Obama’s Budget Is More Expensive Than Initially Thought
Posted July 1st, 2009 at 4.48pm in Ongoing Priorities.
When the non-partisan Congressional Budget Office (CBO) released their original estimate of President Obama’s Budget , they said it was going to be expensive: in ten years the President would accumulate over $9 trillion in deficits. Turns out, that was low-balling it.
In their original estimate, CBO assumed that interest rates would be held constant. This makes modeling the costs a bit easier, but makes little economic sense. In reality, as annual deficits are piled onto the national debt, any rational person (or foreign government) debating whether or not to purchase a newly issued Treasury Bond will begin second-guessing the wisdom of that investment. To get them to stop second-guessing and start buying, the government will have no other choice than to raise interest rates to increase debt-buyers’ returns. Rising interest rates would drive net interest costs up further, driving deficits and debt up even higher, driving interest rates up further, and so on in a vicious cycle.
At the request of Congressman Paul Ryan (R-WI), CBO recently redid their estimate assuming interest rates would not be held constant, and this more realistic scenario paints a very scary picture indeed.
Looking at three different interest rate scenarios, more accurate estimates of President Obama’s deficits would cost an additional $1.2 to $5.3 trillion, bringing the grand deficit-total to as much as $14 trillion.
While it was known that Obama’s budget plan to add national healthcare, introduce a cap and trade, and expand the size and scope of the federal government was going to be costly, turns out there are now 5.3 trillion more reasons to care.
- Author: Nicola Moore
- Interact: Sphere
- Share This
July 2, 2009 Thomas, Anchorage, AK writes:
This was posted on Power Line at 9:13 AM today from a Washington Examiner article posted 9:19PM yesterday: http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/Barney-Frank–49649362.html
“Rep. Barney Frank, the chairman of the House Financial Services Committee, has come up with a proposal to spend any TARP profits before they can be returned to the taxpayers. Last Friday, Frank introduced the ‘TARP for Main Street Act of 2009,’ a bill that would take profits from the program and immediately redirect them toward housing proposals favored by Frank and some fellow Democrats.
Frank, however, wants to spend the money before it can be used to pay down anything. First, the ‘TARP for Main Street’ proposal would take $1 billion ‘from dividends paid by financial institutions that have received financial assistance provided under…the Emergency Economic Stabilization Act’ and apply it to a trust fund that Frank has long wanted to create for low-income rental housing. (The measure, unfunded, was part of last year’s bailout of Fannie Mae and Freddie Mac.) Next, Frank would take $1.5 billion from TARP dividends for a so-called ‘neighborhood stabilization’ fund.
The ‘TARP for Main Street’ bill would also spend $2 billion, apparently from remaining TARP funds, to subsidize people who are delinquent on their mortgages, and another $2 billion to ’stabilize multifamily properties that are in default or foreclosure.’”
The elected regime is riding a bulldozer fueled by our tax dollars and they are laying waste to liberty, capitalism, and self-reliance.