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  • Obama's Budget Is More Expensive Than Initially Thought

    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.

    Posted in Ongoing Priorities [slideshow_deploy]

    10 Responses to Obama's Budget Is More Expensive Than Initially Thought

    1. Thomas, Anchorage, A says:

      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/b

      "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.

    2. Pingback: » Financial News Update - 07/02/09 NoisyRoom.net: “Extremism in the defense of liberty is no vice. Moderation in the face of tyranny is no virtue.” Barry Goldwater

    3. Pingback: As expected, a surprise: « The TrogloPundit

    4. Ted, Avon Ohio says:

      Barney Frank leaves one with the impresion that he is attempting to line his retirement nest before he is voted out of office by the good people of Mass. One wonders if he has interests in the housing/ rental properties that he is trying to protect!

    5. Brian S, Boston, MA says:

      Barney Frank couldn't handle the proceeds from a lemonade stand; how did he get the power he has?

    6. Ben C, Ann Arbor, MI says:

      We need Helen Thomas to ask Barney Franks the questions!

      The above posting further proves that Congress is incompetent. It appears the only good thing Al Gore did was invent the internet (tongue in cheek) so information like the above is spread rapidly and the concerned public is informed. Hopefully the voters of Mass are tuned in.

    7. Brad Raffensperger, says:

      This debt is leading us to "The Road to Serfdom". Go read the book by F.A. Hayek by the same name. When the train is heading towards the end of the tracks wisdom would call out to quit stoking the furnace with coal and to start to apply the brakes. This Administration is doing neither, in fact just the opposite.

    8. StepIntoTheLight, Mi says:

      Democrats like Barney Frank, who have championed home-ownership via taxpayer subsidies are clearly missing the point of living within your means. Now he is proposing using TARP money to further destroy the housing market by artificially keeping prices higher than they should, just begging for another housing bubble down the road worse than what we are facing today?

      How did these people keep getting elected over and over again? What is his profit motive? Democrats (aka progressive liberals) continue pushing for government control over our everyday lives.

      It's definitely time for American taxpayers and American voters to choose freedom, liberty, and the pursuit of real democracy over the failed European-style social welfare state that Obama and his political cronies and union bosses are rushing to pass without any serious debate in Congress.

    9. Lynn B. DeSpain says:

      And this surprises who? Let me put it this way, if you are suprised by this, you are dumber than a sack of hammers!

      Hozro

    10. Pingback: CBO Budget Projections Mask Cost of Obama’s Spending « The Swine Line

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