The title of the post says it all, really. The Office of Management and Budget released figures that show, along with an increased 10-year deficit projection of $9 trillion, a doubling of the federal debt by 2019 that will be 75% of America’s GDP. What’s more, unemployment is expected to hit 10% this year and the economy will shrink 2.8%, worse than the 1.2% projection in May. And even better, the Wall Street Journal says that the $9 trillion is actually a best-case scenario because it assumes Congress will hold spending at inflation and actually has decreasing spending between 2009 and 2012, which just ain’t gonna happen.
OMB Director Peter Orszag took the occasion to scold the Bush administration for not following “pay as you go” rules right before urging that a costly health care reform bill be passed to drive down costs. It’s circular logic that dictates that to save money you have to spend money, sort of like the “spend your way out of bankruptcy” crap that Joe Biden was spouting not too long ago. That kind of mindset, which seems to be prevalent within this administration, leaves me with little hope that fiscal restraint and spending cuts will even be considered until it’s too late. No, it’s the Keynesian model all the way, baby!
Here’s the problem for Mr. Orszag – it’s hard to take any of his rosy economic predictions at face value when his agency has already been off by a few trillion dollars. And, I’m sorry, you can’t blame a misreading of that magnitude on “the economy was just worse than we thought.” The inconvenient truth for Orszag is that he admitted back in March that if the CBO deficit projections were on target, then President Obama’s budget would be unsustainable. Well, guess what? With the new numbers, they are and it is.
So will Congress and the Obama administration exercise financial responsibility by curbing spending and crafting measures that help, not hinder, the private sector economy? I doubt it. We’ll see full steam ahead on the President’s domestic agenda, and we’ll finally see higher taxes for all of us to pay for it.
With these prospects, can you blame anybody for getting sauced at the thought of it all? Not me. Drink up, folks.