Wednesday, February 15, 2012

New Federal Budget up on

So now, a week late, the president has submitted his FY13 budget. And of course has all the data.

But what does it mean?

There's the higher deficit, $1.3 trillion for the election year of 2012 instead of the sub-trillion deficit budgeted for FY12 just a year ago. But we expected that, from the sub-par growth in this sub-par recovery.

There's the gigantic contribution of the Fed's QE2, a convenient $1.6 trillion of public debt that was bought by the Federal Reserve System in FY11. Goodness knows what the impact of that will be in a year or so when credit demand picks up and the $1.6 trillion gets converted into $5 trillion or so in money and credit.

If you are looking for a report card on Obama spending, you can see it in the Estimated vs. Actual for FY11, the spending year that ended last September 30.  You can see the estimates for FY11 for the major functions starting in the FY07 budget.  You can see the sudden jump of about $80 billion a year in Health Care, the $40 billion a year in Education, and the $100 billion a year in Welfare.  Oh, and the $70 billion a year in Other Spending.  Pretty soon we'll be talking about real spending increases!

The big story, of course, is that the president has punted on restraining spending. He's done nothing about the entitlements, especially Medicare, which is already hemorrhaging $280 billion a year over its payroll tax revenues--unless you consider the smoke and mirrors and bureaucratic trick ponies in ObamaCare as serious attempts to address the Medicare problem.

It's frustrating for everyone, liberal and conservative, that the nation is drifting on down the river towards the waterfall, and nothing is being done to fix the government's finances. But that is politics. Politics is not really a system to compromise or settle anything. Politics is power, and the national political power today is contested. That's what we mean by the culture war, by "50-50 nation," by the liberal complaint about the loss of civility and all the other terms used to describe the stalemate in national politics. We will keep drifting downriver until we really go over the waterfall. In the emergency, the question of how much in taxes and how much in spending will be resolved in a great trial of political strength.

Until then Republicans will refuse to agree to new taxes and Democrats will refuse to agree to "cuts." But one thing is certain. When the crisis comes, it won't just be "minorities and women hardest hit." It will be ordinary people across the spectrum who will be hurt, from the working stiff wanting a decent wage, to the college graduate looking for corporations that will hire them to the retiree trying to get a decent interest rate out of his lifetime of savings, to the government beneficiary suddenly finding out that all the old scams don't work any more.

It's such a shame.  Because if we cut back the power and the spending of government all Americans would get a better deal.

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