As if it was a thinly hidden message to President Obama, today the Congressional Budget Office raised its projection for the United States budget deficit in the present fiscal year:
For 2011, the Congressional Budget Office (CBO) projects that if current laws remain unchanged, the federal budget will show a deficit of close to $1.5 trillion, or 9.8 percent of GDP. The deficits in CBO’s baseline projections drop markedly over the next few years as a share of output and average 3.1 percent of GDP from 2014 to 2021. Those projections, however, are based on the assumption that tax and spending policies unfold as specified in current law. Consequently, they understate the budget deficits that would occur if many policies currently in place were continued, rather than allowed to expire as scheduled under current law.
In other words the CBO is saying, this projection says that things are going to get better after this year, but if the government doesn’t get off its hind quarters and do something about the deficit, this country will be in very deep do-do.
When President Obama announced last night that “this is our generation’s Sputnik moment” not only was the metaphor clumsy, but it was misdirected. If he was trying to say that its time for the nation to understand that we are in a crisis and we must unite behind a common goal, that was correct, but that goal must be to cut government spending and return the United States to fiscal health.
But that was not the President’s message last night. He tried to persuade the American people that government should be the mechanism for job creation and that economic recovery is dependent on more government spending which we do not have. Evidently the president still believes in magic, that you can maintain record-high spending levels and pay down the debt at the same time.
Based on the continuing lousy deficit numbers, if drastic steps are not taken soon the US will fall into the abyss of financial ruin.