Friday, June 12, 2009

Obamanomics--Keeping The Deficit Booming

The May report from the Treasury Department says the federal deficit reached an all-time record high of $189.7 billion for the month. That pushes the total deficit to within spitting distance of $1 trillion, and there are still four months to go before the end of the fiscal year. Obama promised change, and these numbers tend to indicate he is keeping that promise. A little more change, and the economy would be recognizable to Herbert Hoover and Franklin Roosevelt.

The actual figure that the Treasury Department cites as the total to date is $991.9 billion, but what's a few billion here or there? Spending has kept up though. In the first eight months of the fiscal period another landmark was set. The government has spent $2.37 trillion (yes, trillion) during that period. Now before anybody jumps on me, the Bush expenditures for three and a half months are included in that total spending figure, but by far the largest proportion of the spending has occurred during the four and a half months of the Obama administration. That spending figure is up 18% from the comparable period of the prior fiscal year.

A more interesting deficit figure is that for April. It was approximately the same negative figure as May, but normally April shows large surpluses since that is the deadline for taxpayers to hand over their hard-earned cash to the government. Income was down, while spending has gone way up, the latter caused largely by huge increases in unemployment compensation and welfare-related programs, the former caused by the rising unemployment itself.

Here are some more fun figures. The April budget deficit was the first in twenty-six years, the year before the Reagan administration was able to restore an increase in revenue with a corresponding slowdown in the increase in spending. The $991.9 billion deficit for the eight months is more than triple the amount of the deficit of the corresponding prior eight month period. Secretary of The Treasury Timothy Geithner reports that tax revenues have dropped substantially (the "eat the rich" taxes have not yet been finalized by Congress), and he estimates the total year's deficit to end up at $1.84 trillion, followed by an optimistic deficit of a mere $1.26 trillion for fiscal year 2010.

The Treasury Secretary further estimates that the annual deficit will not fall below $1 trillion within the next decade, and places the total deficit from 2010 to 2019 at $7.1 trillion. A further fear is expressed by economists who believe that large borrowing needs could drive interest rates up with investors (particularly foreign investors) demanding a higher return for propping up the government.

The best Geithner could offer our Chinese bondholders was the promise that the administration will get serious about getting control of the deficits once the economic downturn and financial crisis have passed. But his deparment's own figures show that he expects no such thing until at least 2019. That's one helluva long downturn. It appears that Obama intends to follow the lead of FDR by turning a depression into a Great Depression. Frankly, I'd prefer just a "run-of-the-mill" depression. Better yet, how about no depression at all, and a swift economic recovery?

18 comments:

StanH said...

Now Lawhawk you know this is how the economy works in a Keynesian fantasy world. It’s been reported that the Presidential teleprompter recently read at nite-nite time to our Barry, The Rise of Third Reich, and the next day over a bowl of Coco-Puffs the Commander in Chief excitedly decided to replicate the Weimar Republic. Barry was quoted as saying, “Rahm, now there’s a crisis.” Barry, Rahm, and the Teleprompter as reported by the Secret Service could be heard laughing in a sinister glee, …Bwa…Haaa…hahahahha…

All kidding aside I believe the Democrats are intentionally trying to collapse the economy, make a crisis, and Barry and the nit-wits in government will be the great saviors. I hate to be so cynical, but.

Writer X said...

I believe President Obama also promised (his word, not mine) that employment wouldn't exceed 8% if he signed the behemoth spending bill in January. I believe it's close to 9.5 now.

One consolation: President Obama is making Jimmy Carter look like a good president.

StlDan said...

There is only one way out of this, and it ain't pretty. Inflation, you can turn 1 Trillion debt into 100 Billion real quick. I don't want it and I don't like it but, it's coming. I have been hedging with commodities, it will not be enough but it will soften the hit and just in case things get really bad I have hard assets in hand, not just in paper. I watched my father during the late seventies and early eighties make a small fortune with hard assets. He even rented a closed gas station and stored 30,000 gallons of fuel and did very well with it.

Disclaimer: Do your own research, I am not a financial adviser.

patti said...

there seemed to be something missing from this statement: "The best Geithner could offer our Chinese bondholders was the promise that the administration will get serious about getting control of the deficits once the economic downturn and financial crisis have passed."

i would have gone with something like this: "the best geithner could offer our chinese bondholders was a gianormous belly laugh complete with teary eyes and shouts of STOP IT! YOU'RE KILLING US HERE! when he promised that the administration will get serious about getting control of the deficits once the economic downturn and financial crisis have passed."

freedom21 said...

I have over $100K in student loans so I am all for inflation. Sure, it's selfish....but you gotta look out for #1 right? or wait for Sallie Mae to follow the way of her pals Freddie and Fannie.

There was an primetime press junket that Obama did a while back and I remember it vividly (because my eyes started shooting blood) and he said something like "I think the debate is pretty settled that the spending during the depression was a successful tool in reviving the nation". Where was this man educated? As a trained economist, I found the remark especially insidious because it had to have been an out and out lie. He has on his "economic team" numerour economists. If economists know anything, they know that nothing is settled.

AndrewPrice said...

Lawhawk, there is another aspect to this that Washington loves to lie about -- the don't count the missing social security money. Remember the lock box?

Uncle Sam began raiding that years ago and replacing it with IOUs. But since that money "is owed to ourselves" they don't count it ad deficit or debt because we will just pay it back to ourselves. But that figure dwarves (or at least use to) the regular deficit and it is a real debt that will need to be paid to retirees.

Wonderful.

Freedom21, I am in no way surprised that Barry would lie to the public. Facts are irrelevant to him when he is trying to sway public opinion.

freedom21 said...

AP: That just made me really sad. Happy friday to you as well ;)

AndrewPrice said...

Freedom21, I'm sorry to hear that. Read the swine flu article, that will cheer you up -- they're being commendably honest. :-)

Captain Soapbox said...

There are divergent interests here, on one hand no sane American wants us to go into another deep depression (note I did say "sane") while on the other hand the progressives look back on the Great Depression through nostalgic glasses. Sure everything basically sucked for the people, but hoo boy the government sure got to do a lot and take over a lot!

So while Obama does want the economy to turn around, eventually, for the time being the bigger the crisis the more crazy crap he can pull. It's a win-win for him at the moment since not only can he crisis-monger (since monger is the word of the day) but since companies are doing so badly he can buy them...with our money, and say he's doing something.

So he's happier than a pig that lives out back of a halal restaurant. The Dems in the House, well come next year they may not be so happy, but you can't make a New New Deal without breaking some eggs right?

LawHawkSF said...

StanH: Obama's problem is that in order to grab power, the savior needs someone previously in power (or in imagined power) to blame for the crisis. The recession had barely begun to look serious by the time of Obama's coronation, and then it got worse--much worse. He will probably have to discover a secret cabal of Republican Congressmen and Bush war-profiteers actively working to undermine his road to salvation. On the other hand, he spent considerable time and political capital on his Muslim outreach. Maybe he just plans to go the old-fashioned route and blame it on the Jews.

LawHawkSF said...

Writer X: You see, that's the problem. We ignorant conservatives don't listen carefully. Obama actually said "I will keep unemployment below 8% if you do exactly as I say, immediately, and with no debate." Congress, led by a few Republican unbelievers, hesitated. Voila, 9.5% unemployment.

StlDan: The problem for the vast majority of Americans is that Obama is so much like Carter that he will produce that uniquely Democrat invention--"stagflation." There will always be a few intelligent trend-spotters like your dad, but most Americans will find themselves going to the grocery store with the "Weimar wheelbarrow" of cash to pay for limited supplies of bread.

Patti: I'm sure exactly what you said actually happened. Only the Chinese leadership is not noted for public displays of humor. They waited until Geithner and the cameras were out of the way, and then came the hysterical laughter.

LawHawkSF said...

Freedom21: You got it. Obama's "settled issue" of spending during the Depression reviving the economy could have been added to my earlier column about "things you thought you knew, but were wrong." "Spending during the Depression" is like "Muslim Arabs invented algebra." Everybody "knows it," but it isn't true.

Andrew: How can you be so naive? Gods don't lie. They simply impart wisdom to us mere mortals, and being human, we simply misunderstand what they said. The Social Insecurity Fund is just fine. Ask Barney Frank.

Captain: Obama coaches the "let no crisis go unexploited" team on the playing fields of politics. He has forgotten that there are two teams that play on those fields. Let's hope, pray, and work hard to make sure that the other team has a new coach and a new opening lineup soon.

Captain Soapbox said...

Oh and by the way Lawhawk, that has to be the best Obama picture evar!

StanH said...

I agree Captain Soapbox, great picture indeed, ha.

LawHawkSF said...

Captain and Stan: The weird part is that somebody (I think it was my younger daughter) sent me that picture a couple of months ago. It was so funny, that I kept it on my desktop having no intention of ever using it for anything except a good occasional laugh. I guess I must have had a premonition.

Skinners 2 Cents said...

LawHawk I'm a little upset with you and your picture you've forever ruined my adolescent memories of Erkel ;)

At some point Americans will wake up from their Bama-bender and realize they have bought into a pipe dream. It's like all those great ideas you and your friends used to talk about at the bar while intoxicated. They sounded like great ideas at the time but the next day while sobering up you realize how silly it all was.

Sooner or later more and more people are going to actually fact check a mere sentence of Obamas and find that for a highly educated and gifted speaker, he didn't pay attention in Sunday school class when they taught lying is a sin. How many out right distortions of the facts can this guy get away with?

LawHawkSF said...

Skinners2Cents: I absolutely love your new avatar. Too cool for school! Sorry about the downer, but I absolutely could not resist using that picture that's been sitting on my computer desktop for about two months, just waiting for the right time.

This man is the smoothest snake-oil salesman since P. T. Barnum, and at least Barnum gave you something for your money. Obama's promises aren't even the traditional obeisance to mom, the flag, and apple pie. Obama barely remembers his mom, he doesn't much care for the flag, and the dessert he offers is more like apple pan doo-doo.

We see lying as a sin. Obama sees it as an art.

LawHawkSF said...

Skinners2Cents: In case you missed it on Andrew's thread, the last thing we would do is cherry-pick comments. We look forward to them all, and yours are a great addition to any post. It's a blogger.com thing, and I've run into it a couple of times, including an original article. Please stick with us, we promise we won't ever ignore or delete your comments.

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