the same," Pelosi said. "This budget is a statement of our values and our investments in education, health care and the health of America. That includes prevention as well as care, and the energy initiatives as well as tax relief for 95 percent of the American people, as well as an approach that takes the deficit down. Those are the priorities of the budget."
White House budget director Peter Orszag made the same point after speaking with reporters on Tuesday.
"There are always some adjustments," Orszag said of the legislative budget process. "But those four pillars" -- health care, education, clean energy and deficit reduction -- "will be represented."
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31 comments:
The first link in the post is not to the article, but to wapo's homepage.
Off topic, but:
How at least one of those crummy, lieberal indie films got financed:
Hevesi Aides Indicted in Kickback Scheme
Published: March 19, 2009
ALBANY — Two top advisers to Alan G. Hevesi, the former state comptroller, were charged Thursday in a 123-count grand jury indictment that said they had turned New York’s $122 billion pension fund into a criminal enterprise. The scheme netted them and other Hevesi associates tens of millions of dollars in kickbacks from firms investing the fund’s money, the indictment said.
John Marshall Mantel for The New York Times
Hank Morris was chief political adviser to Alan G. Hevesi, the former state comptroller.
Hank Morris, who was once Mr. Hevesi’s chief political adviser and a nationally known Democratic consultant, was charged with myriad counts — including bribery, grand larceny, money laundering and fraud — in a case brought by the state attorney general, Andrew M. Cuomo. ...
( Skip to punch line:)
...
Mr. Morris is also accused of rewarding Mr. Loglisci and another unnamed top official in the comptroller’s office for their help. Mr. Morris invested $100,000 in an independent film, “Chooch,” produced by Mr. Loglisci’s brother, and investment firms doing business with the fund also invested in the movie, according to the indictment....
http://www.nytimes.com/2009/03/20/nyregion/20morris.html?_r=1&scp=3&sq=pension&st=cse
I haven't seen the film, but I'm sure that it disdained traditional morality.
Mr. Loglisci’s brother ... probably the ne'er do well artiste of the family, if you get my drift.
'BORAT' Obama.
I know its unrelated, but after the 'Special Olympics-foot-in-mouth-all-the-way-back-to-the-ankle' gaffe that should even make the most boot-licking leftist wonder about the man's political instincts, isn't it a good moniker for his critics?
I mean we had "Slick Willie", and it stuck, (much to Bill's chagrin as he admitted that it was the insult that actually bothered him the most on 60Minutes once).
I find your lack of faith in Big Government disturbing, Steve.
Back to the reeducation camps with you...
Something tell's me the $9.3 trillion in new debt is now the base figure, from which all future estimates will grow. What are the economic assumptions they made about growth, for example? What assumptions did they make about new, mass immigration, especially the kind of stampede that an amnesty will set off? And, perhaps most importantly, what assumptions did they make about unemployment rates? Because given the experience in Europe with this whole socialism experiment, once Obama's new handouts are enacted we may never see single digit unemployment again.
The press is starting to weave a story about how the country is getting "too angry" about the AIG bonuses. Sounds like someone's getting worried that the American people are actually waking up to exercise their power.
It's interesting that in his four pillars there is no provision for national security.
"What you see in his budgeting proposals, I think, is the liberal equivalent of the conservative attempt to "starve the beast." In both the Reagan and Bush eras, Republicans passed tax cuts and ran up large deficits while hoping that by starving the federal government of revenue they would curb its long-run growth. Obama's spending proposals would effectively reverse that dynamic - they would create new spending commitments and run up large deficits, in the hopes that the dollars poured into health care and education will create a new baseline for government's obligations, which in turn will create the political space for tax increases on the middle class."
http://rossdouthat.theatlantic.com/archives/2009/03/the_pursuit_of_social_democrac.php
Hey Steve have you read any of Dmitry Orlov's writings? He basically argues that a Soviet style collapse is going to happen in the US in the near future. Some of his stuff is similar to what Mencius Moldbug has said over at Unqualified Reservations. Some of the parallels he draws between the US and the USSR are pretty striking and frankly, scary.
His site is http://cluborlov.blogspot.com/
What horrifies me is that people are still bellyaching about "socialism for the rich and capitalism for the poor". We're all rich or poor, is that right? You wonder if this sort of dualism is ideological blindness, or if these people have just never heard of the middle classes.
These people have definitely never heard of Medicaid, a $200 billion program which (like Food Stamps and TANF), is not available to the middle classes.
Doubling the outstanding debt endlessly rolled over into normalized 5-6% Treasury interest rates from the current low 3.4% is game, set, and match, a debt trap with interest compounding faster than ability to pay. It doesn't help that the debt was restructured (Rubin) towards the short end, the majority coming due within 3-5 years.
Default is either overt with suspension of payment of principle and interest or stealth default through debasement. Stealth default is the usual preferred method and in progress through 'quantitave easing' by central banks the world over.
The Swiss chose 'forceful relaxing.' The PR firm hired to come up with these cutesie-tootsie euphemisms for printing is Barely Drys, Inc.
Every segment of society conspires on the side of inflation, screaming bloody murder at any interest rate hike from realtors to unions to every manufacturer, business and newspaper.
The purportedly independent central banks are supposed to be the adult supervision and are instead spiking the punch by the tanker load. Holders of the paper are playing a global game of hot potato.
In Weimar Germany 12 zeros were lopped off the currency. The printing went swimmingly, the government backed debt was issued
and made payment upon for years.
It was the en masse panic and throwing it all back over the border into Germany in repudiation
for whatever it would fetch that resulted in the wheelbarrow-deep mess. Not the printing, the repudiation. The effect of repudiation can be seen in the current valuation of securitized toxic assets. There was no problem with the issuance.
Currency, financial system, economic and societal collapse are not exactly synchronous in timing but soon synonomous, random in ordering, four faces of the same dark angel.
Determining what is a US bank is as gray an area as an American made car. It became one banking fleet orgy,
counterparty anchor chains looped through the bow eye of the adjacent scow.
Navigating calved icebergs, ignoring looming glaciers, monetary authorities from shared Ivory Tower isolation and shared spiked kool-aids, a booze cruise.
There was an oldtime central banking shared religion, gold standard, and the horrors of sinning and falling off the wagon.
Kind of like a revolution on Easter Island where the former sins and taboos become the new tenets and voo-doos. You would have a hard time convincing the legions of PhD economists that wander the halls of sovereign and increasingly involved multilateral institutions (now also printing) that their sects and beliefs are faith-based.
Angels with four faces. Where the monetary unit forms the basic trust between people(s) and their government, forgive them, they know not what they do. Just a failure of imagination, an inability to conceive beyond their isolated narrative. One could say it didn't have to end this way but then, looking around, one couldn't.
The news media are ablaze with denunciations of the AIG bonus payments. This outrage is wonderfully ironic. Obama spent most of the campaign denouncing high earnings and approving of high taxes based on the fairness factor. He spent months training the electorate to froth at the mouth when they heard the word "bonus".
He also promised, as you well know, to allow all legislation to be aired on the Internet before passage so the public could understand the issues. Instead the stimulus package and the various bailouts were passed in record haste and largely unread by any one anywhere.
So it is heart warming to see Obama and his administration being slowly roasted on TV and in the press on the issue of bonuses for AIG executives.
Yet it's all nonsense and bushwacky.
The whole issue dissolves if instead of calling the compensation a bonus, it is called a salary.
I have supervised government workers who got paid a published salaries and I have supervised private sector staff who received roughly a quarter of their compensation in the form of a bonus. Civil service employees who you may not have hired, and whom you can't fire, often exhibit a fine contempt for you, their manager. They know that your opinion of their performance is irrelevant to their compensation, so they they are seldom very eager to try to please you.
Obama doesn't have any relevant experience with management in large organizations - or small organizations now that I think of it. He has never experienced the annual review meeting where the private sector employee sits across the table from his manager and is told face to face just what "bonus" he will receive.
Obama doesn't understand how psychologically powerfull such meetings are. Subordinates identify their financial well being with their bosses good opinion.
However the power of the bonus is in many ways a pretense. In a good year virtually all subordinates get a bonus. Those who can be clearly seen to not be deserving of a bonus probably should just be let go. Bonuses are largely routine for any class of workers. Those who get extreme bonuses are probably being prepared for advancement.
So in government a civil servant might get $100K as a straight salary. In private industry a comparable employee would get $75K as salary and $25K as a bonus. Some would get a bit more and some a bit less but the employee's economic expectation would be $25K. In business school and economics classes this is called Expected Value and it is equal to the arithmetic mean. Sadly, Obama never took any of those subjects.
Of course the outrage is over the executives who get much bigger bonuses than $25K. But this outrage is based on a very common falacy. The falacy of pubic versus private levels of compensation.
In general the government pays better than private industry. The richest county in the US is Fairfax, Virginia. A county filled with federal civil servants. The next richest counties are those next to Fairfax.
So the average worker on facing the job market should prefer goverment service because that's where the money is. Private industry at all levels except the very top pays less well.
The issue isn't more versus less. The answer is in - public jobs pay more. The issue is in the distribution of that compensation. The relevant statistic is the Gini Index of inequality.
Board members and company directors get a lot more pay than the line workers. Leftists have spent decades trying to enrage the people over this kind of distribution. Yet people accept that Alex Rodriquez alone makes more money than whole minor leagu teams. There is a lot of money in opera but Pavarotti, Domingo and Carreras managed to suck it all up for themselves. The fourth best tenor couldn't even make a living in America and had to go to Europe.
Wealth is not distributed equally in sports, the arts or business. No one would worry for two seconds about that except that Obama and the Left have created this issue to further their political careers. Now they have been hoisted on their own petard. Bravo!
The big money is in government work.
You won't hear Obama or any Democrat mention that. They are too busy demonizing "greedy" private sector executives.
"What you see in his budgeting proposals, I think, is the liberal equivalent of the conservative attempt to "starve the beast."
That's not really starving the beast. That's making promises that you can't afford to keep, then discovering later - after Americans are hooked on the new bennies - that you'll have to raise taxes to keep the promises. Who back in 193X, for example, would've ever thought we'd end up paying 14% of our earnings in payroll taxes just for social security? Or how many today can envision the government we'll have ten years from now - the one that will be taking 50-60% of our earned income to finance its operations?
"know its unrelated, but after the 'Special Olympics-foot-in-mouth-all-the-way-back-to-the-ankle' gaffe that should even make the most boot-licking leftist wonder about the man's political instincts, isn't it a good moniker for his critics?"
I think TOTUS (Teleprompter of the United States, as opposed to -President-), has legs.
Amazing how this climate change crap is a fig leaf for so many pols in the West. Vaclav Klaus dared to speak plainly about this hoax. The thing that nobody gets about the climate change debate is that, even if the assertion that it’s manmade were true, the effects of even drastic reductions in energy output are miniscule, according to scientists. So we would regulate ourselves back to the Stone Age and only change the global temperature by about 0.5 degrees, which is a ridiculous number. Apart from that, the research on the issue seems sketchy at best.
"...Some of the parallels he draws between the US and the USSR are pretty striking and frankly, scary."
I'm reading a German translation of Aleksandr Solzhenitsyn's book "Two Hundered Years Together". Its a real eye-opener, very well written and objective by any measure. I can understand why it is being supressed in the US. Too much meat. In it he details the emigration to the US from Russia/USSR. Its obvious that the USSR and the US have much more in common than anyone would like to admit. The book is like a film.
As a European it gives me the hope that after the collapse of the US we can return to classical European Christendom without all this multicultural crap which the USSR and now the US have poured all over Europeans, Russians and whites in the New World.
Hi, I'm Canadian Gord Gordonson, it's great to be here.
thinks to self: it's great to be here.
My 4 hour webinar "So, You've Decided To Become Socialists", now available at Amazon for only $24.95CAD, is jam packed full of taxspending tips from real live socialists right here in Canada. That's a $24.95CAD value!
"albertosaurus said...
Yet people accept that Alex Rodriquez alone makes more money than whole minor league teams."
No, they don't accept it, they just can't do anything about it. If it were up to me (which it is, of course, not) I wouldn't pay ball players a lot of money, or actors, or entertainers. I wouldn't pay executives the kind of compensation they've been getting either. And if they complained I'd tell them that there are hundreds of people in India who could do their job just as well, and they should deem themselves lucky to have a job.
I also don't agree with you that government jobs pay better than those in industry. For engineers, at least, this is not true. What government jobs offer is not more money, but rather safety. As you pointed out, the civil service rules make it virtually impossible to fire anyone.
By the way, government managers also can get bonuses, and these bonuses can be a significant fraction of their salary (5-10%). However, whether they get said bonuses depends on whether they've met their (usually) stupid and arbitrary metrics (promoting diversity, for example). So it doesn't necessarily promote productivity.
The recent troubles in the financial sector indicate that bonuses there don't necessarily promote productivity either.
"Yet people accept that Alex Rodriquez alone makes more money than whole minor league teams."
No, they don't accept it, they just can't do anything about it.
Sure they can, collectively. Stop going to MLB games. Stop watching it on TV. Take your families to see your local minor league team instead, for a fraction of the cost.
Enough people do that, and salaries for guys like Alex Rodriguez will drop. They're probably going to drop anyway, as companies start to curtail their conspicuous spending on luxury boxes and such.
- Fred
Steve, how about some blog entries on what regular people can do to prepare for this economic meltdown and survive it.
I would like to know what the hell to do now. The Carl Denninger blog is so grim at this point I feel the future of the country is probably bleak. Taki magazine also carries Peter Schiff columns which also feature extremely grim forecasts.
Denninger is talking about "bugging out" to a rural location to raise chickens etc. What the hell.
"What you see in his budgeting proposals, I think, is the liberal equivalent of the conservative attempt to "starve the beast."
The liberal equivalent has been going on for a lot longer than the GOP "starve the beast" program. It's a fundamental tactic of passing leftist legislation to understate the costs and/or consequences. Ted Kennedy, 1965: 'our cities will not be flooded with a million immigrants a year, the ethnic balance won't change.' Both happened. The Civil Rights Act: 'this will not establish quotas.' It did. Ted Kennedy, 1986: 'this is a one-time amnesty for a million people.' It was 3 million, and he was back 2 decades later asking for another. The estimated cost for Obama's health care program rose in just 2 weeks from $634 billion to $1.5 trillion.
Somewhere down the road somebody's gunna have to make a commercial showing how severely and rapidly reality diverged from promise with liberal legislation. It always does.
Sometimes the costs are ridiculously understated. Here in Utah a state senator named Luz Robles (no ethnic self-interest involved, honestly) tried to pass a bill this session giving free health insurance to the uninsured children of legal immigrants (it passed the Senate, but too late to be considered in the House). Now immigrants, even the legal ones, are the least likely of all people to be insured - something like 27% lack coverage. Utah has 2.7 million people, including lots of legal immigrants. How many did Robles estimate would be added to the welfare roles? 800. And it was all static analysis. No realization that free health care would encourage immigrants to move here from states that don't have the coverage. No contemplation of an amnesty adding to the numbers. Nothin'.
i second anon's comment about what to do now. we all know its going to suck. How much money do you need for a few acres and how long can you sustain???
That's not really starving the beast. That's making promises that you can't afford to keep, then discovering later - after Americans are hooked on the new bennies - that you'll have to raise taxes to keep the promises.
That's the point, that it is "starve the beast" in reverse. Run up such huge deficits in spending programs that you do not have any wiggle room to cut taxes or even to avoid raising them.
I think TOTUS (Teleprompter of the United States, as opposed to -President-), has legs.
You're right, it definitely has legs. I heard a few seconds of Rush interviewing the TOTUS and it was hilarious (low-hanging fruit).
Steve, how about some blog entries on what regular people can do to prepare for this economic meltdown and survive it... I would like to know what the hell to do now. ...Denninger is talking about "bugging out" to a rural location to raise chickens etc.
I feel the same way. I'm told we are going to have massive inflation in Europe and that the Euro will melt. I'm fiscally conservative, so I don’t have debt and some money on a few accounts. What's the point of keeping it if we are going to have inflation? Should I switch to Swiss Franc and gold? Or buy a house?
Maybe it’s an idea to move back to South Africa. The place is the pits compared to its former glory but it may be better placed to survive the coming tsunami. During both world wars South Africa was a quiet and remote outpost where people could actually live fairly comfortably.
The readership seems much more exercised about the salary of Alex Rodriquez than I would have believed.
Consider a hypothetical example of a team with a star on the order of Jose Canseco. Before Team X got Canseco the stands were largely empty. When our Canseco-like star arrives he creates such a stir that there are 30,000 more fans in the seats contributing $20 each in added revenue. That's nearly $100M in added revenue annualy.
Who should get that extra money? The owner of the team certainly has a strong claim but so does Canseco.
It's not the player's contribution to team winnings that matters here. Total Baseball's statistics never supported the notion that the real Canseco was the team's most valuable player. Canseco however was a media star. People paid to come to the stadium to boo him. He and his agent no doubt cried all the way to the bank.
If baseball was a government run enterprise he might have been paid by some formula based on batting average. Let's say Canseco batted .250. A pick up utility infielder might have batted .200. The government formula then would pay the infielder $200,000 a year and Canseco - the guy who was filling the stands - $250,000.
Such a pay structure would warm the hearts of cryto-socialists but what would it do to Canseco and baseball? First of all if there were another non-governmental team around, Canseco would quit. If there weren't and all baseball jobs had no riches or glory, Canseco probably wouldn't have ruined his health with steroids. He would have continued to look like his twin brother Ozzie.
Finally no one would ever watch a professional baseball game again.
If, as now seems likely, the government will put a cap on bonuses, there are some obvious consequents. First of all there will be no more bonuses of any kind. Salaries will rise and the executive who formerly got $500,000 a year in salary and bonuses will now get $500,000 in salary alone.
If there are only caps on government owned or controlled companies there will be a brain drain toward private firms.
Al Gore, Bill Clinton, Richard Nixon, and Barrack Obama all got filthy rich working in government. None as far as I know ever got a bonus.
If being near the seat of power is the only avenue open to wealth, then we will have a generation of courtiers (what they called lobbyists in Elezabethan England). There will still be rich people but we will be comforted by the truth that no one had gotten a bonus.
BTW when I was at a failing Internet startup that soon went bankrupt, I handed out bonuses to my staff. Should I not have been allowed to so because there were no profits? If that were the rule, few companies would ever get off the ground. My company had never turned a profit. It just ate its way through millions of dollars in venture capital funds.
All the staff who were eligible for bonuses counted their bonus as a predictable part of their compensation package. When I hired new people I told them the job's salary and their probable annual bonus.
Meanwhile the company failed to ever earn a profit. This was standard industry practice. The market for skilled sofware engineering talent was very competitive. Without the promise of a subsatntial bonus I could never have been able to hire anyone good. I imagine that much the same contingencies operated at AIG when they sought executives.
I think the beef about these bonus payments is that we are constantly led to believe they are in some way related to performance.
Yet the people walking away with multimillion$ of bonuses are at best grossly incompetent, at worst actually corrupt.
Al Gore, Bill Clinton, Richard Nixon, and Barrack Obama all got filthy rich working in government. None as far as I know ever got a bonus.
Al Gore got filthy rich as payback for all those favors he performed in Congress or as Veep. Within 6 years of leaving office he was worth $100 million. Clinon was worth at least $50 mil. Once Hillary finishes her one term as SecState she (65) and Bill (66) will take those new/strengthened foreign contacts and get back to pulling strings and selling favors. They'll be worth a billion before you know it. Barack Obama will, too. In fact if Obama loses in 2012 the big race will be to see who can make it to $1 billion first - Obama or the Clintons.
We are now truly an African-style kleptocracy.
Good lord, albertosaurus. Where to begin?
If baseball was a government run enterprise he might have been paid by some formula based on batting average. Let's say Canseco batted .250. A pick up utility infielder might have batted .200. The government formula then would pay the infielder $200,000 a year and Canseco - the guy who was filling the stands - $250,000. Such a pay structure would warm the hearts of cryto-socialists
How is meritocracy socialist? Or is sizzle without steak (i.e. a con job) valuable?
but what would it do to Canseco and baseball? First of all if there were another non-governmental team around, Canseco would quit.
And gone to Vegas, perhaps, to peddle his personality. After all, it isn't his batting average, etc., that pulls them in.
If there weren't and all baseball jobs had no riches or glory, Canseco probably wouldn't have ruined his health with steroids.
And this would be a bad thing how?
Finally no one would ever watch a professional baseball game again.
No baseball fan cares about the actual game, in other words? Better then that such a fraud die.
when I was at a failing Internet startup that soon went bankrupt, I handed out bonuses to my staff. Should I not have been allowed to so because there were no profits?
Were the investors on board with this? It's their money.
If that were the rule, few companies would ever get off the ground. My company had never turned a profit. It just ate its way through millions of dollars in venture capital funds.[...] This was standard industry practice.
Why the economy is in the tank is a complete mystery. (Could it possibly be the cyto-socialists?)
The market for skilled sofware engineering talent was very competitive. Without the promise of a subsatntial bonus I could never have been able to hire anyone good.
You hired all those good people, who took the company bust. Um, why were they good, again?
Weren't they like Conseco: the product of an irrational bidding war for steakless sizzle?
"I had to pay my employees bonuses because otherwise they would leave, they were so great. We never made a profit and went bust. But those guys were worth it. We laughed all the way to the bank while the investors ate it. Capitalism at its finest."
This is the kind of crap that "angers" the rational man. If you call that incredible irrationality "capitalism," then don't be surprised if anyone with a brain says: "Why, to hell with capitalism, then!" Explaining such standard industry practice to us may be breeding more cyto-socialists.
M"aybe it’s an idea to move back to South Africa. The place is the pits compared to its former glory but it may be better placed to survive the coming tsunami. During both world wars South Africa was a quiet and remote outpost where people could actually live fairly comfortably."
I'm going to try and put this in a polite manner, but that is fucking crazy. if you want to move anywhere that will probably ride out the storm, try Finland, the rural US or some out of the way corner in Croatia/Serbia/Montenegro, maybe other E European places.
When considering where to ride out the next decades, people often forget to include in their calculations the extreme probability of massive, Cultural Revolution-style government harassment, particularly of families with children.
Here's something to think about: US government workers are more willing to separate mothers and children than the Nazis were. If it happened to the FLDS, it can happen to you.
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