The Story To Watch Today

“Healthy debate” always seems healthier and more productive when the complainers have legitimate complaints. the Federal budget deficit, is, was and remains a significant problem. The problem is that the people who are screaming about it this week had been oddly silent for the last 8 years.
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I still like my summary best:
The Democrats would like to spend more than they take in. The Republicans OTOH prefer to take in less than they spend.
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One group acknowleges that somthing needs to be done about it. The other seems to believe in magic.

K Tizzle
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So are you saying that the story to watch today is a story that people have known at least since President Obama released his budget? I mean the only difference between the earlier forecast and the new one is the stimulus bill and the omnibus bill both of which people knew if they were paying any attention were going to raise the deficit and President Obama admitted as much several times. How exactly is this a “new” story?

sg: it’s an extremely important story. i think crossing the $2 trillion threshold is a watershed moment, and it also shows the fiscal outlook is deteriorating. this forecast is signifcantly worse than people thought a few weeks ago. and the white house is very concerned. they are sending a spin patrol of high-ranking administration officials to deal with it.

KT: I agree this is important. But what I find odd is that we know we are in deep trouble, and things will get worse before the tide turns. We know this. Yet every days we thrash ourselves and moan and groan and the spin merchants are sent to calm the peasants.

Does this kind of self-flagellation help us? Does it restore confidence? I know that admitting things up front is the thing to do. But we have no instant solutions. The CBO has oversold its wares from time to time.

We lost 7 trillion dollars of networth. That has set us back. I think we are in for a long slog. What we need to do is cool it with the daily drumbeat of yet another “crisis”

Hear, hear, bitter.
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What we’re going through now is kind of like a football game that gets stopped for a review by the officials after every single play. Congress is behaving as though this tactic will allow the game to be called as soon as the first team crosses the goal line.

K Tizzle
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I don’t know about spin control but allow me to quote from the linked article.
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Lawmakers knew the outlook would be grim because the budget has suffered a kind of one-two punch since the previous CBO forecast.
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That’s mainly because the budget has suffered a kind of one-two punch. Congress passed two huge spending bills — the stimulus package and an omnibus funding measure — and in the economy’s downward slide has only continued.
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But even though they knew it was coming, the number stings: some $2 trillion in new debt this year. It has the potential to change the political landscape for the Obama administration

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The administration is a little more optomistic at 1.75 trillion and the CBO is traditionally a more conservative forecast as far as growth but still I don’t see how this is a big shock to anybody who was paying attention. The stimulus bill itself was close to a trillion and the omnibus bill was almost half a trillion. Maybe its just me but at this point I think its all moot. We have to turn the economy around or the deficit is going to be the least of our worries.

SG: Still think it’s significant. Especially if you were to highlight the last sentence of that excerpt that you chose.

So let the landscape change. The Obama administration inherited a huge problem, and a year from now we will not be listening to the “we have inherited this” line. We will be asking ” what have you done this past year about the problem”. I really see nothing that stands out so starkly that we say: “why didn’t we know this”. Sorry, KT, I don’t see what alarms you.

bitter: don’t shoot the messenger here. the white house is very alarmed. i’m just reporting it. as i said, they are sending out a platoon of high-ranking officials to edit boards.

(NOTE: I’m using billions instead of millions here.)

All the way back in January, the CBO released The Budget and Economic Outlook: Fiscal Years 2009 to 2019. They projected an on-budget deficit of $1340 billion in 2009 (see Table 4). (This does not include $155 billion in off-budget surpluses from Social Security or the US Postal Service; what I would call the net deficit and what CBO calls the Total Deficit is $1,186 billion.)

Throughout the document, CBO refers to the fact that this projection did not include potential future changes. Here is the first paragraph in “The Budget Outlook” section (I have bolded for emphasis):

The ongoing turmoil in the housing and financial markets
has taken a major toll on the federal budget. CBO
currently projects that the deficit this year will total
$1.2 trillion, or 8.3 percent of GDP. That total, however,
does not include the effects of any future legislation.
Enactment of an economic stimulus package, for example,
would add to the 2009 deficit. In any event, as a percentage
of GDP, the deficit will most likely shatter the
previous post-World War II record high of 6.0 percent
posted in 1983 (see Figure 11).

You’d think some enterprising reporter would have done the math and noted that we’ve already spent an additional $660 billion for FY09 since January when it actually happened, rather than wait for CBO to do the addition. (The deficit won’t be getting smaller, either; a change in administrations pushes the DOD APOM request until spring.)

K Tizzle
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The last sentence is opinion. What out of all that President Obama has done so far hasn’t been characterized much in the same fashion? Especially the stimulus bill which is the primary reason for the deficit to go up so far in the first place? I suppose its “symbolic” in some sort of way but its still just a projection. The deficit actually might be worse or in fact it might be better. We have to wait and see. But the only true alternative was for the government to do nothing and then have a country going belly up. I won’t give a sh*t about the deficit until we come out of this recession. Then I will take a peek at it and call for the government to fix it. Until then I am just praying everyday that the jobs numbers, the foreclosure numbers, and the stock market numbers all turn around sometime this year.

Not shooting the messenger, KT, just don’t see what’s new. Of course Cable Chatter will get its daily nervous breakdown. The Village will worry about Wall Street and CNBC will froth on and on. That’s to be expected. But the vast majority of Americans will be working or struggling with unemployment.

Then again, maybe it will distract the cable shows from the special olympics gaffe.

K Tizzle
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In all honesty that would be the best case scenario. At least the deficit is something of substance that will matter going forward. But somehow I doubt it. Our discourse just isn’t structured that way anymore. Pundits have been opining about the Leno appearance all week and I am sure they want to give their coupe de grace on it.

What Would Drudge Do?

When do we get to talk about impeachment? I think total mis-management in the first 60 days is enough to go on. Why wait for 100 days?

If the white house is worried it’s because they know that the gutless, handwringing media hacks (not you KT) that are only comforted by the daddy party (failed, intellectually bankrupt GOP) will make another massive assault on the wisdom of Obama’s plan, at their behest. It’s hard to fight on two fronts and conventional wisdom has been trying to Clintonize the Obama presidency since the debates. They are going to use this excuse to insist that we once again only nibble around the edges.

KT:
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Anxiety over this number is palpable.
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Perhaps the White House will be “anxious” enough to tell Treasury that they’ve got to stop shoveling billions of dollars into a furnace?
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When Geithner stops insisting that this is a simple liquidity crisis, and actually take over the institutions, and immediately start the process of reorganization, then the anxiety will have proven to have been palpable.
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Do you get what I’m saying, KT?
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There simply can’t be that much anxiety if they’re doing what they’re doing…

I have a question for those who are in favor of nationalization. Where will we get the money to do it? Especially in light of the report earlier this week that the FDIC reserves are low because of a dumb ass decision in 1996. Are we going to borrow money to give banks so they can lend it out? And if so isn’t that much the same thing they were doing when the house of cards came tumbling down? Hey I am all for doing something to get the banks back to working but I am not sold on nationalization primarily because of the costs. So if someone can explain to me where we would get the money to nationalize the big banks I am open to hearing you out.

Then again, maybe it will distract the cable shows from the special olympics gaffe.
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I had the opposite reaction. Maybe the ‘Special Olympics’ gaffe was the smokscreen to draw attention away from the deficit!
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Breaking: WSJ is finally honest about EFCA and secret ballots.
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http://theplumline.whorunsgov.com/political-media/journal-editorial-page-admits-that-employee-free-choice-doesnt-nix-secret-ballot/

Why are we taken aback by the size of the budget deficit at a time when the consumer isn’t spending and business isn’t investing, yet throughout the last decade, we ran up massive deficits with tax cuts that we couldn’t afford, a massive expansion of Medicare via a prescription drug benefit, and an unnecessary war that has arguably made us less safe, while the outrage from the villagers was muted?

But for the debt and deficit that was incurred during the Reagan and Bush II Administrations, we would be able to spend our way out of this deep recession with far less fiscal consequences.

Our priorities are deeply skewed, and the selective attention paid by Ms. Tumulty and her colleagues is part of the reason

CBO actually said 1.8 trill in deficit not 2 trill. That means the administration projection is “only” 50 bill off from the CBO. Not exactly earth shattering.

A modest thought: we members of the consuming American public haven’t excelled ourselves in the department of savings,thrift and careful spending, have we?

We ran up credit card debts, borrowed off our equity; lived beyond our means: so we should accept some responsibility. I know all about Wall Street types ordering $1000 bottles of wine and handing dollar bill tips like it was confetti. But the average person was also gobbling $100 bottles of wine. Conspicuous Consumption meet Hopelessly in Debt.

KT: The story: set up a 2Trillion target. Say WH has a lower figure. CBO says 1.9TR. Whew what a relief its not 2 TR.Sound eerily familiar. Wall Street says Dow will drop 100 points. Dow drops 50 points. Whew, that’s a positive. Earning expectations: company must earn 10c per share. Earns 11c: etc etc. This is a well played game and it has got us here.

I have to agree with richinnj.
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It’s bizarre almost to the point of ridiculousness how the first trillion dollars of debt went by almost without notice by the establishment press corps.

I thought deficit spending was desirable during a big economic slowdown. Was Keynes wrong?
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How much of the new deficit spending is from accounting for the two wars we are fighting? (ie, what is the baseline if the previous administration had uses honest accounting?)
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How much of the new deficit spending is due to lower revenue?
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(Not snark here – honest questions.)

Just a suggestion KT. Any discussion of the size of the deficit should include a sentence or two about the numbers reflecting actual honest accounting, just in case anyone is thinking back to the Bush deficit numbers which were based on dishonest numbers.
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And you should never assume that just because this was covered in an article or two six weeks ago that all of your readers will understand.
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and ditto Art-P’s honest questions. Important.

Anxiety over this number is palpable.

It sure is. So is our anxiety over the very real fear that we are close to heading into another Great Depression. I’d much rather see an effort made to head that off and prevent a decade or more of 20-25% unemployment, soup lines and millions of homeless people than sitting back and just letting things fail like the republicans seem to advocate. Tax cuts for the upper income earners isn’t the answer. It never was. There’s hard choices and hard times ahead no matter what. Throwing everything we have into an effort to lessen the impact or at least shorten the recession seems like the only real choice we have at this point. 2 trillion might be a psychological barrier that they don’t want to cross, but if we have to…we have too. I’ll get some psychological help if I need it then.

Ack! Shriek! Deficits all over the place! Due a story on the Commodities Trading Modernization Act…that’s the scandal. Phil Gramm set the house on fire. Barack Obama’s come to put it out. Historic Wisdom from Grand Mother: The Democrats always often take heat when they have to come in to clean up the Repulicant mess!