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February 04, 2010
Behind Obama's Phony Deficit Numbers
This goes along with the article below so well so I am putting it here. ~ Wild Thing
Sen. Judd Gregg (R-NH) Read the Riot Act to Obama Budget Director!
Sen. Judd Gregg (R-N.H.) responds to White House budget director Peter Orszag in a Hill hearing this morning over what to do with the remainder of the original bailout, or the $700 billion TARP.
A fiery Judd Gregg, the senior Republican on the Senate Budget Committee, blasted the White House budget director today over his boss' plan to use bailout funds for a new business credit.
While President Obama was visiting Nashua, Gregg's birthplace, the three-term senator was on Capitol Hill skewering Peter Orszag over their plan to tap $30 billion from the Troubled Asset Relief Program.
Gregg exploded as Orszag spoke of lingering problems in financial markets due to access to credit for small businesses.
"No! No! No!" he yelled out. "You can't make that type of statement with any legitimacy. You cannot make that statement." Gregg then held up a guideline for the TARP, which he helped write last year to keep the country from further economic collapse.
"This is the law," he said. "Let me tell you what the law says. Let me read to you again because you don't appear to understand the law. The law is very clear. The monies recouped from the TARP shall be paid into the general fund of the Treasury for the reduction of the public debt. It's not for a piggy bank because you're concerned about lending to small businesses and you want to get a political event, when you go out and make a speech in Nashua, N.H."
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Behind Obama's Phony Deficit Numbers
by Dick Morris
President Obama is being disingenuous when he says that the budget deficit he faced "when I walked in the door" of the White House was $1.3 trillion. He went on to say that he only increased it to $1.4 trillion in 2009 and was raising it to $1.6 trillion in 2010.
Congressman Joe Wilson might have said "you lie," but we'll settle for "you distort."
(As Mark Twain once said, there are three kinds of lies: "lies, damn lies, and statistics.")
Here are the facts:
In 2008, Bush ran a deficit of $485 billion. By the time the fiscal year started on October 1, 2008, it had gone up by another $100 billion due to increased recession-related spending and depressed revenues. So it was about $600 billion at the start of the fiscal crisis. That was the real Bush deficit.
But when the fiscal crisis hit, Bush had to pass TARP in the final months of his presidency which cost $700 billion. Under the federal budget rules, a loan and a grant are treated the same. So the $700 billion pushed the deficit -- officially -- up to $1.3 trillion. But not really. The $700 billion was a short term loan. $500 billion of it has already been repaid.
So what was the real deficit Obama inherited? The $600 billion deficit Bush was running plus the $200 billion of TARP money that probably won't be repaid (mainly AIG and Fannie Mae and Freddie Mac). That totals $800 billion. That was the real deficit Obama inherited.
Then...he added $300 billion in his stimulus package, bringing the deficit to $1.1 trillion. This $300 billion was, of course, totally qualitatively different from the TARP money in that it was spending not lending. It would never be paid back. Once it was out the door, it was gone. Other spending and falling revenues due to the recession pushed the final numbers for Obama's 2009 deficit up to $1.4 trillion.
So, effectively, Obama came close to doubling the deficit.
Obama seems not to understand that the deficit is the jobs problem. To add to the deficit in the hope of creating more jobs is an oxymoron. Additional deficit spending just crowds out small businesses trying to borrow money to create jobs and consumers seeking credit to buy cars and homes.
Soon, when the Fed stops printing money and we have to borrow real funds from real lenders, the high deficit will send interest rates soaring, further retarding growth and creating a cost-push inflation.
The interest rate we are now paying for the debt -- about 3.5% -- is totally artificial and based on the massive injection of money supply created by the purchase of mortgage backed securities by an obliging Federal Reserve. Once these injections of currency/heroin stop, the rate will more than double, sending our debt service spending into the stratosphere. Once we had to choose between guns and butter. Now we will have to choose between guns and butter on the one hand and paying our debt service on the other.
Obama's program of fiscal austerity in this new budget is a joke. He freezes very selected budget items while he shovels out new spending in his stimulus packages. If he wanted to lower the deficit, here's what he could do:
1. Cancel the remaining $500 billion of stimulus spending and
2. Cancel the $300 billion of spending in stimulus II.
Those are the real numbers. Or, as Al Gore would have it, "the inconvenient truth."
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Wild Thing's comment........
Dick Morris nailed it. Dick Morris takes the lie apart piece by piece!!! Obam inherited a Bush recession deficit of 600-700 Billion (bad enough) with TARP added on in the last quarter.
A TARP fully supported by Obama. And furthermore the Pelosi-democrats INSISTED in Dec 2008 that Bush request the entire $700 Billion TARP on his watch and use $350 Billion of it to bail out the auto unions, which was never part of the original TARP bill. And Bush caved to Pelosi.
So Obama stepped into office on Jan 20th with a huge slush fund for his union buddies.
The lie about Obama inheriting a Bush “$1.3 trillion deficit” needs to be confronted right at the moment it is uttered, not in next day's editorial.
Obama signed the most massive spending bills EVER shortly after becoming President in 2009, yet he tries to blame the deficit on President Bush.
....Thank you Mark for sending this to me.
Mark
3rd Mar.Div. 1st Battalion 9th Marine Regiment
1/9 Marines aka The Walking Dead
VN 66-67
Posted by Wild Thing at February 4, 2010 04:48 AM
Comments
Confusing, double labeled and phony statistics are an art form in which the govt is a blue ribbon champion. Money is being thrown around in Washington like confetti. False figures are being used to distort the real amount of that money.
Americans on the street are beginning to realize that the government is on an out of control spending spree and these same Americans will have to pay the costs. We also realize that a lot, if not most, of that money is ill spent. I hope for a resounding backlash at the polls in 2010/2012.
Posted by: TomR at February 4, 2010 12:14 PM
I think that I once posted that the maximum deficit in good years that Bush could run was about 500 biilion dollars withoout damaging the country. We would need about 3% growth for that to still be true. There is however noway that 1.4 trillion dollars of deficit speending does not do great damage to the country.
Posted by: Avitar at February 4, 2010 05:52 PM
Today the DOW dropped -268 points, the Markets are scared, obama's already planning on deficit spending before he needs it. Small business is jittery, and obama says we well double our exports and pay for the debt. We can't sell what we have now. With the unions and government interference Where is all this exporting going to come from and at the price it will cost...Who's going to buy it ?
Posted by: Mark at February 4, 2010 07:19 PM
Tom, me too I hope so too. The thing you said too about false figures really hits the nail on the head too. I can just imagine the money that has been just given to politicans in this as well. Hand to hand and no accounting for who or why or what for.
Avitar, I agree, I remember you saying that too.
Mark, thanks for the information about the DOW and what is happening. Good question too. I wish I knew. deep sigh this is all very scary for the future of our great nation.
Posted by: Wild Thing at February 5, 2010 02:02 AM
