♠ Posted by Emmanuel in Cheneynomics at 7/14/2010 12:09:00 AMWe have just received word from the US Treasury that America's fiscal deficit for the year has just crossed the $1 trillion mark with one more quarter to go. While this figure is certainly no surprise, perhaps the only slight "improvement" over the previous year is. The trick this and the previous administration has used is to quote some massive deficit projection beforehand to show that, gee, they actually were "frugal" despite running up massive deficits by undershooting somewhat:
The federal deficit has topped $1 trillion with three months still to go in the budget year, showing the lasting impact of the recession on the government's finances. In its monthly budget report, the Treasury Department said Tuesday that through the first nine months of this budget year, the deficit totals $1 trillion. That's down 7.6 percent from the $1.09 trillion deficit run up during the same period a year ago...What will be the sum total of all this Obamanite spending on current trajectory, however? The picture looks pretty appalling. I've patiently tried to debunk all sorts of "deficits don't matter"-style arguments emanating from mathlexic and/or logic-proof commentators. However, one flagrantly logic-free argument has been "deficits don't matter because interest rates are so low." Apparently, even Obama's fiscal commission--which I've criticized much already--realizes that this pathetic line of argument is patently absurd. For, they predict that debt service costs on interest alone will amount to $2 trillion by 2020:
The deficit in the federal budget in June totaled $68.4 billion, the second highest June deficit on record, but down from the all-time high of $94.3 billion in June 2009, a month when the government was spending heavily to stabilize the financial system and jump-start economic growth...
Many private economists are forecasting that the deficit for the entire budget year, which ends on Sept. 30, will come in around $1.3 trillion. That would be the second highest deficit on record, but it would be down slightly from last year's all-time high of $1.4 trillion. The Obama administration is forecasting that the deficit for the 2011 budget year, which begins Oct. 1, will remain above $1 trillion for a third straight year, projecting an imbalance of $1.27 trillion. And the administration predicts the imbalances over the next decade will total $8.5 trillion.
The nation's total federal debt next year is expected to exceed $14 trillion — about $47,000 for every U.S. resident. "This debt is like a cancer," [UNC President and Fiscal Commission Chairman Erskine] Bowles said in a sober presentation nonetheless lightened by humorous asides between him and Simpson. "It is truly going to destroy the country from within."It's good to know that, no matter how hamstrung by the administration's own spending, powers-that-be at UNC get the idea. If the US spending disease is indeed cancerous, I suggest a strong programme of chemotherapy that will have the disbelievers' hair falling out, pronto. Face it: America is, at present, out of control. It certainly isn't creating any jobs [1, 2] to create taxable revenues, so there's every reason to disbelieve. The American dream is dead, my friend. From here on in, it's just deficits upon deficits.
Bowles said if the U.S. makes no changes it will be spending $2 trillion by 2020 just for interest on the national debt. "Just think about that: All that money, going somewhere else, to create jobs and opportunity somewhere else," he said.