Friday Night Bad News Dump

Obama was hoping you wouldn’t notice the new record deficit he set. It’s more than three times as large as the deficit was when Bush left office.

White House predicts record $1.47 trillion deficit this year, 9 percent unemployment next year

New estimates from the White House on Friday predict the budget deficit will reach a record $1.47 trillion this year. The government is borrowing 41 cents of every dollar it spends.

That’s actually a little better than the administration predicted in February.

The new estimates paint a grim unemployment picture as the economy experiences a relatively jobless recovery. The unemployment rate, presently averaging 9.5 percent, would average 9 percent next year under the new estimates.

The Office of Management and Budget report has ominous news for President Barack Obama should he seek re-election in 2012 — a still-high unemployment rate of 8.1 percent. That would be well above normal, which is closer to a rate of 5.5 percent to 6 percent. Private economists don’t think the unemployment rate will drop to those levels until well into this decade.

“The U.S. economy still faces strong headwinds,” the OMB report said. They include tight credit markets, a high inventory of unsold housing and retrenchment by state governments bound by balanced budget mandates. The European debt crisis has also had an impact.

See also:
Mid-Session Review
Budget of the U.S. Government

Federal budget deficit to exceed $1.4 trillion in 2010 and 2011
Forecast for 2011 Deficit Is Raised to $1.4 Trillion
Obama Budget Office Forecasts $1.47 Trillion Deficit This Year
Obama’s budget deficit heading further up
US deficit heads toward record $1.47 trillion
Federal deficit expected to reach record high
OMB: Economic pain will linger
US predicts record budget deficit
U.S. economy faces strong headwinds: White House
U.S. Trims ’10 Deficit Forecast as Economy Faces Headwinds
Republicans pounce on new OMB deficit predictions
Budget 2011: Past Deficits vs. Obama’s Deficits in Pictures

And remember, these record deficit projections are based on rosy White House economic assumptions.

Real GDP is expected to rise by 3.1 percent during the four quarters of 2010 and to increase 4.0 percent in 2011. The growth rate is projected to rise to 4.3 percent in 2012 and 4.2 percent in 2013 as the economy returns closer to its potential output level. Beyond 2013, real GDP growth is projected to moderate, declining gradually to 2.5 percent per year in 2018-2020.

If the U.S. economy falls short of these GDP projections, the now record deficits will become even worse. And you don’t even want to think about what happens if interest rates rise significantly and it costs the U.S. Government even more to borrow these incredibly humongous amounts of money.

/there’s no way that Obama can legitimately blame Bush for this budget mess anymore, although that won’t stop him from trying to revise history

Obama Pounds 3.8 Trillion More Borrowed Nails In America’s Economic Coffin

We’re quickly nearing the tipping point where the interest payments alone on our debt will swamp our ability to pay them, yet Obama’s stomping the spending accelerator down to the floorboards with a record setting budget proposal, for the second year in a row.

Just wait until interest rates rise and watch how much more the interest on our debt is going to cost as we borrow even more, that is if anyone will still be willing to lend to us.

/Michael Ramirez

Obama to veil $3.8T budget with massive deficits

President Barack Obama is sending Congress a $3.8 trillion budget on Monday that will increase spending in the fight against high unemployment, boost taxes on the wealthy and freeze spending for a number of government programs.

The deficit for this year would surge to a record-breaking $1.6 trillion, according to a congressional official who had access to a White House summary document. That deficit would easily top last year’s then unprecedented $1.41 trillion gap.

The congressional source, who spoke on condition of anonymity before the budget’s official release, said the deficit would remain above $1 trillion in 2011 and would average 4.5 percent of the economy over the next decade, a level that economists consider a threat to long-term economic prosperity.

Budget of the United States Government, Fiscal Year 2011

See also:
Deficit climbs to record under Obama’s budget
Obama budget: Record spending, record deficit
Obama’s 2011 budget underlines depth of US woes
Shadowed by deficits, Obama pitches economic plan
Budget reflects dire realities, Obama says
Obama’s budget illustrates dire fiscal straits
Breaking Down Obama’s Budget
Hard choices to come with fiscal year 2011 budget
Tax Proposals in the 2011 Budget: What’s In It for You?
Obama’s budget: Impact on your taxes
Obama Budget, Jobs Plan Get Early Tests on Hill
Obama’s budget proposal draws rapid fire from legislators

So, in the face of an obviously unsustainable deficit and debt trajectory, why does Obama insist on submitting a budget with record spending and record deficits? Why does he propose a fig leaf of a spending “freeze”, when drastic spending cuts are clearly called for? I think James Clyburn sums up this insane Democrat mindset best.

“We’re not going to save our way out of this recession,” the majority whip added. “We’ve got to spend our way out of this recession, and I think most economists know that.”

Most economists believe that, really? The reality, as proven by history, is that only the private sector can create a sustainable recovery. Massive government deficit spending only creates a temporary boost, while crowding out private investment and adding to the national debt, which, in turn, sparks long term economic pessimism and turmoil. Eventually, this downward spiral will completely collapse in a national default.

/the time to stop the dangerous and reckless economic train wreck that’s looming is now, so vote like your standard of living depends on it, because it does