White House Sharply Increases Deficit

This goes in the category of no-brainer. The rampant spending by the Obama Administration is going to boost the deficit by far higher amounts than the Obama Administration was willing to admit just a few months ago.

White House projections of future deficits have increased sharply, however, as the administration has recalculated its economic forecast to take into account an unusually severe recession. The White House now projects that the economy will shrink by 2.8 percent this year, grow by a sluggish 2.0 percent next year and heat up to 3.8 percent growth in 2011. Unemployment, meanwhile, is likely to climb above 10 percent in the last quarter of this year and remain there into 2010, said Christina Romer, chairman of the White House Council of Economic Advisers, who predicted an average unemployment rate of 9.8 percent next year.

As a result, government spending on social programs will continue to soar while tax collections will lag behind expectations. Instead of $1.3 trillion, the deficit in the fiscal year that starts Oct. 1 is likely to exceed $1.5 trillion, the White House said. And deficits are likely to remain elevated even after the economy recovers, averaging more than $800 billion a year through 2019, when the White House forecasts the annual gap between spending and revenue will be $917 billion.

All told, the White House predicts that the nation will have to borrow an additional $9 trillion over the next decade to finance the annual deficits, driving the accumulated national debt to nearly $23 trillion in 2019 -- or 76.5 percent of gross domestic product, the highest since 1950.

That's after trying to goose the current year deficit figures by claiming that they're not going to need $250 billion to bail out faltering financial companies.

New Unemployment Data In; Obama Administration Doesn't Get It

The new unemployment data is out - and once again, they show that Obama doesn't know what he's talking about.

The Labor Department said Thursday that its tally of initial claims for unemployment insurance rose by 30,000 to a seasonally adjusted 554,000. That was above analysts' estimates of 550,000.

The increase follows two straight weeks of sharp drops largely because automakers didn't lay off as many workers as expected in early July. General Motors and Chrysler temporarily shut down many of their plants earlier than usual this year, in May and June, after filing for bankruptcy protection and restructuring their companies.

A department analyst said the government's seasonal adjustment process expected claims to drop sharply last week, after the normal pattern of auto layoffs was complete. But that didn't happen, causing seasonally-adjusted claims to rise.

Weekly claims remain far above the 300,000 to 350,000 that analysts say is consistent with a healthy economy. New claims last fell below 300,000 in early 2007. The lowest level this year was 488,000 for the week ended Jan. 3.

The Administration estimated that unemployment rates would not go above 8.5%. We're now well above 9.5%, and the rate keeps increasing. We've now got high unemployment and massive spending with nothing to show for it except a gaping maw of deficit spending that is absolutely unsustainable.

More people think that the stimulus hurt the economy than helped. No kidding.

The only reason that the weekly claims for the past two weeks beat expectations is that the automakers didn't lay off as many people as the experts thought they would in that time period. The rest of the economy is making up for it as the numbers keep showing serious instability in the marketplace and underscore the inability of the Administration to come to grips that their porkfest stimulus package did nothing to stem the tide of unemployment as they claimed.

The rates are also tempered by the fact that many people have actually given up looking for jobs, which takes their numbers off the rolls completely. All the additional people who are unemployed adds to the costs of multiple government programs, including unemployment, welfare, and other such benefits, further multiplying the negative effects of Obama's economic policies.

Indeed, Doug Ross notes that we're on the precipice of a depression based on numerous economic factors. I'm not nearly that pessimistic, but the continued effects of the stimulus plan will have long term negative effects on the economy and the fiscal health of the nation.

Oh, and for those who think that the health care plan will result in free health care, you'll be in for a rude awakening. Obama has signaled that he's all for raising taxes on the middle class; you just wont know how many are going to see their taxes rise even as their health benefits and options for health care decline. Moreover, he now notes that the health care plan will be funded in part by a tax on the middle class because running the numbers on the Democrats' proposals all come up hundreds of billions short without doing so.

The redistribution of wealth involved here is staggering, and it's only going to get worse as more details slip out about how much people are going to be taxed so that the health care delivery system can be reworked.

The AP is having a hard time swallowing Obama's nonsense. They ran a fact check and it came up with an epic fail. A sampler:

OBAMA: "We already have rough agreement" on some aspects of what a health care overhaul should involve, and one is: "It will keep government out of health care decisions, giving you the option to keep your insurance if you're happy with it."

THE FACTS: In House legislation, a commission appointed by the government would determine what is and isn't covered by insurance plans offered in a new purchasing pool, including a plan sponsored by the government. The bill also holds out the possibility that, over time, those standards could be imposed on all private insurance plans, not just the ones in the pool.

Choice? Not going to happen under those plans.

On cost:

OBAMA: "I have also pledged that health insurance reform will not add to our deficit over the next decade, and I mean it."

THE FACTS: The president has said repeatedly that he wants "deficit-neutral" health care legislation, meaning that every dollar increase in cost is met with a dollar of new revenue or a dollar of savings. But some things are more neutral than others. White House Budget Director Peter Orszag told reporters this week that the promise does not apply to proposed spending of about $245 billion over the next decade to increase fees for doctors serving Medicare patients. Democrats and the Obama administration argue that the extra payment, designed to prevent a scheduled cut of about 21 percent in doctor fees, already was part of the administration's policy, with or without a health care overhaul.

Beyond that, budget experts have warned about various accounting gimmicks that can mask true burdens on the deficit. The bipartisan Committee for a Responsible Federal Budget lists a variety of them, including back-loading the heaviest costs at the end of the 10-year period and beyond.

That's an epic fail, and one of the reasons for pushing health care reform was Obama's repeated claim that it will reduce costs and lower the deficit. These bills do nothing of the sort, and will only expand the deficit by hundreds of billions.

Obama To Name Panel To Rebalance Tax Code

On whose backs will the tax code be rebalanced?

President Barack Obama is putting former Federal Reserve Chairman Paul Volcker in charge of a tax- code review aimed at closing loopholes, streamlining the law and generating revenue, budget Director Peter Orszag said.

Volcker, 81, who heads the president’s Economic Recovery Advisory Board, is being asked to take a look at the laws in an effort to rebalance the tax system.

Orszag said the review, given a deadline of Dec. 4, is being ordered to make recommendations on steps to simplify the code, built over the last 96 years, in ways that would reduce tax evasion and what he called “corporate welfare.”

“There are hundreds of billions of dollars in uncollected taxes each year,” Orszag said in a conference call. The Volcker board “will be examining ways of being even more aggressive on reducing the tax gap.”

The tax gap is the difference between the amount of taxes owed by taxpayers and companies and the amount collected. Orszag cited academic studies suggesting that the difference is $300 billion or more. That is “ a lot of money,” he said, adding that the administration is going to be “as aggressive as possible” in reducing it.

A more fundamental question is why the sudden disdain for corporate welfare.

How exactly is that different than the corporate bailouts we've repeatedly seen since last year, and which President Obama has found unsatisfactory since he's called for the Treasury Department to have still more control over businesses not currently within its grasp so that they can shutter and liquidate them.

There is a real difference between the two. Corporate welfare includes tax breaks designed to minimize government intrusion, while the bailouts maximize the government's interference in the markets. Both, however, distort market operations and needlessly complicate the tax code.

Tax simplification is needed after years of tacking on provisions and complicating the tax code to the point that it requires businesses and individuals to shell out billions of dollars annually to figure out their tax obligations (though some do it better than others as Tim Geithner could attest to). Simplification could result in higher tax collections.

Some in Congress aren't exactly happy with this announcement, claiming that the job of writing the tax code resides in Congress, not in an executive branch task force. They've got a point.