OMG! Obama Gets Tough on the Deficit. Or Not.
San Jose Mercury News:
President Barack Obama will call for a three-year freeze in spending on many domestic programs, and for increases no greater than inflation after that, an initiative intended to signal his seriousness about cutting the budget deficit, administration officials said Monday.
The officials said the proposal would be a major component both of Obama's State of the Union address Wednesday and of the budget he will send to Congress next week for the fiscal year that begins in October.
The freeze would cover the agencies and programs for which Congress allocates specific budgets each year, including air traffic control, farm subsidies, education, nutrition and national parks.
But it would exempt security-related budgets for the Pentagon, foreign aid, the Veterans Affairs and homeland security, as well as the entitlement programs that make up the biggest and fastest-growing part of the federal budget: Medicare, Medicaid and Social Security.
The payoff in budget savings would be small relative to the deficit: The estimated $250 billion in savings over 10 years would be less than 3 percent of the roughly $9 trillion in additional deficits the government is expected to accumulate over that time.
Wait a second here, slick, weren't we just talking about raising the debt ceiling YET again not even a month and a half ago?
At least someone in America isn't feeling a credit squeeze: Uncle Sam. This week Congress will vote to raise the national debt ceiling by nearly $2 trillion, to a total of $14 trillion. In this economy, everyone de-leverages except government.
It's a sign of how deep the fiscal pathologies run in this Congress that $2 trillion will buy the federal government only one year before it has to seek another debt hike—conveniently timed to come after the midterm elections. Since Democrats began running Congress again in 2007, the federal debt limit has climbed by 39%. The new hike will lift the borrowing cap by another 15%.
But then you have guys in the Treasury talking sense for once about cutting off the crackpipe and hoping housing can float on its own in America without unlimited government subsidies. Are we counting the unlimited Fannie/Freddie bailout that Tim Geithner granted over the Christmas holiday in these figures? Just wondering.
In case you missed this Christmas stocking stuffer, the federal government has given unlimited financial backing to housing finance bigwigs Fannie Mae and Freddie Mac. These two government backed companies are essentially guaranteeing a majority of home loans made the past year. Here's one housing expert who considers this horrible news:
That noise you heard emanating from your chimney on Christmas Eve wasn’t Santa Claus’s sack full of gifts: it was an unlimited contingent liability, gifted to you, the taxpayer, hitting your hearth when you were sitting down to a holiday feast. Because a $400 billion limit just wasn’t enough.
And no, I’m not talking about the healthcare monstrosity passed by the Senate on Christmas Eve. I’m talking about the Treasury’s stealth, Christmas Eve-post market “announcement” that (a) Fannie Mae (FNM) and Freddie Mac (FRE) would no longer have credit lines of a mere $200 billion each, but would instead have unlimited lines from the Treasury, and (b) they are no longer under any immediate obligation to reduce their massive mortgage security portfolios.
I don't buy it. Let's see if the rest of the world does. I mean that's the point of all this, right? OMGObama getting tough on the deficit! We're serious! Seriously!
Yeah ok. I'll believe it when I see it. Maybe that spiel works for 6th graders but JDA ain't buyin what you're selling, sir.
So, Mr President, which is it? Unlimited bailouts or tough on excessive spending? You cannot choose both. You must really think we're stupid to think anyone will fall for this. And don't look to the Fed to save you, they're sick of your shit too.