Tuesday, February 14, 2012

Obama's Debt-defying Budget

zerohedge: 4 Charts Summarizing Obama's 2013 Budget:
Obama formally proposed his 2013 budget (link) which sees a $1.33 trn budget deficit in the 2013 fiscal year - more than the $1.296 trillion 2011 budget deficit, which unfortunately indicates that even with rather rosy assumptions, the deficit hole continues to grow, which also means that the debt plug will be higher in the next year compared to the prior, which in turn lends even more credibility to the US debt clock analysis which assumes a nearly 140% debt/GDP ratio by the end of a potential second Obama term.
Look at that chart again. The White House is projecting income tax receipts of $1.36 trillion and Medicare and Medicaid outlays that exceed that figure by more than $110 billion, coming in around $1.47 trillion. That is unsustainable.

As zerohedge points out, Republicans wasted no time in criticizing the plan. From the WSJ: Obama Seeks New Taxes on Rich:
The budget underscores the White House's bet that it can convince voters in November that increased spending in the short term is needed to jolt the economy before steps are taken to shrink the federal deficit in the long term. "At a time when our economy is growing and creating jobs at a faster clip, we've got to do everything in our power to keep this recovery on track," Mr. Obama said at a community college in northern Virginia.
That's the pure Keynsian claptrap that is all about boosting aggregate demand with debt financed crony capitalism that will ultimately have to be paid off by generations of Americans who have yet to be born.

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