OBAMA’S $3.8 TRILLION BUDGET
01 February 2010 9:58 am by Taylor Marsh
Well, let it never be said that the fed didn’t finally start spending money to get us out of the hole. What I’m seeing is a country desperately looking for a way out of our problems, with a long term drought on the creativity required to produce our way through it. We’ve got much bigger challenges ahead at the start of the 21st century than a whopping deficit. But that’s what will likely be squealed about from all quarters.
We’re also effectively out of the recession, so I’m wondering, in political terms, how independents, who are notoriously miserly, will interpret these numbers. Because most people don’t care, read or understand the details, good or bad inside.
The Chicago Tribune has a partial layout, which includes $237 million for federalizing Thompson prison in Illinois:
According to the White House, the $3.834 trillion spending plan includes:
? A projected deficit of $1.267 trillion, 8.3 percent of GDP. That is down from $1.56 trillion in 2010, or 10.6 percent of GDP.
? $100 billion for jo-creating investments in small
business tax cuts, infrastructure, and clean energy. This includes a new Small Business Jobs and Wages Tax Cut to spur small business hiring and wage increases, at a cost of $33 billion.? Extension for another year of the “Making Work Pay
Tax Credit” for 110 million American families, which amounts to $800 a year for a married couple filing taxes jointly.? Elimination of the tax on capital gains for new investments in small businesses.
? More than 120 cuts totaling $20 billion to enable other areas of discretionary spending to increase within the overall freeze.
? Elimination of tax preferences for oil, gas, and coal companies – raising $40 billion over 10 years.
? Allowing the 2001 and 2003 tax cuts to expire for households making more than $250,000 a year.
? A $3 billion increase in the Elementary and Secondary Education Act for public school funding, raising the total to $28 billion, plus $1.35 billion more for the “Race to the Top” program for schools to increase student performance, in addition to $4.35 billion that was included for the program in the economic stimulus act.
? $17 billion for Pell Grant funding for college aid.
? $33 billion for a 2010 supplemental request and $159.3 billion for 2011 to support the ongoing war effort in Afghanistan and Iraq and other defense needs.
? A 2 percent increase for the Department of Homeland Security, for a total of $43.6 billion, including $734 million for up to 1,000 new Advanced Imaging Technology screening machines at airport checkpoints and new explosive detection equipment for baggage screening and funding for emore federal air marshals on international flights.
We are not “effectively out of the recession.” We are digging ourselves into a very deep hole, from which we cannot ever escape. Independents will be disgusted, as well they should be–not because they’re “miserly” but because they know how unsustainable this is. Their “statistical recovery” is nothing but a lie; Obama is bankrupting this country. States are going bankrupt. Unemployment has gone up for the past 24 months. Tax revenues are plummeting, while our debt is soaring. China won’t rescue us anymore.
Why We Are So Screwed
http://www.businessinsider.com/we-are-so-screwed-2010-1
The backdrop to Obama/Orzag’s budget: What’s really going on:
http://globaleconomicanalysis.blogspot.com/
My non-discernible intellect tells me that the defense budget is going to increase. That’s good news for those who want the American empire to remain intact. But, not so good news for those of us who want to end the wars in Iraq, Afghanistan, Pakistan, Yemen and every other place the neocons want to fight a war or bring down a regime. Peace
Noogan says:
01 February 2010 at 10:28 am
“Digging ourselves into a very deep hole,” is separate from the fact that we have weathered the recession. It’s important to keep the two straight.
You act as if Obama created this problem in 1 single year, Noogan. The previous Bush-Cheney administration didn’t even put their wars inside the budget, while giving massive tax cuts to people who didn’t need them. That wasn’t Obama and it the problem certainly didn’t start with him.
Obama never said it wouldn’t, Imhotep. National security is always a set aside balloon buck event. Understanding you are against what we’re doing overseas, it’s truly stunning that you actually believe we want to “bring down” the governments of Pakistan, Afghanistan, and Yemen. Silly stuff that.
“Silly stuff that.” So tell me why, exactly, are we conducting military operations in all of these places? Does it have something to do with our “war on terrorism?” Peace
I don’t accept your “war on terrorism” phrasing, because as I’ve been writing for years, it’s a broader mission that includes many aspects beyond military. But YOU said we were trying to “bring down” governments, which is ridiculous and misses the mark by one administration.
BUT AGAIN, THIS TOPIC IS ON THE BUDGET. Feel free to put up a thread on Obama “bringing down” governments, if you like. This thread is not for that, Imhotep.
http://www.taylormarsh.com/in-the-news/
“Effectively out of the recession”??? You’re sure not reading the same financial blogs I’m reading, but never mind. Events have their own momentum…
It certainly doesn’t mean that people aren’t still hurting, jobs are still missing, and we’ve got a long way to go. People certainly don’t FEEL like it’s over, as you prove, TaosJohn. But yes, I agree with the assessments that we have essentially made it through it.
http://www.usatoday.com/money/economy/2010-02-01-econ01_ST_N.htm
WASHINGTON — From California sheet music to North Carolina construction equipment, U.S. exports are roaring back as the global economy recovers from recession.
Exports shot up 18.1% the last three months of 2009, helping the U.S. economy expand at a 5.7% annual rate. U.S. factories were behind the surge: Exports of goods soared 28.1%…
Another article from CBS:
http://www.cbsnews.com/stories/2010/01/30/earlyshow/saturday/main6157642.shtml
The administration is hailing the economy’s strong, 5.7 percent annual growth rate reported for 2009’s last quarter, the fastest pace since 2003 and second straight quarter of growth after four of decline.
And while many economists are waving caution flags, noting that much of the growth was simply from businesses replenishing threadbare inventories, one leading economist says flat-out that, “The Great Recession is over.”
Mark Zandi, chief economist at Moody’s Analytics, does point out that the economy isn’t out of the woods yet, but says it appears to have turned the corner. …
TaosJohn, Larry Summers said this the other day, “What we’re seeing in the United States, and perhaps in some other places, is a statistical recovery and a human recession.” Wall Street is up 36% since TARP was passed. Yet we have lost 7 million jobs. It appears that the top 2% have finally figured out a way to make billion$ while slowly squeezing the rest of us into oblivion. But, you know what a famous Indian economist once said, “Once the poor people get hungry enough, they will turn on the rich and devour them for food.” Peace
We have not “weathered” the recession; the debt/derivatives/credit default swaps are still out there in the hundreds of trillions. The Obama administration is simply covering that up.
I don’t “act as if obama created this problem in one year” at all. I know the facts, and I am no fan of the Bush/Cheney regime. Henry Paulson, Alan Greenspan, Ben Bernanke and Timothy Geithner are criminals and should be arrested. Alan Greenspan and Ben Bernanke created this monster, but so did Bush, and frankly, so did Clinton–who altered the statistical methods of calculating unemployment during HIS administration, covering up the problem.
Obama has quadrupled Bush’s deficit. And, he hasn’t done a thing to stop the derivatives continuing to swell. In fact, this administration is simply engaging in a massive scam of “extend and pretend” hoping no one notices and hoping against hope that something will happen to rescue them.
So, take a few moments and read this carefully [ignore the sales pitch at the end, the basic synopsis is easy to understand, so it's helpful to see what has happened]. You’ll see that it’s all just a giant ponzi/shell game–at our expense of course. It’s criminal; the Federal Reserve Bank is hiding the truth. That’s why Bloomberg is suing to force them to reveal where the money went–you know, the “audit the fed” argument.
http://danielamerman.com/articles/Trillions.htm
Myths of Recovery:
http://www.counterpunch.org/hudson01262010.html
Obama has quadrupled Bush’s deficit. And, he hasn’t done a thing to stop the derivatives continuing to swell. In fact, this administration is simply engaging in a massive scam of “extend and pretend” hoping no one notices and hoping against hope that something will happen to rescue them.
Lehman Brothers versus Goldman Sachs. On September 15, 2008 Lehman Brothers was allowed to go bankrupt. Then came TARP which pumped $160 billion dollars into AIG and $10 billion into Goldman Sachs. (Can’t allow any more of these “too big to fail guys go under.”) AIG then gave Goldman Sachs $13 billion out of the TARP money it got. In the end Goldman Sachs remained solvent and had a momopoly on the derivatives trading that it use to share with Lehman Brothers. Paulson was a Goldman Sachs man. So was Geithner and Giethner’s second and third in command at Treasury. So, also, are lots of other Obama administration appointees. Peace
The 5.7% growth will shrink in this quarter.
In addition watch for interest rates to rise in the 2nd and 3rd quarters of this year. Why? Because the 2nd quarter is when the Feds will stop buying mortgage backed securities. Interest rates have been held low for that very reason. When we are back to investors buying them, if they do, interest rates will have to rise to make them attractive.
And Noogan, the expenditures the Administration is proposing in the new budget are 35% HIGHER that what they were proposing last year. Amazing.
I don’t think that is accurate information Noogan about Obama quadrupling the deficit Noogan but I need to do some research to dispute it. You need to be careful where you get your information. I have noticed that you read many conservative writers. That fine we all need information from everywhere but numbers are the easiest thing to play with and they all do it.
Taylor’s point of being out of creative energy in this country is what worries me the most.
LL -
Noogan is correct about the deficit.
Lake Lady, hell I read many conservative. Actually ever writer that I read, except for one or two, are conservative writers. Perhaps you could help me out here and name one or two writers who work for the MSM who are not conservatives? Thanks. Peace
LL, not well written, but you get my drift. Peace
It appears that the big bankers are thumbing their noses at all of us with their bonus’ they know thay own congress and they are asking us,”What are you going to do about it?”
Going back to the party that dug the hole in the first place seems illogical to me and desperately wrong. Did anyone see any brain cells to rub together when Obama visited the Repub caucus? If that is the best they have to offer..well?
I get your drift and agree with it for the most part Imhotep.
Thanks Kris..I am not well schooled in economics but I don’t trust conservatives.
I try to keep up on what Dean Baker,Simon Johnson,Paul Krugman and Robini(sp?) are saying. It is so hard to know what information to trust in this area for someone fairly ignorant on the topic.
Can we get back to the Defense portion of the budget yet? Peace
Lake Lady, I have been reading serious economists at their blogs since 1994, and was therefore quite prepared when the crisis hit in 2008. I knew it was coming since 2006, because I’d been reading Nouriel Roubini since 2004. since you’re making presumptions about me–again–I’m going to post a list of my routine reading so you can start educating yourself. Most of these blogs link to information, too which is helpful. You can link to articles in the Financial Times, at Bloomberg, etc, so I didn’t list the mainstream media sources below. But by reading these extremely knowledgeable bloggers on a regular basis, you get a pretty good BIG PICTURE of what is really going on.
Cheers
First, here’s a picture that says all that needs to be said about Obama’s Budget. You just can’t spend your way out of debt; it doesn’t work.
http://jsmineset.com/wp-content/uploads/2010/01/clip_image00145.jpg
http://market-ticker.denninger.net/
http://globaleconomicanalysis.blogspot.com/
http://www.financialarmageddon.com/
http://jsmineset.com/
http://www.businessinsider.com/
http://www.realclearmarkets.com/
http://jessescrossroadscafe.blogspot.com/
http://www.nakedcapitalism.com/
http://www.zerohedge.com/
http://www.roubini.com/index.php
http://www.calculatedriskblog.com/
http://www.ritholtz.com/blog/
http://wallstreetpit.com/
http://www.creditwritedowns.com/
http://thecomingdepression.blogspot.com/
http://seekingalpha.com/
http://www.moneyandmarkets.com/
We can imhotep, but I want to add that the only way to reduce the deficit is holding the line on entitlements. This Administration is not willing to do so and given that fact the “freeze” is a joke.
I hope we all realize that roughtly 1.65 trillion of this budget needs to be borrowed.
As for capital gains, that’s a nice bone, but capital gains should be eliminated FOR small businesses. Now that would be an incentive.
kris, here’s what entitlements aren’t. They are not Social Security which pays for itself. (A $2.2 trillion dollar excess in that account.) They are not Medicare which pays for itself. (Won’t run into the red until at least 2017.) Entitlements are part of discretionary spending which constitutes only 17% of the total budget. About $477 billion. Interest on the debt is 8% of the budget. Mandatory obligations is another 10% of the budget. That leaves Defense which is 23% of the budget or $741 billion dollars. You simply cannot get any real savings or cuts to the deficit unless and until you cut the Defense portion of the budget dramatically. Say by 50%. Once you do that all manner of good things will begin to happen. Peace
Clinton is still being vilified for going for a “peace dividend” and cutting the Pentagon budget.
Here’s one place to consider Lake Lady – with a link:
http://tinyurl.com/yhluuyd
“Bottom line: Hensarling was correct in that the annual budget deficit soared in 2009, though it did not increase by twelve-fold as he asserted in his comments. However, he does come close for some years. The 2009 deficit was about nine times the size of the 2002 and 2007 deficits, when Republicans
controlled the White House and at least one chamber of Congress.
Obama was essentially correct when he said he inherited a budget deficit of $1.3 trillion. Though the budget deficit for 2008 was a then-record $458.6 billion, the CBO issued a projection in January 2009, just days before Obama took office that the budget deficit would reach $1.2 trillion that year, before the cost of any new stimulus plan or other legislation was taken into account.
As for the impact that Obama’s first budget would have on the national debt, the CBO estimated the national debt would indeed triple by the year 2019 under the president’s budget, from $5.8 trillion to $17.1 trillion. The
president’s budget office, the Office of Management and Budget, projected that the national debt would increase to $16.0 trillion by 2019.
When the CBO issued its projections for Obama’s budget in June 2009, it projected that the national debt would double to $11.7 trillion by 2019 if its pre-Obama baseline economic assumptions were held steady for 10 years. A more recent CBO baseline projection from this month puts the national debt at $14.3 trillion in 2019 and $15.0 trillion in 2020.
The budget process begins at the first part of each year when the president submits his proposal to Congress, which spends months debating and negotiating toward a final bill. That bill would go into effect on October 1, if it is passed by Congress and signed by the president in time. If that has not happened, Congress can pass continuing resolutions to allow the government to continue using the old budget. “
He already talked about that, kris, in his SOTU, which I wrote about as well.
http://www.taylormarsh.com/2010/01/28/enough-time-for-results/
http://www.businessweek.com/smallbiz/running_small_business/archives/2010/01/what_obama_said.html
The real pain on small biz is health care.
Read Brad Delong’s new book, with Stephen Cohen. You might find this interesting LL:
Bill Clinton is still being villifited for not being the characiture many “bought into.” Makes you look silly when you buy silly stuff.
This is a fight Obama needs to have, over the Consumer Financial Protection Agency, especially since Luntz is already targeting it:
http://www.huffingtonpost.com/2010/02/01/frank-luntz-pens-memo-to_n_444332.html?view=print
Taylor Marsh says:
01 February 2010 at 1:24 pm
This is a fight Obama needs to have, over the Consumer Financial Protection Agency
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Not if he’s smart, he won’t. It’s a loser.
ogenec says:
01 February 2010 at 1:45 pm
Taylor Marsh says:
01 February 2010 at 1:24 pm
This is a fight Obama needs to have, over the Consumer Financial Protection Agency
_____________________
Not if he’s smart, he won’t. It’s a loser.
It’s a good thing your not in politics as a strategist. That’s a loosing strategy if I ever heard one.
Why is an effort to protect the consumer “a loser.?”
djjl says:
01 February 2010 at 1:52 pm
Why is an effort to protect the consumer “a loser.?”
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Perhaps without knowing it, you’ve just made my point. I am all for protecting the consumer; I just don’t thing we need another government agency to do it. The better way is to reorganize the agencies that exist: shutter the ones that aren’t effective or rendered moot, and realign the objectives of those that remain.
iceblinkjm, ordinarily I’d quibble with you, but I’m not really up to it. But I’ll make you a friendly wager — you won’t see a new agency. You will see regulatory realignment.
That is a tired, old Republican point. It just may be time to TRULy protect the consumer.
OK Clarence.
Iceblinkjm says:
01 February 2010 at 1:51 pm
You don’t start where you want to end up. You aim high. If health care taught people anything this is it, though obviously many didn’t learn the lesson.
However, I’m not surprised in the era of Obama Democrats are buying Republican talking points. It’s the in thing.
I don’t care about its provenance. I care whether it’s right. And it’s right. the reason we got into this mess with derivatives is because the two agencies were fighting over which had jurisdiction. The CFTC and the SEC. both were formed to ensure safety of the consumer, but each was concerned only with its dominance. CFTC needs to be merged into SEC — there is no longer a meaningful distinction between commodities and securities. And consumer protection at bank level needs to go to Treasury, leaving Fed with safety and soundness mandate.
The problem has not been the institutions; it’s been the lack of leadership. Mary Shapiro is an excellent leader, and together with Warren and Bair, will “truly protect the consumer.”
That isn’t how we got into this – it was some were too important to be investigated and had too many friends in high places to question.
Iceblinkjm says:
01 February 2010 at 2:08 pm
OK Clarence.
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Don’t get me started on THAT subject. If you’re throwing that out as a perjorative, then its clear you know really don’t know anything about the man’s jurisprudence. To say nothing of me.
djjl says:
01 February 2010 at 2:17 pm
That isn’t how we got into this – it was some were too important to be investigated and had too many friends in high places to question.
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That is absolutely how we got into this. no one regulated derivatives, which is what default swaps are. And the reason they didn’t is because no one could agree on whether they should be regulated, or if they should, which regulatory agency should do it. SEC and CFTC had huge fights about this, culminating in the Shad-Johnson accord. Which was undone by the Commodities Futures Modernization Act of 2000.
I agree with that part – “having anyone to protect the public” is not how we got into it.
bbl
Thanks for all the economic advice, everyone. I will try to study it.
ogenec, you’re half right. Nobody knew what derivatives were. When they found out it was far too late to do a damn thing about the trading of or assigning actual risks to default swaps. The ship was already sinking. Peace