So Where's The Budget Discipline?


The August numbers are in, and they’re not pretty….

$211 billion in deficits in August, nearly a record for the year, second only to March with $333 billion.

Social Security taxes (which were stolen, of course) provided a $13 billion “help”.

Here’s the updated graph:

And now Obama is allegedly going to pop up with more insanity in the form of “making permanent” an R&D credit, which will force it “on-budget.”

This is being sold as a “new tax incentive”, when in fact it is not.  Every President since Clinton has had this credit, but due to it never being “permanent” it is not “counted” in budget estimates.

Welcome to Fraudington DC, where accounting is done in a fashion that would get you 20 (with Bubba as your “date”) were it performed in any company in the private economy.

Obama is also trying to play with the Bush Tax cuts, of course.  He wants to extend them for anyone making less than $200,000 ($250k for couples.)

The Pew Group says that such an extension would cost $2.2 trillion over 10 years; $3.3 trillion if it were extended for everyone.

$300 billion a year eh?  Gee, I wonder where I’ve seen a number that might be related to before?

Oh yeah, right here:

So let’s see…. all the claims that “Bush’s deficits were all caused by the war” isn’t quite true now, is it?  No, those deficits became structural as a consequence of the tax changes, which added anywhere from half to two thirds of the deficit amounts that we actually sustained. 

So let’s cut the crap, shall we?

First, we’re already running an annualized deficit rate of close to $1.7 trillion – $1,700 billion dollars – both last year and this year.

This is about three times the level that Bush ran during his Presidency.

It is also well over 10% of GDP – the level at which other nations, including Greece, Ireland and Iceland, got into trouble – critical trouble – with being able to finance these deficits on a forward basis.

There is no tax policy that will materially address this – even if all the tax cuts were to expire, they would still leave us with well over $1.2 trillion in annualized deficits, which remains dangerously close to the 10% level.

The issue is spending, and on a $4 trillion budget spending roughly 33% more than is taken in via taxes is both unconscionable and unsustainable.

We blew our wad in the 2000-03 time frame in this regard, we’ve built in the structural deficits as a consequence, and as a result all such announcements will have no net positive impact on economic activity.

Nice try Mr. President.

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