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Office Of Management And Budget Blames US' China Vassal State Status On Republicans
Peter Orszag justifies an insane cumulative budget deficit by 2019 by underscoring "the dire fiscal situation that was inherited." And while the $9 trillion is likely a very gentle underestimation of what will happen if the Bernanke policies kick in and trillion is really quadrillion, it is a sad state of affairs when every administration going forward will simply blame the previous one for its unprecedented fiscal and monetary blunders. Oh and here is an item for future revisionists: by 2019, interest expense will account for more than 80% of the projected deficit of $917 billion. We are now officially a vassal state of China.
From the Mid-Session Review, released earlier by Peter Orszag, who certainly has no chip on his shoulder.
Today, OMB released the Mid-Session Review (MSR) which updates the
Administration’s economic forecast, last done in February, and its
budget projections.The MSR shows a smaller 2009 deficit but larger out-year
deficits than previously projected. Overall, it underscores the dire
fiscal situation that we inherited and the need for serious steps to
put our nation back on a sustainable fiscal path.
First, let’s consider this year’s deficit. We now expect
that the policies put in place to repair the financial system are
likely to cost taxpayers less than previously anticipated. In
particular, we have decided to remove from the budget a placeholder for
further financial stabilization efforts that seemed prudent earlier
this year. And we have lowered our estimate of the expected costs of
FDIC bank rescues.The net result is a $262 billion improvement in the
projected 2009 deficit. The 2009 deficit is now projected to be $1.58
trillion – or 11.2 percent of GDP – down from a previously projected
$1.84 trillion or 12.9 percent of GDP.
Second, with regard to the out-year deficits, the changes
are primarily driven by changes in our economic assumptions. In line
with the current consensus among professional forecasters, the
Administration’s economic projections show that we inherited a deeper
recession than projected in February. These revisions are based on new
data on the severity of the recession that weren’t available last
winter. [But today's consumer confidence number indicates it is all fine?]As a result of a deeper-than-expected recession, certain
spending programs (such as unemployment insurance and food stamps) are
projected to automatically increase and revenues are projected to
automatically decline, compared to our previous projection. Although
these effects help to ameliorate the economic downturn by stimulating
demand, they also lead to higher medium-term deficits both directly and
indirectly (through higher interest costs on a higher level of public
debt). Over the next 10 years, the net impact is to add $2 trillion to
the projected deficit, compared to our last projection made based on
February’s economic assumptions. That brings the projected 10-year
deficit for 2010-2019 to $9.05 trillion – in line with CBO’s June
projection.
It is worth noting, however, that by 2019, the difference
between non-interest spending and revenue, which is also known as the
"primary deficit," is only 0.6 percent of GDP. Interest payments, which
almost entirely represent the cost of the debt accumulated due to the
policies of past administrations and the need to run short-run
deficits to help the economy recover from the worst downturn since the
Great Depression, are 3.4 percent of GDP.During an economic downturn, one wants to allow the
deficit to increase, so deficit reduction should be focused on the
out-years – after the economy has recovered. That said, the out-year
deficits hover in the range of 4 percent of GDP, which is higher than
desirable. Getting the out-year deficit under control is a top priority
of the Administration.We are in the midst of the policy process surrounding the
FY 2011 budget, and that process will include proposals to put the
nation back on a fiscally sustainable path. In the meantime, we have
to stop making these longer-term deficits worse – which is why the
Administration supports statutory pay-as-you-go legislation, so that
any new tax or entitlement initiatives are fully paid for. (If pay-go
rules had been followed over the past eight years, the projected
deficit would be $5 trillion lower over the next decade.)In addition to avoiding making the problem any worse, we
need to address the key driver of our long-term deficits: health care
costs. The federal government simply cannot be put on a fiscally
sustainable path without slowing the rate of health care cost growth in
the long run. That is why the Administration is insistent that health
care reform not only be deficit neutral over the next ten years, but
also incorporate changes that will help reduce the deficit thereafter.There’s no doubt that additional steps will be necessary
to reduce our out-year deficits (including continuing our effort to
reduce spending and reform government contracting), and the
Administration will have more to say about all that as part of the FY
2011 Budget.On inauguration day, the Administration inherited the
greatest economic crisis and the largest deficits since the end of
World War II. The economic freefall has been arrested, and, while too
many people remain out of work, the consensus among private forecasters
is that the economy will return to positive growth in the second half
of this year. As the economy recovers, the Administration is committed
to putting the nation on a fiscally sustainable path.
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As the economy recovers, the Administration is committed to putting the nation on a fiscally sustainable path.
One wonders if this is the same commitment that the Administration has to a strong dollar policy?
The truly frightening part of this statement is that many of these so-called Administration wizards actually believe that 1) the Administration is committed to putting the nation on a fiscally sustainable path and 2) that doing so is even possible.
I suspect that faced with disaster, we're all willing to believe everything and anything in order to sleep at night. After all, denial isn't just for the uneducated.
I wonder what interest rate assumptions are being used for future deficit projections... I suspect rates will be heading north as our politicians succeed in destroying the dollar. A person would have to be an IDIOT to buy long term government debt at current rates.......
Politics as usual. Blame the Republicans for everything! Just remember, Democrats were in control of Congress the last two years of the Bush Admin.
Politics as usual. Of course, blame Republicans for everything! Just remember that Congress the last two yrs of the Bush Admin was controled by Democrats.
Jack
That's a bad thing, right? </humor>
As the economy recovers, the Administration is committed to putting the nation on a fiscally sustainable path.
?!?!?!?!?!?!?!?!?!?!?!?!??!?!?!?! O_O
Hilarious!!
Expect riot, revolution and WAR!
we are indeed a "vassal state" of China. The false notion that the Chinese have lost monies on their T Bond investments needs to be perpetuated in the tightly controlled media. If americans understood that they are working directly to profit the Chinese investors , there would be civil unrest.
If this is getting cured...I am having DT's right now and waiting for Dr.Drew show up to my front door.
Orszag can go work for Kruger Industrial Smoothing..."We're in the red...or the black...Hell, I don't know, whatever the bad one is."
good stuff.
at 1:06. http://www.youtube.com/watch?v=z6kVBGeQeR4
yeah i don't get what's so difficult about all of this, if you can model and project under one or two growth scenarios, why not establish a larger range so you can plan accordingly as events arise? perhaps multiple curves wouldn't be such a bad idea?
this way if you have shortfalls (that apparently nobody saw coming) you know right away how to adjust and can move expiditiously... it's still infuriating that the response we get is to wait until the bombs go off and then blame the hospital for not having enough emt's instead of training the police better.
when all else fails blame bush? why is anyone surprised at this. Of course everyone ignores that the people who control the purse strings (Congress) was run by the same idiots who run it today when the bulk of the fiscal crisis and housing bubble were created (and burst). Our "esteemed" media continues to just parrot whatever press release is given to them without even attempting to report anything anymore. Primarily because they are too fucking stupid to understand even basic economic issues.
It is all just insane.
Caught footed when U.S. equities rebounded off, many investors and asset managers prescribed a cautious
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
OK, "Tyler" so you want a political food fight instead of a detailed analysis of what Orszag is assuming to reach those new projections. Go at it!
how do you fight retard? with retard.
We are supposed to believe a guy who missed a ten year forecast by close to 30% in only 4 months
It might prove useful to take a look at past projections of the deficit, say from 2004, 1999, 1994 to get some idea how good the various administrations are at predicting the future.
I'll venture a guess now that this latest projection is accurate to within +/- $10 trillion, i.e., 110%. Oh, forget the minus; just make it plus.
Stop looking over my shoulder, kids, go study your Putonghua!
Tyler,
Check if Orszag is using smoke and mirrors in his deficit projections. CBO used some big, likely bad, assumptions to reduce its deficit projections:
1. AMT Patch: They assumed that Congress / Obama would not pass a "patch" to extend the inflation adjustment of the AMT (so it doesn't bite everyone with income over the 80th percentile); Congress has done this every year; and shockingly, it actually costs money.
2. Discretionary Spending: They assume discretionary spending would grow at a far slower rate than its historical average.
Orszag is probably playing similar games to CBO in order to prevent his projectsions from looking even worse.
good point
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
Two sides of the same Iridium coin... Remember 77 (Ir) is 8 (O) more than 69 (Tm)..
I'm 54 years old, have always been optimistic, worked in financial services for 30 yrs., well educated, blah, blah, blah.
It pains me to say this but the simple matter is that the USA is pretty much phucked. I have 3 children and am not pleased at all with the future that lies ahead for them. The only thing I can do is leave them my money and continue to pay my life insurance premiums so at least they have money to survive if things continue to get worse.
This is so sad that it breaks my heart.
Done with my rant, but I will continue to try to remain optimistic and will continue to advocate with my elected representatives and support those folks who are trying to change the insanity that we find ourselves in.
Remember that positive engagement is no protection form being led to the showers so to speak..
Standing is always preferable to kneeling. Their knife can always chip & shatter.
Here is to the proposition that the world will indeed turn. I strongly suspect that our children will make up the "next great generation"....
well said Layne......and definitely, standing is the only option!
The elephant in the room is war.
China, the rest of the world, will watch to see how the debt load will affect military spending, and measured relative to the progression of their own military strength.
Subsidizing US imports works but not at the expense and risk of continued financing of the US military.
http://usdebtclock.org/
The economic freefall has been arrested, and, while too many people remain out of work, the consensus among private forecasters is that the economy will return to positive growth in the second half of this year. As the economy recovers, the Administration is committed to putting the nation on a fiscally sustainable path.
There are 2 huge problems with that thought process:
(1) Many private economists are only willing to go out 2-3 quarters in projecting economic growth. Why? Because they see where the money is coming from to finance that growth. That growth is simply not sustainable.
(2) Many private economists simply don't have a clue. If you are relying on the same economists who projected only a mild recession in 2007... you might want to rethink who you trust.
The only way to work our way back to prosperity is for the banking system and its bondholders to take its losses, be absorbed by more sound institutions with the assitance of FDIC (or a new RTC), and revalue mispriced assets back to reality.
If the Obama administration doesn't face up to these realities, we are going to see deficit levels much higher than the $9 trillion we see today. And the next Administation in power will be assuming the same stance about inheriting messes.
Nicely said. 99% of "economists" do not have a clue, cannot forecast and are charlatans. This goes for those with PhDs and degrees in finance also.
I agree wholeheartedly that losses should come to those who should get them and even more importantly debt be converted to equity.
I would also add that the idiots who were driving the bus when it crashed (Bernake et al) should be removed and disgraced.
Seems like a good time to post this from Mish's site - sorry if it's a dupe from a day ago.
http://globaleconomicanalysis.blogspot.com/2009/08/global-debt-bubble-ca...
"
Australian economist Steve Keen is one of the very few who have called this economic crisis correctly. What distinguishes Keen is that his economic forecasts are based on levels of debt and changes in levels of debt as opposed to money supply, output capacity and other things that led most economists astray.
"
Pete
We need a Credit Counseling Czar.
Maybe they can get Starsky to do it.
Thsi is a reflation of the trade as quantitative easing
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
Orsag is an idiot. No one forced the administration to pursue these strategies. There were other options but they want to blame their choice (especially the results) on the previous administration(s).
http://www.youtube.com/watch?v=zDAmPIq29ro
Gibbs is Orszag. Orszag is Gibbs.
remember who orszag is. He is the scion of a very high level hungarian (soviet espionage?) weapons designer who has worked for the US military at he highest levels. His father was allowed to defect in the 1970's (!!!) His loyalty is not to the US but to the Soviet. Destroying the US is something to be proud of for him and his family. And they are also vehemently anti christian.
The anti-christian part gives us hope, at lease.
maybe they know there will be nothing left after year 2012..they do not have to pay anything back..all these debts essentially is free money...
I am confident that we can get on top of the deficit and debt problems by continuing to outsource the origins of future revenue growth. (Hey . . . wait a minute.)
Well, perhaps we can sit back and watch as China goes from red- to white-hot, and make note of the rpm level at which it flings apart.
Interesting stuff, there are so many hands in the pot on the economy, it's a hard beast to define.
I have to say, there is merit to the current administration's claim that they inherited the situation that we're currently in, between all of the taxpayer money spent on war & no-bid contracts connected with the war, the reductions in taxes (and tax haven basing of companies) and creating new layers of government (DHS), as well as all of the fiscal irresponsibility shown by every company involved the derivatives scam and a general focus by most companies on the bottom line for the current quarter, instead of a long-term plan.
I personally don't think that the bailouts (especially to the banking and insurance industries) and other things done by the current administration were the best thing or way to do them, but it wasn't like they got carte blanche to do any of it, there was some collaboration.
And yes, the congress was democratically "controlled" (if you consider the democrats to ever be a cohesive unit) during the last 2 years of the prior administration - but by that time, most things were already in place, like 2 wars, tax cuts, and plenty of other instances that helped to spike the deficit incredibly, between the first and last days of that administration. The numbers don't lie, though they can be spun.
The trick now is how to try to allow things to correct themselves, with as little direct intervention or manipulation as possible, as the economy hiccups greatly from the convergence of so many bad influences at the same time - the federal defecit, the market, the housing market bubble and the weakened condition of the economy. But the Fed paying more interest to banks for "parking" the bailout money there than lending it, while simultaneously giving record bonuses to their executives for a job poorly done is not helping, either.
Businesses will do whatever they can get away with, no matter what changes they make to the regs and the laws, because like GS, there is money to be made in the loopholes and any lack of oversight or terminally idiotic "self-regulation" hoodwink (or there would be no SEC or Treasury or other policing agencies).
This is a great site, I love reading some of the articles and especially the comments - there are definitely some great insights and a lot of brilliance in here. Thanks for posting so that someone like me can understand some of the more nuanced (or just greatly misunderstood or purposely disinformed) aspects of what's going on around us. I think omission, misinformation and disinformation are some of the biggest problems going on right now, usually funded by the very corporations that need the cover or the spun support.
-D
I love the constant "We inherited" bit. As a Senator the president voted against last year's Bush stimulus and the bank bailout right?
He in no way endorsed any of the current deficit.
I think the "Orszag Incident" is the template for how to deal with your potentially worst critics. He made his rep at the CBO as the anti-establishment Cassandra saying budget deficits (esp. healthcare entitlements) had to be stopped NOW or catastrophe would follow. Sucked into the executive vortex, he defends the massive deficit expansion, attacks the CBO, and still says he's the guy to tell us the deficit needs to be reduced...someday. Instead of ripping Obama, as he would have done in his old job, he's stuck his head up Obama's butt as a career move.
Obama has little to do with it. Ram Emmanel, Axelrod, Geitner, Summers, feldman, Cass sumstein, Bair, Shapiro, Schumer, Frank, Pelosi, Volcker, Rattner, Feldman control the monies. What do they all have in common? Hatred for christian Peoples. Goodbye america.
"There are 100,000,000,000 stars in the galaxy. That used to be a huge number. But it is only a hundred billion. It's less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers"---Richard Feynman (1918-1988)
So Ducky, what would you call that which is passed down from one generation or administration to the next? I'm pretty sure it's called an inheritance, and it's what the rich rail against the taxing of, no matter how you choose to see it. And, no matter what happens during this administration, the next administration will "inherit" the situations and environment that they must deal with and operate within, that will cause them to shape their policies and actions, either responsibly or not.
And true, Obama voted for HR1424, but does his one vote in 100 implicate him in ALL of the finanical manuverings of the executive branch (that controls the monitary sector and the defense department) for the entire prior 8-12 years that helped lead us into this mess? I don't think that what's being done currently are the best ideas or methods to change things for the positive, but I think Obama would be blamed for doing anything or for doing nothing. In any case, I think the damage machine was pretty well set in place and motion by the time Obama got to vote to endorse it.
Politics aside, all things are inherited from the past, including the current situations, which is what everybody is currently on this website commenting about. History is supposed to teach us things, tell us where we came from, where we've been and hopefully where not to head. I don't care what anyone's political orientation is, you come into the situation you come into, and it determines your path, to a certain degree, at least. I could have been born to an incredibly wealthy family, and my trip to being a rich man would be a whole lot shorter - although for them to be MY riches, I'd have to wait until I "inherited" that money.