CHESSNOID

I just finished reading a good article at Reuters titled “Trillion dollar deficits are not the answer” by Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute.  I never knew people actually read all those big boring reports put out by the CBO.  It’s probably because I was unaware it was all accessible on the Internet.  One of the main things she points out in her article that is scary:

Mr. Obama was optimistic about how his policy recommendations, if enacted, would play out.  But the nonpartisan Congressional Budget Office estimated that government spending and the deficit would grow steadily from 2012 through 2019, not only in dollars, but also as a percent of GDP.

After “bottoming out” at $658 billion in 2012—a level more than 40 percent above the highest deficit under the presidency of George W. Bush— CBO projects the deficit to reach $1.2 trillion in 2019, or 6 percent of GDP.  By 2019 government spending would take up nearly a quarter of GDP, far higher than at the peak of Iraq war spending, and the highest, except 2009 and 2010, since World War II.

The current projections for Obama’s administration will  increase the deficit 40% more than when Bush was President. We already know what effects the Bush deficit spending has had on the economy.  More of the same is not the solution.    I don’t know why our government thinks we can spend our way out of this recession.

I agree with the author that deficit spending is not the solution to get out of this mess. The numbers don’t lie. Most of the states are having budget crises because they have to balance them out with revenues. The Federal government is able to avoid that because they have the ability to just print more money. The consequences of those actions are reflected in our current economy.

The Bush administration failed in its economic policies! Unfortunately, the Obama administration is following in the same steps on a more massive scale. This is no surprise since Bernanke is still on board and Geithner was already working with both Paulson and Bernanke as early as the first bailout of Bear Stearns. The same people in charge of the Federal Reserve and US Treasury made this recession worse by keeping rates artificially low in attempt to prop up the housing bubble.

“After “bottoming out” at $658 billion in 2012—a level more than 40 percent above the highest deficit under the presidency of George W. Bush— CBO projects the deficit to reach $1.2 trillion in 2019, or 6 percent of GDP. By 2019 government spending would take up nearly a quarter of GDP, far higher than at the peak of Iraq war spending, and the highest, except 2009 and 2010, since World War II.”

These assumptions do not include more fraud bailouts and wasteful stimulus packages that are sure to continue as the economy falls further.

On a side note, the CBO report on 1/23/08 estimated the unemployment rate for 2009 at 5.4%. Nationally, it is currently at 8% and in about 7 states it is already over 10%. This is significant in that it affects the projection of future revenues. The unemployment numbers are updated in the 3-20-09 report to 8.8%, but we are already at that number and it is only March 2009.

March 27 (Bloomberg) —

The number of U.S. states with a jobless rate exceeding 10 percent almost doubled in February as the worst employment slump in the postwar era spread.

Nevada, North Carolina and Oregon last month joined the four other states that had previously climbed above 10 percent, according to Labor Department data released today in Washington. Michigan, at 12 percent, remained the state with the highest unemployment rate, followed by South Carolina at 11 percent and Oregon at 10.8. California and Rhode Island bring the total number of states to seven.

Ron Paul video on Deficit Spending