With the release of the his FY12 federal budget President Obama is reaching a do-or-die moment.
The key to the budget is the new estimate of the deficit for FY11, the current fiscal year, from $1.2 trillion to $1.6 trillion. You can see the problem here, using usgovernmentspending.com's Federal Budget Analyst.
No, it ain't pretty. And it's all the consequence of the two strategic errors made by the Obama administration in 2009. Let's list them:
- Orthodox Keynesian Stimulus. Stimulus has a point when you are trying to rescue the banking system from a meltdown. But the idea that you can stimulate the economy with government spending is laughable. Liberals just can't wean themselves away from the notion, and this time, it is going to cost them big time.
- Full-on liberal agenda. Obama and his chaps just put the pedal to the metal in 2009 with gigantic expansions of traditional liberal special-interest spending plus ObamaCare, a huge weight on the economy, and all the educated class agenda on high-speed rail, clean energy and taxing and regulating conventional fossil fuels. It was a gigantic mistake, and liberals will be paying for it out to the horizon.
The basic problem for President Obama is that Americans are frightened. They are frightened that the big spending and the big deficits are going to hurt the economy and take away their jobs and their retirement.
In that, the American people are right.
Maybe the economy, with the inflationary QE2 and the Fed printing money like mad, will improve enough by 2012 to get President Obama home for reelection. But maybe not.
In any case, the Liberal Hour is over. Whether President Obama gets reelected or not, the American people are souring on big government programs, especially as they feel, rightly, that they don't benefit them. That means that a second-term Obama would be in office, but not in power. And that would mean a mid-term election which could reduce Democrats to numbers not seen for over a century.