Sunday, February 22, 2009

Obama Plans to Reduce Budget Deficit to $533 Billion by 2013

This promise shows that absolutely NO lessons of the past have been learned and it also ensures that whatever recovery we get will be short-lived.

President Barack Obama plans to cut the U.S. budget deficit to $533 billion by the end of his first term by increasing taxes on the wealthy and cutting spending for the war in Iraq, according to an administration official.

This means either increasing fiscal drag or not recycling the money spent on Iraq into other, domestic spending needs.

Obama wants to reduce the deficit because he’s concerned that over time, federal borrowing will make it harder for the U.S. economy to grow and create jobs, said the official, speaking on the condition of anonymity.

He has totally bought into the false theory of "loanable funds:" the idea that deficit spending takes away from the ability of the private sector to spend and invest, when in fact by definition, it does the opposite.

Ironically, these were the words of his own Treasury Secretary, Tim Geithner, just 12 days ago:

"We believe that action has to be sustained until recovery is firmly established. In the United States in the 30s, Japan in the 90s, and in other cases around the world, previous crises lasted longer and caused greater damage because governments applied the brakes too early. We cannot make that mistake."
-Treasury Secretary Timothy Geithner, February 10, 2009

Amazing!! Now Obama essentially says he will be applying the brakes as soon as the economy gets rolling again!

I said this long ago after Obama made his selections to his economic team. They are all fiscal conservatives and the deficit terrorists will take charge. This is not change. This is the status quo at the worst possible moment in the nation's history. God help us!!


googleheim said...

has anyone organization come to terms with an exact number on the deficit in terms of GDP, GNP and all that ?

maybe obama is only trying to keep the deficit to gdp ration under 40% ? or something similar ..

mike norman said...

I think that's pretty well publicized, both in nominal terms and as a percent of GDP. There's no "set" amount for the deficit that can be considered appropriate. That would be completely arbitrary anyway. The deficit is only too high when output and employment are "maxed" out. We're far, far, from that.