White House: Budget deficit to top $1.8 trillion, 4 times 2008’s record
* Andrew Taylor, Associated Press Writer
* On Monday May 11, 2009, 11:09 am EDT
WASHINGTON (AP) — With the economy performing worse than hoped, revised White House figures point to deepening budget deficits, with the government borrowing almost 50 cents for every dollar it spends this year.
The deficit for the current budget year will rise by $89 billion to above $1.8 trillion — about four times the record set just last year. The unprecedented red ink flows from the deep recession, the Wall Street bailout, the cost of President Barack Obama’s economic stimulus bill, as well as a structural imbalance between what the government spends and what it takes in.
As the economy performs worse than expected, the deficit for the 2010 budget year beginning in October will worsen by $87 billion to $1.3 trillion, the White House says. The deterioration reflects lower tax revenues and higher costs for bank failures, unemployment benefits and food stamps.
For the current year, the government would borrow 46 cents for every dollar it takes to run the government under the administration’s plan. In one of the few positive signs, the actual 2009 deficit is likely to be $250 billion less than predicted because Congress is unlikely to provide another $250 billion in financial bailout money.
The developments come as the White House completes the official release of its $3.6 trillion budget for 2010, adding detail to some of its tax proposals and ideas for producing health care savings. The White House budget is a recommendation to Congress that represents Obama’s fiscal and policy vision for the next decade.
Annual deficits would never dip below $500 billion and would total $7.1 trillion over 2010-2019. Even those dismal figures rely on economic projections that are significantly more optimistic — just a 1.2 percent decline in gross domestic product this year and a 3.2 percent growth rate for 2010 — than those forecast by private sector economists and the Congressional Budget Office.
For the most part, Obama’s updated budget tracks the 134-page outline he submitted to lawmakers in February. His budget remains a bold but contentious document that proposes higher taxes for the wealthy, a hotly contested effort to combat global warming and the first steps toward guaranteed health care for all.
Obama’s Democratic allies controlling Congress have already made it clear that they will reject key elements of his plan. Already apparently dead is a plan to raise $267 billion over the next decade to pay for his health care initiative by curbing the ability of wealthier people to reduce their tax bills through deductions for mortgage interest, charitable contributions and state and local taxes.
And the congressional budget plan approved last month would not extend Obama’s signature $400 tax credit for most workers — $800 for couples — after it expires at the end of next year.
Obama’s remarkably controversial “cap-and-trade” proposal to curb heat-trapping greenhouse gas emissions is also reeling from opposition from Capitol Hill Democrats from coal-producing regions and states with concentrations of heavy industry. Under cap-and-trade, the government would auction permits to emit heat-trapping gases, with the costs being passed on to consumers via higher gasoline and electric bills.
Among the new proposals is a plan — already on its way through Congress — that would increase the Federal Deposit Insurance Corporation’s borrowing authority from $30 billion to $100 billion in order to grant a two-year reprieve from higher deposit insurance premiums while the industry is struggling.
Also new are several tax “loophole” closures and increased IRS tax compliance efforts to raise $58 billion over the next decade to help finance Obama’s health care measure. The money makes up for revenue losses stemming from lower-than-hoped estimates of his proposal to limit wealthier people’s ability to maximize their itemized deductions.
The updated budget also would repeal an unintended tax windfall taken by paper companies that use a byproduct in the paper-making process as fuel to power their mills. The tax credits were never intended for paper companies, but now they could be worth more than $3 billion a year, according to a congressional estimate.
The budget would make permanent the expanded $2,500 tax credit for college expenses that was provided for two years in the just-passed economic stimulus bill. It also would renew most of the Bush tax cuts enacted in 2001 and 2003, and would permanently update the alternative minimum tax so that it would hit fewer middle- to upper-income taxpayers.
As usual, there is no such thing as accountability within the Obama Administration:
This morning, Fannie Mae (FNM) announced that it had lost another $23 billion in the quarter, and would have to call down $19 billion more in taxpayer support. It also said that it would face losses as far as the eye can see.
Do you know how much we’ve committed to backstopping Fannie and its partner-in-crime Freddie Mac (FRE)? $400 BILLION! Back in February that was doubled from the original $200 billion.
But the news of the quarterly loss is getting hardly any attention. Nothing here at the NYT business section, for example. Nothing at the blogs that were going nuts when AIG was revealed to have paid out bonuses back in March.
The problem is that the Fannie and Freddie disasters don’t fit into any conventional media narrative. At AIG you had Joe Cassano, lurking in the shadows, turning AIGFP into his own personal casino, while taking home gargantuan pay.
Fannie Mae? They help nice families get into homes. Their motto is something about helping the people who help house America. Who could be against that? Plus, the Fannie and Freddy story doesn’t help explain the idea that laissez-faire deregulation is what allowed Wall Street to go crazy. Fannie and Freddy had their own freakin’ regulator, OFHEO. Two companies with one regulator to look into both of them.
And then you have all the Democrats on the inside (Rahm Emanuel, for example) on the outside (Barney Frank), who have ties to the company’s worst years.
If AIG (AIG) ever has to ask for one more dollar to pay counterparties like Goldman Sachs (cue the ominous music!), there’ll be a fresh round of media outrage. Fannie and Freddie continue to blow through cash though, and it goes without a peep, depriving the public insight into one of the more important aspects of the housing bubble and the crisis.
Still, the North Carolina Democrat said he realized that tracking so much money will be difficult, acknowledging that “we’re trying to spend $500 billion quickly.”
Mr. Devaney, though, said his board – made up of 10 IGs – has a dual mission: “First, the board is responsible for establishing and maintaining a Web site.” Oh, and second, it’s supposed to “help minimize fraud, waste or mismanagement.”
Corrected paragraph: While Mr. Miller and the panel’s top Republican were there, only Rep. Kathy Dahlkemper, Pennsylvania Democrats, came to the hearing. Absent were Democratic Reps. Steven R. Rothman of New Jersey, Lincoln Davis of Tennessee, Charles A. Wilson of Ohio, Alan Grayson of Florida and Bart Gordon of Tennessee. Republican Rep. Ralph M. Hall of Texas also skipped the session, while Rep. Brian P. Bilbray of California dropped by for the final hour of the nearly three-hour hearing.
Still, to a sparse crowd, Mr. Miller got right to the point. “President Obama promised a level of transparency, through the Internet, Recovery.gov. … How do you intend to provide that level of transparency, to see how – who actually got the contract to pour asphalt?”
“As I mentioned in my testimony,” Mr. Devaney said, “that Web site is evolving. … I would probably be the first to admit today the Web site doesn’t give you that kind of information.”
Dear government, if money isn’t that important to you, then pay my school debts for me. Thanks. Signed, a taxpayer.
Congressman Lacy Clay represents my district. He’s never responded fully to a question. However, I consistently bug his office about federal government spending. The same goes to Claire McCaskill (but I do substitute the appropriate words to directly address her).
Here’s the latest question
Dear Congressman Clay,
As a long-time Missouri, and a first generation Mexican-American, I had two questions concerning the stimulus plan earlier this year and the upcoming votes on the Federal Budget.
(1) How does passage of the stimulus bill in February, which OVERTURNED Clinton’s welfare reform provisions of the mid-1990s, benefit St. Louis taxpayers?
(2) How does the government’s pledge to spend more money this year (in terms of the stimulus package and the federal budget) than what the entire US GDP output was last year benefit St. Louis taxpayers?
PLEASE give an actual response. Your office has never returned this constituent’s questions about federal government spending.
A St. Louis (and Federal) Taxpayer
Unfortunately, I’m leaning towards voters having absolutely no clue as to how much money the Obama and Democrats Co. have spent in the past 70 days.
We have a man who has never run a for-profit company, who cannot even fill out his own income tax properly, now firing the heads of large manufacturing firms.
On top of that, Congress wants to limit “excessive spending.” Hmm…which business or entity has blown (pledged) enough money in the past 70 days to equal that of the US GDP? (see previous posts). How about we have Congress set an example first and allow TAXPAYERS to set their pay grade and perks (like free unlimited health care and travel).
The old Revolutionary War slogan was “no taxation without representation.”
Why not make “no taxation, no representation”? In other words, if you do not pay state taxes, you don’t get to vote in state elections. If you don’t pay federal taxes, you don’t get to vote for federal elections. Why does this matter? Because the type of people who are currently running our government have spent this money money (below) [i.e., I’m betting people who actually pay taxes are more likely to be more careful about who they vote for and how that person/party will spend their money than those that do not. Not a hard and fast fact. Just an idea].
The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.
New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. include $1 trillion for the Public-Private Investment Program, designed to help investors buy distressed loans and other assets from U.S. banks. The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008.
The following table details how the Fed and the government have committed the money on behalf of American taxpayers over the past 20 months, according to data compiled by Bloomberg.
— Amounts (Billions)—
Total $12,798.14 $4,169.71
Federal Reserve Total $7,765.64 $1,678.71
Primary Credit Discount $110.74 $61.31
Secondary Credit $0.19 $1.00
Primary dealer and others $147.00 $20.18
ABCP Liquidity $152.11 $6.85
AIG Credit $60.00 $43.19
Net Portfolio CP Funding $1,800.00 $241.31
Maiden Lane (Bear Stearns) $29.50 $28.82
Maiden Lane II (AIG) $22.50 $18.54
Maiden Lane III (AIG) $30.00 $24.04
Term Securities Lending $250.00 $88.55
Term Auction Facility $900.00 $468.59
Securities lending overnight $10.00 $4.41
Term Asset-Backed Loan Facility $900.00 $4.71
Currency Swaps/Other Assets $606.00 $377.87
MMIFF $540.00 $0.00
GSE Debt Purchases $600.00 $50.39
GSE Mortgage-Backed Securities $1,000.00 $236.16
Citigroup Bailout Fed Portion $220.40 $0.00
Bank of America Bailout $87.20 $0.00
Commitment to Buy Treasuries $300.00 $7.50
FDIC Total $2,038.50 $357.50
Public-Private Investment* $500.00 0.00
FDIC Liquidity Guarantees $1,400.00 $316.50
GE $126.00 $41.00
Citigroup Bailout FDIC $10.00 $0.00
Bank of America Bailout FDIC $2.50 $0.00
Treasury Total $2,694.00 $1,833.50
TARP $700.00 $599.50
Tax Break for Banks $29.00 $29.00
Stimulus Package (Bush) $168.00 $168.00
Stimulus II (Obama) $787.00 $787.00
Treasury Exchange Stabilization $50.00 $50.00
Student Loan Purchases $60.00 $0.00
Support for Fannie/Freddie $400.00 $200.00
Line of Credit for FDIC* $500.00 $0.00
HUD Total $300.00 $300.00
Hope for Homeowners FHA $300.00 $300.00
The FDIC’s commitment to guarantee lending under the
Legacy Loan Program and the Legacy Asset Program includes a $500
billion line of credit from the U.S. Treasury.
AND YET, voters still believe that Obama is being “careful with public money.”
It’s a sad day in American knowing that the socialist states of Europe are telling America to quit spending so much money.
Here’s the solution to America’s deficit: Take Bill Gates money! If Obama’s economic plans are so great, and thus helps Obama indirectly promote them via Obama name-dropping him in townhall meetings, then let Gates pay for the national deficit when the bills come due and there is no more money that can be tapped out of the middle-class workers (middle class being those people who actually go to work as opposed to people supported by the government).
- Anti-Catholic Legislation
- Atlas Shrugged
- Bills I Support
- BO – Biography
- Capping Pay
- Credit Crisis
- Disenfranchise Voters
- Equal Opportunity
- EU Ratification
- Food Stamps
- Former Obama Supporters
- Free Market Economics
- Free Press
- Free Speech
- Global Warming
- Going green
- Government Debt
- Health Care
- Liberal Business
- Mark Levin
- Michelle Obama
- Minister of Culture
- Neutral Govt
- Obama & Bush
- Obama – Cabinet
- Obama – Domestic Policy
- Obama – Foreign Policy
- Obama – Fundraising
- Obama – Housing Bill
- Obama – Spending Bills
- Obama – Stimulus Bill
- Obama Budget
- Obey Obama
- Personal Amusement
- Personal Debt
- Political Attacks
- Preventing Credit Fraud
- Record Collections
- Redistribution of Wealth
- School Shootings
- Science and Politics
- socialized medicine
- Space exploration
- Strange but True
- tax cheats
- Tax Cuts
- Tea Party
- The Left
- Tolerant Liberals
- Town Hall
- United Nations
- Useful Idiots
- Voting Rights