It was to be a new era of fiscal responsibility. In 2006, Nancy Pelosi promised that “the first thing” Democrats would do when they were in control was to reimpose Paygo rules that “Republicans had let lapse.” That didn’t quite happen. By 2008 those rules had “lapsed” twelve times for a total of $400 billion in new deficit spending. Ok, well that didn’t stick, but on the campaign trail Barack Obama promised to “reinstate pay-as-you-go budget rules, so that new spending or tax cuts are paid for by spending cuts or revenue elsewhere.” He subsequently engaged in a trillion dollar spending binge that painted the nation’s ledger red with deficit spending. Well, that was a slip up, but now he’s was super serious when he said in his weekly internet address,

“Now, Congress will have to pay for what it spends, just like everybody else. . .  After a decade of profligacy, the American people are tired of politicians who talk the talk but don’t walk the walk when it comes to fiscal responsibility. It’s easy to get up in front of the cameras and rant against exploding deficits. What’s hard is actually getting deficits under control. But that’s what we must do.”

At least he got the first part right. Polls show that Americans, especially Millennials, are tired of the federal government’s big spending ways. A February poll by Rasmussen finds that among voters 18-29,

• 74% are either very or somewhat concerned by the federal deficit
• 68% believe that cutting the deficit would be better for the economy than the Keynesian approach of increasing deficit spending
• 64% believe that increasing the deficit will hurt the economy
• 85% thinkthat the government fails to spend taxpayer money wisely and carefully
• 87% blame politicians unwillingness to reduce government spending as the cause of the federal deficit

Our fiscally frugal generation has been let down again. Far from being responsible, Congressional Democrats have found creative ways to work around the spirit of the Paygo law. For instance, the law exempts more than 50 federal programs from its reach – including the biggest ticket items like Social Security, the Medicare doc fix, and the alternative minimum tax patch. These tidy little exceptions are worth some $2.5 trillion; money that the government is not required to offset under Paygo.

The biggest farce comes in the form of an “emergency” exception. Patricia Murphy of Politics Daily explains,

“[A]lready, the Senate has issued itself a waiver from the provisions on three of the four spending bills it has considered by declaring several bills to be emergency spending, including a $15-billion jobs bill, a $10-billion measure for unemployment benefits and $100 billion package of tax extenders.”

If everything is the exception is there really a rule? We won’t (though we could) argue that there isn’t a unemployment emergency that requires government action. But, it does not follow that the government can’t make up for that spending elsewhere. As Olsson Frank Weeda of the Peterson-Pew Commission on Budget Reform makes clear,

“You can find there are so many places in discretionary spending that have been increased tremendously over the last two, three, four years that can be cut.”

On Tuesday Tom Coburn attempted to rein in the clear abuse of the Paygo law by introducing an amendment requiring the Senate to post the full cost of Paygo violation online for the public.  Of course the Senate passed it unanimously. To vote no would have been to uncover the swiss-cheese fiscal responsibility of Paygo. Nevertheless, Coburn is less than optimistic about his amendment’s chances to create lasting change to Democrats’ free spending ways. In an emailed statement he says,

“Today, minutes after the Senate accepted my amendment to post its violations of PAYGO online, Senators signaled their intent to remove this amendment from the bill before it goes to the President.  Taxpayers are tired of this cat and mouse game on spending and will hold Senators accountable if they want to be for transparency in words but not action.”

Unfortunately, Obama and the Democrats in Congress have perfected this game of cat and mouse. They say all the right things in public yet continue to drown our generation in red ink. Paygo is a good idea to get us back on track. There should be no exceptions.

by Brandon Greife, Political Director of the College Republican National Committee

Read more: www.collegerepublicans.org

A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned – this is the sum of good government. – Thomas Jefferson

The political paths of young adults are often guided by the environment they were raised in. The “Roaring Twenties,” with Presidents Harding, Coolidge, and Hoover, created a conservative voting bloc that remained staunchly Republican. Franklin Roosevelt’s charisma and plan during the Great Depression created a group of lifelong Democrats. The Reagan Revolution built a nationalistic excitement based in unprecedented prosperity…and produced a new batch of Republicans along with it. The Bush years (the only president on the list whose era lacked a catchy nickname) left many young adults disenchanted with the perceived tone deafness of the executive branch and threatened to lose a generation of potential Republicans.

It is clear that the economic environment and the president’s response have a direct effect on the political ties of an entire generation. Obama should consider himself warned. A new Rasmussen poll shows that a vast majority of young adults aged 18-29 believe the nation is headed in the wrong direction. By a 68% to 23% margin young adults believe the United States is on the wrong track rather than the right direction – the highest margin of any age group polled.

During the campaign Barack Obama appeared as if he was going to capture the hearts of a generation. Hope and change resonated with young adults who were completely fed up a Washington removed from their cares and concerns. But President Obama is not the same as Campaign Obama and Republicans stand ready to reap the rewards.

Democrats failed to understand that they were elected to change Washington. Well young adults have now given up on changing government and simply want to minimize its role in their lives. A straw poll , taken at this year’s Conservative Political Action Conference with 56% of respondents being 25 years of age or younger, confirmed this desire. When asked for the top two issues that matter to you personally reducing the size of the federal government and reducing government spending were far and away the top two choices.

Somewhat surprisingly young conservatives are willing to overlook things that will benefit them immediately – stimulating the economy and lowering taxes – because of a greater understanding of the long term threats of the deficit. President Obama, by focusing on big government initiatives such as health care and big ticket items like the stimulus, is losing the support of young adults.

Millennials have very few examples of government success in our lifetimes. Medicare is heading in to the red. We don’t believe we’re going to see a dime of Social Security benefits. The list goes on. Medicaid, the Post Office, the response to Katrina – simply put, we have been presented with little evidence that the government is equipped to handle our problems. The natural reaction to a federal government headed in the wrong direction? Make it smaller and have it spend less.

Listen up Republicans. Our generation is not lost to the pretty sounding words of a charismatic president. In fact, if new polls are any indication, we’re trending conservative. And we represent the next generation of the Republican party, the foundation of the conservative movement going forward.  The boots on the ground today, and the votes in the ballot box tomorrow. But you must understand what President Obama clearly doesn’t – we’re not willing to mortgage our future for a slight benefit today, we don’t believe the government is the answer to our problems, and we are legitimately scared by the ballooning debt. Do this right and Milllennials will become your biggest ally.

- Brandon Greife, Political Director of the College Republican National Committee. Read more: www.collegerepublicans.org

Like most young conservatives in the United States I spent the past weekend at CPAC. Nearly every booth had some great handout, from key chains, to bottle openers, to books, but my favorite – a stress ball in the shape of the Capitol dome. One can’t help but look at the Capitol and be filled with a patriotic pride. A sense of awe at the stunning symbol of Democracy. Even in the shape of a foam-rubber mold it was still impressive. Then I turned it over and on a little gold sticker saw the word: CHINA.

Sadly, it is a perfect metaphor for America’s growing dependence on our primary creditor – China. President Obama’s recently released budget plan presented a bleak fiscal future. $1.6 trillion deficit this year, $1.3 trillion next year, $9.3 trillion in the next decade. According to the CBO, the debt held by the public will rise from 41% of gross domestic product in 2008 to 82% by 2019. This year each American will chip in more than $800 of their hard earned cash just to pay interest on the debt we’ve accumulated. It’s easy to see that this is a huge domestic problem. Huge deficits lead to higher interest rates on credit cards, mortgages, and loans which lowers demand for goods, and eventually slows economic growth. That’s the bad news.

The very bad news is that the huge debt sum must also be viewed as a threat to our global role and national security. After all, China’s political mentality and philosophy are far removed from the United States; as a business partner this may not be a concern, but as our banker, it presents unique problems.

Unfortunately, the president’s budget does little to curb our recent spending binge causing our fiscal dependency to grow by the day. The U.S. government will borrow 42 cents for every dollar it spends this year. China and Japan are the puppeteers manipulating the trillion dollar strings holding up our nation’s economy. But their willingness to lend us money will not last forever. As Congressman Mark Kirk said after visiting China,

“But privately, the key concern is, Should we buy any more U.S. debt? And over time, what’s happening is China is beginning to cancel Congress’s credit card, doesn’t want to lend much more money to the United States, and especially is worried about the Fed’s policy of printing money to buy new debt.”

The growing anxiety over the U.S. government’s fiscal largesse has already manifested itself in national policy. For instance, taxpayers now guarantee up to $5 trillion in Fannie Mae and Freddie Mac debt because of demands by Japanese and Chinese lenders. As Richard Haass, president of the council on Foreign Relations, says

“We’ve reached a point now where there’s an intimate link between our solvency and our national security.”

This is especially true in a politically charged atmosphere in which the U.S.-China relationship is being put to the test. Beyond the growing concern about our ability to repay the debt are worries over recent arms sales to Taiwan, increasing Chinese military build-up, and threats of a trade war over import tariffs. A China controls more of our debt they also gain a greater say over the price of our dollar. A decision to dump its foreign dollar reserves would lead to massive inflation and directly impact our ability to quickly respond to a crisis. Hard to fight a war when your checks bounce and your credit card gets declined.

The problem is not without a solution. We must stop denying that the national debt is a priority. We must get our fiscal house in order before someone comes in and cleans it for us. The blame for our current deficit does not fall solely on create a budget that tacitly accepts debts and deficits as the new baseline reality, Obama must reevaluate his spending plans. The three year discretionary spending freeze, which now looks like nothing more than a good sound bite, should have been the starting point for this fiscal discipline. Now we must go further. The Democrats’ health care reform and any other bill that dips heavily into the well of red ink should be voted down. Finally, we must get serious about entitlement reform. As the Heritage Foundation’s Brian Riedl notes, the U.S. will spend $26 trillion over the next 10 years on entitlement spending and interest payments alone!

We are the greatest nation in the world. It is time our balance sheet reflects this fact. If not, I wouldn’t be surprised if I’m left squeezing my stress ball while looking out my office window to see a Capitol Dome with the word “CHINA” in big bold letters.

- Brandon Greife, Political Director of the College Republican National Committee (hat tip to Amy Burggraf)

Yep, our elected officials have really run up $1,028,000 of public obligations for the family of the average American.  No kidding. 

First there’s the hard debt - contractual obligations of the government.  Roughly $87,000 per family - half the value of the average home in America. It’s chicken feed to America’s politicians.  

Then there’s the semi-hard debt - primarily retirement benefits for civil servants that their governmental employers have not saved.  That’s almost as much, $73,000 per family.  Think taxpayers can wrest control of that money from unions?  It’ll be a whale of a fight.

Then there are the best loved brands in government: Social Security and Medicare.  They are slated to consume $368,000 per family more than tax revenues over the next 75 years.   Beyond 75 years, those two programs are short another $500,000 per family.  (The Treasury, Social Security and Medicare Trustees Reports, GAO, and Census Bureau have additional details if you’re interested.)

To put in perspective, it would take $1,028,000 per family invested today and growing to pay off government’s debts, promises, and implied promises: federal, state and local, as they come due.

This is in addition to the taxes citizens already pay.  

Every year the balance is not paid down, it grows at the rate of interest - like an unpaid mortgage.

This analysis makes the heroic assumption that taxpayers will not be called upon to make good on any loans that they have co-signed.  No FDIC problems, no bad TARP money, no further Fannie and Freddie losses, no student loan troubles, etc… 

In the interests of credibility, it is imporant not to exaggerate the problem.  America can cut the total unfunded liability in half easily - simply by deciding the country is not going to pay Social Security and Medicare to anyone roughly 8 years old or less or to those not yet born.  Simple, right?  Not in a political environment…might not even be possible.

Visit MyGovSpending.com/beginner/new (full disclosure: it is my site) for a view of your families’ total tax bill, share of government spending, your share of the deficit and the national debt.  I think you should know.

The numbers are big.  There’s not much time.

Years of Corruptioon have left America with severe decay to be removed.

America is suffering from a leadership crisis, despite electing one of the most electrifying young president, a senate with the average senator having almost 20 years of service, and House memeber with almost a decade and half of experience. This failure in leadership all points to stagnation instead of experience and comptency for the crisis at hand. A lack of new ideas has led to complency, corruption and de-cay. America’s instution now are infected with graft, greed, and excuses.

This malignancy was born in the great comprise between Tip ONeil and Ronald Reagan. It was that we would cut tax rates–What Reagan wanted– in exchange for increases government spending–What ONeil wanted. This led to the American public getting to eat their cake and have it too for nearly 30 years. This malignant compromise grew with each passing administration and our instutions and people grew accustom to getting a dollar today for a dime. It became the American way to burrow and purchase. Our government did it. Our business did it. Our People did it. For a generation and a half we have lived leveraging our future for today’s Sunny Day. Now the bills our coming do and what is our response. BAIL ME OUT!!!

Not surprising, a country citizens who burrowed their way into an alvanche of debt snowballs elected leaders who only know how to burrow for a crisis. Need more for Education, burrow. Need to fight a War, burrow. Need medicine for the edlerly, burrow. Need a tax cut, burrow. GLOBAL FINANCIAL CRISIS BY DEBT, BURROW-BURROW. Unfortunately, the corrupted leaders that spawn this debt crisis are now firmly entrenched power. Their response has been to think we can burrow our way out of this debt caused recesssion. Do not turn a blind eye. They are about to enslave your kids, their kids, and maybe many more generations to their debts.

We all this know graph and see the future. What we don’t realize is the day of reckoning is TODAY not later.

This financial crisis has caused a curious phenomnon. We are burrowing more but paying less in interest than ever before. The chart from zerohedge.com below shows the monthly interest payments made out over all the federal government’s burrowings. As you can see due to different debt structures the government payments fluctuate. The line takes the payments and smooths them as if they all burrowings were one payment on a fixed loan. What you see is the line is decreasing. This is cause by the FED changing our burrowing to more short term instruments with lower interest rate and people rushing to the dollar for safety helping to keep it a seller market.

As zerohedge analysis goes on further in the table below. An analysis of what would happen if interest rates rose. They create different scenarios and analysis what the most likely scenario is. They chose the middle because they don’t believe the world can continue to lend us trillions of dollars and ask for near nothing in interest. The results show just how much a tight wire our government is walking. We are most likely looking at a 8 billion increase in interest payments. That’s a 67% increase with an average interest rate of 3.2% (Still historically low). If we go back to norms of 5% we are looking at an increase of 11 billion. This is just on the interest of the debt. It is not the time for new spendiing or tax cuts but for spending cuts and surpluses. We must stop our burrowing and start paying off the debt before the interest rates set off the alavanche that buries us.

We really need to make this case.

President Obama has created a panel to look into ways to cut the deficits he’s created.  This panel, based on the military base closing commission, is supposed to put politics aside and find ways to trim the red ink.  Of course, this commission was created for the sole purpose of insulating him from the inevitable conclusions; cut spending and raise taxes.  He thinks he’s pulling a fast one on the American people.  But, we should really raise the roof because he’s completely abdicating government’s responsibility in this matter.  He is, in fact, outsourcing the work of Congress.

We have a democratically republican system of government.  The populace votes representatives to do their collective work for them.  The president, elected by all the citizens, is supposed to create a budget for the good of the whole country.  Congress is supposed to argue, debate, and decide from what parts of the economy the revenues will flow and to what areas these funds will be allocated.  That is the single most important role for Congress.  In our system of checks and balances, the power of the purse is Congress’ most potent.

Barack Obama is seeking to circumvent that political process through this commission.  He hopes the commission will come back with both spending cuts that will hurt and tax increases he favors.  He will promptly dismiss the spending cuts and immediately press Congress to rubber stamp the tax increases.  He will use the commission report as a kind of bludgeon to ‘force’ the representatives to enact his will.  This is insane.

If the president wants to do his job properly, he should have sent a responsible budget in the first place.  Having nonelected officials carry his water is ridiculous.  He is, in fact, making the case that he and his party are irresponsible spendthrifts who do not have the intestinal fortitude to make wise, sane decisions.  Instead, he is blaming the ’system’ for his and his party’s inability to say ‘no’ to their partisans. 

It’s not the system that’s broke, Mr. President, it’s your party.  If they cannot act responsibly and reasonably while doing their most important business, collecting and allocating money, then they need to be shown the door.  Obama is really telling the American people that he and his party are nothing but spineless hacks who cannot govern and cannot make hard choices.  They are worthless.

That is the case that must be made to the population.  Telling the American people that their president doesn’t have faith in either himself or his party is job one.  This fall we can decide it is time to send some adults and roust out the clowns and poseurs.  Now is the time to make that case.  It is imperative we don’t let him get away with this blatantly deceptive commission.  

We don’t need an outsourced government.  We need a new, inhouse government that will do it’s work.

Once again our good friends on Capitol Hill and at 1600 Pennsylvania Avenue have put forth their budget, and once again they prove that they either don’t realize or don’t care that their profligate spending will ensure that we have a never ending recession.  I know I’ve done this before, but since we’re headed down Debt Alley again, I’m going to explain why deficits are going to choke off recovery:

A fundamental identity of macroeconomics is called the National Income Identity which breaks out the components of the total economy that sum to the GDP.  It states that the GDP is equal to the sum of consumer spending, investment, government spending, and net income from international trade.  GDP is also equal to the sum of consumer spending, taxes, and savings.   Symbolically:

GDP = C + G + I + (X - IM) = C + S + T

Some simple algebra can recast this equation into two interesting forms.  First, we can see exactly from where the money for government spending comes:

G = T + (S - I) + (IM - X)

This tells us that government spending is funded from a) tax revenue (T), b) crowding out private investment by diverting savings to bond sales (S - I), and c) foreign entities reinvesting their dollars, which flow out of the US economy by way of a trade deficit, in bonds (IM - X).

The second form shows the investment potential of the economy - money available to invest in the private economy to replace depreciating assets, invest in technology, and, most importantly, hire new employees.  It is:

I = S + (IM - X) - (G - T)

This tells us that capital for investment comes from a) savings (S), b) reinvested dollar outflows (IM - X), and is diminished by governmental deficit spending (G - T).

Now the numbers: The GDP estimates are in the range of 14.5 trillion dollars.  The budget calls for 3.69 trillion in spending with 2.09 trillion in taxes (1.6 trillion dollar deficit).  The trade deficit runs generally 38 billion per month; that rate extrapolates to 456 billion annually.  The savings rate (percent of GDP minus taxes) is estimated to be in the 5% range; this gives 620 billion in savings.  How does this budget do?

I = S + (IM - X) - (G - T) = 600B + 456B - 1600B = -544 billion (-3.75% of GDP)

What does this mean?

1. Every dime of GDP which does not go to consumer spending and taxes will be diverted to fund the government - nothing for investment, zero to replace depreciated equipment, nada to invest in technology, and bupkis for new hiring.

2. Even after crowding out every bit of investment, the government STILL needs $544 billion more.  This is where the Fed starts printing money and debasing the currency.

The “Progressives” (who know so much better about what’s right for America than us - just ask them!) like to jump on President Reagan’s back about his deficits.  His biggest was 1986: $221.2 billion ($990.4 billion in spending with $769.2 billion in tax receipts) in a $4.428 trillion GDP; 3% trade deficit ($133 billion) and a savings rate of 8.5% (this is from St. Louis Fed data), making savings $311 billion.  So, how does this measure up?

I = S + (IM - X) - (G - T) = 311B + 133B - 221.2B = $222.8 billion (5% of GDP)

Five percent of GDP available to invest.  GDP grew 3.5-4% during that time.  By the way, if you want to have a 5% investment pool available in the current economy you’ll need to cut $1.221 trillion from the budget, leaving a deficit of “only” $379 billion (and I don’t want to hear a word about hiking taxes - those who do get an F and a lecture about how increasing marginal tax rates steepens the Investment-Savings curve and reduces total economic output).

So why do the “Progressives” run deficits which can never be sustained?  I have three ideas:

1. They have no clue about principles of macroeconomics which any first year economics student knows well (so what are Romer, Goolsbee, Summers, Bernstein, et al doing to earn their pay?).

2. They know about these macroeconomics principles, but don’t care.

3. They wish to “fundamentally transform the United States of America”, and this is a step in that process.

If anyone in the Administration reads this and wants to provide an answer you can find me on Twitter - @mikegesner.

Budget discussions are hard to have with anybody. In the media, figures are usually bandied about with abandon, skewed to prove whatever the bandier wishes. Advanced math is Karl Rove with his little slate. That is not to criticize him. He is one of the few who may really know the truth.

In early 2009, I created a spreadsheet to facilitate the analysis of the budget projections by OMB and CBO. The methodology was simple. You get to input the current level of outlays, the current level of revenues, the average rate of increase of outlays for ten years (or other time), and the average rate of increase of revenues for ten years.

I do not try to predict GDP or changes in tax laws or changes in entitlements, or any of the usual crap. Those projections have been hopelessly flawed in the past. But all they are used for is input into the annual rates of change in revenues and outlays. The math is indisputable. It is almost inconceivable that ten years from now the total debt (not the annual deficit) will be under $30T. It is quite likely to be twice that.

I sent these results to just about every Republican leader I could find. I sent it to major newspapers. I sent it to talk show hosts. I even sent it to the CBO and to Peter Orzsag of OMB. Here is a list of responses I received:

That’s right. None, nada, zilch. Those of you who have followed my diary entries on health care already know my disdain for the mathematical ability of anyone in Government or the Media. But this is all middle school level mathematics.

If I can paste the spreadsheet here, I will. It is better in color. It is still better in interactive form, where you can change assumptions to see the impact. I would be happy to send an interactive version to any redstater who wants one, complete with the formulas. Feel free to repost it anywhere with attribution.

I accuse the government economists, actuaries, and other professionals of dereliction. They can’t all be incompetent. The only other alternative is that they are betraying their professional standards. Politeness gets nowhere. Heritage didn’t respond. Newt’s American Solutions staff yawned. I actually did correspond with a bright young staffer there for a while, but she either tired of it or was ordered to ignore me.

I know that people on Cantor’s and Boehnor’s staffs read RedState. The staffs of Steele and Palin and Newt and others read it. Erick has created a great forum here. So I will shamelessly take advantage of the opportunity to publish my deficit rants here.

If the Republican Party would only create a shadow OMB or CBO to counter the deceit from Washington, it would certainly help our cause.

Since I can’t actually display the spreadsheets, let me describe the content. Each row represents an average annual spending increase from 1% to 10%. Each column represents an average revenue increase of 1% to 10%. Each of the 100 individual cells contains the deficit outcome over a fixed number of years of the corresponding row and column.

Not all outcomes have equal probability. The only honest way to project an expectation and a standard deviation is to “estimate” the probability of each possible outcome. Every statistical tool, every regression, every prediction is only a means to that end. Each assumption of initial revenue and spending and each number of years (say ten years) creates a different sheet. This is the best I can do, lacking the tools to display a three dimensional chart, let alone a five dimensional one. If anyone wants to see the master formula, just let me know.

One of the ways the budget OMB and CBO economists skew the results is to front-load the growth assumptions on GDP; that is, high early increases, followed by tapering off in later years. This causes higher total revenue projections without changing the “average” growth rate. Then too, there are no economic slowdowns and national security spending is projected in a world without new crises. ”Overseas Contingency Operations” are slated to shrink by a trillion or so. Fat chance of that happening! And then there are interest rates. They will have to stay low and so does the rate of inflation. In other words, we should ignore history and trust the fate of the country to a bunch of ignorant clowns and self-serving Wall Street alumni.

If there is interest, I am more than happy to publish a more detailed discussion of the probabilities and what they mean. For now, suffice it to say that this budget risks total collapse of the economy of the United States in return for dubious claims of benefits. It sounds a bit like the risk profile made by Goldman Sachs and other bank executives. It is not really fair to lump them together, since the Goldman Sachs people are an order of magnitude smarter than their competitors. Not surprising, since that is who is creating these plans. I will try to discuss this more in another article.

The fiscal 2011 spending is budgeted at $3.8T against only $2.6T in revenues. Both figures are highly optimistic.

For what it is worth, a cursory look at the past 40 years seems to show average (compounded) revenue growth at a bit over 3% and spending growth a bit over 5%. That would cause a ten year deficit (2011-2020) of more than $22T. Total debt would be over $35T. In twenty years, it would be more than twice that.

Considering the current spending orgy and the attack on capitalism, my own guess is that we will have more like 1% growth in revenues and 8% in spending. That would cause a ten year deficit (2011-2020) of more than $32T. Total debt would be over $45T.

Even if we could finance a $40T debt at 6%, that would suck up more money than the entire federal revenue projected for 2011 and more than half that projected for 2020.

The OMB 2011 ten year budget projects average spending growth of 5% and revenues of 8%. Anyone who expects that should be committed. But even then, the ten year deficit would exceed $16T as opposed to the OMB projection of only $8.5T. As mentioned above, this has to do with frontloading good years.

Any attempts to alter these figures by increased taxation are likely to lead to much lower growth. Thank you, Art Laffer.
A more likely result will be runaway inflation to make all these numbers meaningless. Thank you 1921 Germany.

There are other numbers which suggest that OMB is cheating. They project a cumulative revenue increase of more than 80% with spending going up less than 50% and GDP also up around 50%.

One lesson from these observations is that the OMB and CBO are way off the mark in so many ways…I hope this can be communicated to someone in the GOP or media. I have failed to do so. Meanwhile, stay tuned for my budget whine, number 2, with a bonus on global warming and a possible way out, still in progress.

Who knew that the lead editorials in the New York Times could be so funny?

The “Massachusetts” editorial, where the New York Times reasoned that the Massachusetts election result was “not remotely” about Obama, had its laughs.

Here’s how the New York Times summarizes today’s lead editorial, “The Truth About the Deficit”:

Though the governement will soon need to address the deficit, the last thing it should do is slash spending at a time of high unemployment and fragile growth.

The government will “soon” need to address the deficit? Soon? How soon? How about forty years ago?

The “last thing” it should do is to slash spending? Really, New York Times? The LAST thing? When you have no money, the LAST THING you should do is to stop spending on your credit cards? Does that make sense to any household? The FIRST THING anyone with any brain would do (stop spending money you don’t have) becomes the LAST THING?

Who’s to blame for this mess? Who? Who? Can we think of somebody?

The deficit numbers — a projected $1.3 trillion in fiscal 2011 alone — are breathtaking. What is even more breathtaking is the Republicans’ cynical refusal to acknowledge that the country would never have gotten into so deep a hole if President George W. Bush and the Republican-led Congress had not spent years slashing taxes — mainly on the wealthy — and spending with far too little restraint.

Blame George Bush! Of course! What a refreshing new idea!

But the cold economic truth is this: At a time of high unemployment and fragile growth, the last thing the government should do is to slash spending. That will only drive the economy into deeper trouble.

More reckless government spending! All aboard the wine train!

HOW DID WE GET HERE? When President Bush took office in 2001, the federal budget had been in the black for three years, and continued surpluses were projected for a decade to come.

By the time Mr. Bush left office in early 2009, the government had run big deficits for seven straight years, and the economy was on the brink of another Great Depression

Let’s blame Bush again!

Of course, America was attacked during the Bush years, and he was fighting two wars, and since 2006 we’ve been in the Pelosi era (Hint to NYT: She’s a Democrat). The economy and the spending improved under Pelosi, no?

To avoid a meltdown, the government — under President Bush and President Obama — rightly decided it had no choice but to spend hundreds of billions of dollars to bail out banks and car companies and to stimulate the economy.

I don’t remember President Bush saying that TARP could be used to bail out car companies. And TARP has been a big failure–just ask TARP Special Inspector Neil Borofsky.

Politicians need to pass health care reform now and start thinking seriously about Social Security and tax reform.

Nothing says “fiscal sanity” like the presently drafted health care bill. Too funny.

The first lesson is that spending without taxing is a recipe for huge deficits, and that running big deficits when the economy is expanding only sets the country up for bigger deficits when the economy contracts. The second lesson is that once a deep recession takes hold, slashing government spending is not going to solve the problem. It will only make it worse.

The first lesson is that we don’t tax enough? The second lesson is not to cut government spending when you’re broke?

WHAT CAN BE DONE NOW? Here is an unpopular but undeniable fact of life: When private sector demand is weak, the federal government must serve as the spender of last resort.

No! The proper thing to do is to let weak companies die, to let bad properties sell at a discount, and to let the situation right itself.

But today’s deficit fearmongers invariably fail to note that the impact of stimulus spending on the long-term fiscal problem is small, because the spending is temporary.

The $800+ billion stimulus wasn’t big enough?

SO HOW DO WE FIX IT? Mr. Obama’s budget makes a down payment on deficit reduction by freezing some nonsecurity discretionary spending for three years, and by letting the Bush tax cuts for the richest Americans expire at the end of this year.

To truly tame deficits will require serious health care reform, the sooner the better.

If we only taxed the rich more and had a health care system like the British, we’d have balanced budgets?

We hope that health care reform will move ahead before that. If it does, the commission will still have to press for new taxes that both raise revenue and broaden the tax base, including a value added tax.

A value added tax! Joy to the world!

HotAir has a similarly titled piece: “It’s time to tell the truth about the deficit, Mr. President”, linking to Evan Thomas of Newsweek.

Another option: the government can dramatically raise taxes—and thus truly stifle economic growth. Or—better idea! —the federal government can start now, through a prudent mixture of spending cuts and tax hikes, to get control of its financial future and avoid, or at least mitigate, a dreary fate of high inflation and/or high-taxation stagnation.

Spending cuts? Isn’t that the LAST THING we should do?