Obama's Deficits

I hope to have fire-side typings a little more frequently in the next few weeks. Tonight's musing: deficits.

Before I begin, I want to mention an idea that resonates with all my typings, and I failed to mention this much sooner. I do not expect every reader to agree with my beliefs. My aim is to present facts, mixed with my own personal opinion, and hope that these typings inspire serious, fundamental, and independent-minded thinking and debate.

So, back to the topic I want to talk about: deficits. Suppose a family is putting together their budget for the upcoming year. In that yearly budget, this family decides that they are going to borrow 40 cents on every dollar that they spend. Would you call this a budget?

I would say when a family borrows like this then they aren’t “budgeting” correctly. It turns out that the US government borrows 40 cents on every dollar that they spend. Based on this, there ought to be a new word for the government’s “budget”.

While Obama was running for president in 2007, he promised he’d cut the deficit in half in his first term. http://www.youtube.com/watch?v=II-9Q-kExYo By this, he meant – or at least I thought he meant – that he would take the total US deficit – not the annual deficit - and cut that in half. Well, not only has this failed to happen under his presidency but also the deficit has increased by 1.3-1.4 trillion dollars each year of his presidency http://www.usgovernmentdebt.us/federal_deficit_chart.html – that’s 1.3 times 10^12 dollars a year, for anyone who likes math.

In a recent interview, Obama says the budget isn’t his fault because the economy is worse than he thought, and the recession is deeper then he predicted. Thus Obama does not take any blame.

I personally think the fact that he tries to divert the blame is a farce. Obama is the only president ever – that’s right, ever – to have interest rates at zero during his entire term. You can't go any lower than 0, and 0 is the lowest interest rates can go. Thus he has received more monetary stimulus then any president, ever, yet despite that we have this massive deficit. Imagine what the US economy would be if the Fed didn’t have the economy on (what I call) life support; imagine if the US had to pay a normal rate of interest on its national debt. The deficits would then be even LARGER.

A few questions worth pondering: how much better off is the economy after each of these years of raising the total deficit and expansion of government? How much has the economy actually improved during Obama's first term / Bush's second term? Did the huge bailouts signed-off by Bush and Obama seem to improve the economic situation of the country? Are there substantially more well-paying jobs in the economy?