by sheer coincidence, the following was just released by the Obama administration ...
(snip)Aug. 25 (Bloomberg) -- U.S. unemployment will surge to 10 percent this year and the budget deficit will be $1.5 trillion next year, both higher than previous Obama administration forecasts because of a recession that was deeper and longer than expected, White House budget chief Peter Orszag said.
The Office of Management and Budget forecasts that the U.S. economy will shrink 2.8 percent this year, worse than the 1.2 percent contraction the OMB projected in May. For next year, the budget office said the gross domestic product will grow 2.0 percent, less than the 3.2 percent expected in May. By 2011, the economy would be well on its way to recovery, growing at a 3.8 percent annual rate, according to the administration’s mid-year economic review, released this morning.
“While the danger of the economy immediately falling into a deep recession has receded, the American economy is still in the midst of a serious economic downturn,” the budget office’s report said. “The long-term deficit outlook remains daunting.”
Separately, the nonpartisan Congressional Budget Office today predicted that the jobless rate would average 10.2 percent next year, gloomier than the White House projection, and forecast the deficit for this year at $1.6 trillion, slightly worse than the White House estimate.
Impact on Agenda
The budget shortfall for 2010 would mark the second straight year of trillion-dollar deficits. Along with the unemployment numbers, the deficit may weigh down President Barack Obama’s drive for his top domestic priority, overhauling the U.S. health care system.
“It throws a wrench in health-care reforms,” Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, said in an interview before the report was released. “No matter the specific numbers, they’re a constant reminder that we’re in bad, bad shape.”
House Republican Leader John Boehner of Ohio seized on the numbers to call for the Democrat-controlled Congress to impose “strict annual caps on federal spending.”
The health-care overhaul “is just the latest in a long line of expensive Democratic experiments that will add to the deficit, raise taxes on families and small businesses and cost more American jobs,” Boehner said in a statement.
Slower Growth
The projected deficit for the fiscal year that begins Oct. 1 is higher than the $1.26 trillion forecast in May and reflects expectations that economic growth will be slower this year and next because of “the severity of the crisis in the U.S. and in our trading partners,” said Christina Romer, White House chief economist, who along with Orszag briefed reporters on the report.
The administration said last week that the deficit for the 2009 fiscal year, which ends Sept. 30, will peak this year at $1.58 trillion before narrowing over next decade. That is less than the $1.84 trillion projected in May because budget officials were able to delete hundreds of billions of dollars that had been set aside for bank bailouts.
Last year’s deficit was $459 billion.
Over the next decade, the budget picture is darker, with the 10-year deficit reaching $9.05 trillion, up from $7.1 trillion forecast in May, the budget office said Aug. 19."(snip)
from
http://www.bloomberg.com/apps/news?p...d=aNaqecavD9ek
and this response from Senator Grassley ...
(snip)"The economy could spiral into hyperinflation not seen since the early 1980s if the Federal Reserve does not tighten its monetary policy soon, Sen. Chuck Grassley (R-Iowa) warned Tuesday.
Grassley, speaking about the renomination of Federal Reserve Chairman Ben Bernanke to a second term as head of the Fed, asserted that Bernanke's ability to hold down inflation would be the metric by which the Fed's success would be measured.
"We won't know for a year if he's done a good job so far, because he shoveled money out of an airplane to save banks and the financial system," Grassley said in a conference call with Iowa reporters. "But shoveling money out of an airplane to solve problems can be inflationary — in this case, hyperinflationary — if he doesn't start mopping up some of the money that's out there."
Grassley, the ranking member of the Senate Finance Committee, said that inflation as a result from government spending on bailouts could result in inflation rivaling rates in 1980, when it hit a peak of 13.5 percent."(snip)
from
http://briefingroom.thehill.com/2009...ing-the-1980s/
I would add that a significant portion of the ( originally ) $787 billion in federal stimulus spending is actually being directed toward helping many states pay for unemployment insurance checks, medicaid benefits, school system payrolls, road / bridge repairs and other purely 'maintenance' work which are actually the responsibility of the states. This amounts to a wealth transfer from fiscally responsible states ( most of which are red ) to fiscally irresponsible states (most of which are blue). And because the welfare / medicaid / unemployment transfer payments are formula based, the actual cost of the federal stimulus package continues to rise above the originally approved $787 billion !
I would also point out the announcement of a new clunkers-like program to subsidize appliance purchases with federal taxpayer money in a manner similar to the cash for clunkers program itself subsidizing new car purchases with federal taxpayer money. The kicker for both of these programs, of course, is that they are financed by the future income taxes of Americans who actually have to pay federal income tax ... which is barely a majority of those filing federal tax returns these days. As such, this amounts to another wealth transfer from productive Americans earning more than $40k a year ( or so ) to less productive Americans ( most of whom vote blue ).
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