Wednesday, August 26, 2009

A new era of fiction

AlphaNinja - Oh how I do attempt to stay non-political! I'll justify this one by citing the words at the top of my site, "Stocks and Free Markets." A stretch, probably, but our government's spending (and the taxes that'll support it) is worth looking at.

Yesterday the White House's OMB released a "mid-year" update in which they proudly take credit for reducing this year's deficit (solely due to less money being loaned to troubled banks).

Here's the link to the update, in which the term "inherited" (as in, our administration "inherited" all their financial problems) is used three times in one short blog post.

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.

That's all well and good. But Reuters and others have pointed out an astonishing fact -->> the administration includes "$627 billion in revenue between 2012 and 2019 from a so-called cap-and-trade system requiring companies to buy permits for the carbon gases they spew into the atmosphere."

This has not even been voted on in the Senate, which is consistently more level-headed than the House. It's an administration projecting extra "revenue" (never taxes, always "revenue") from some obscure regulation that has never been passed into law. If (more like when) Congress decides that climate regulation is too harsh to be implemented, the White House will adjust its numbers to reflect reality. Thanks, guys.

An OMB official said the budget review essentially assumes the full implementation of Obama's campaign promise. "To the extent that Congress enacts a different proposal, we'll adjust the budget accordingly at that time," the official said.

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