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Written by Administrator
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Friday, 17 February 2012 20:18 |
This week, the White House released their proposed 2013 Budget, which can only be described as fanciful, to put it mildly. Take a look:
Ok, first of all, when has Obama or this Congress been able to make any cuts even to proposed increases in spending let alone REAL cuts? We're supposed to believe that they're going to knock $35 billion off of discretionary spending from 2011 to 2013? Fat chance.
Next, they project a 6.7% increase in mandatory spending on entitlement programs... are they not aware that Baby Boomers are now retiring in droves? 6.7% over two years (3.35%/year) doesn't even keep up with inflation let alone account for all of the new recipients! This number is obviously severely low-balled.
So, total outlays going up only 1.4% over two years is laughable. But if you think that's funny, just look at the other side of the balance sheet! Individual income taxes are being hiked 18%? Corporate taxes by 101%? That's just outlandish! And then look at entitlement income... more people are retiring and less people are working, but payroll taxes are going up by 25%? And how about those excise taxes jumping 20%? Apparently we're going to enact protectionist trade policies! But then how do they expect customs duties to jump by 13%?
It is just beyond comprehension how any serious person could propose that they can increase government revenue by 25%. Did they not get the message from the Tea Party movement that we're TAXED ENOUGH ALREADY? Trying to enact this kind of tax scheme would drive corporations to foreign shores, small businesses to bankruptcy, and most individuals onto the ever expanding unemployment rolls. This proposal is not merely optimistic, but seriously puts into question the sanity of those who proposed it.
Here's my prediction of what actually happens... Discretionary spending increases by 6% (to $1,378 billion), which hardly even keeps up with inflation. Mandatory spending increases by 15% (to $2,383.95 billion), which is probably conservative. Also, forget about that $71 billion cut from the "Joint Committee enforcement". That's not going to happen. That puts 2013 total outlays at just over $4 trillion.
As for receipts, none of that stuff is going to happen. If they're lucky, they'll manage to pull in the same amount in 2013 that they did in 2011. If they try to raise taxes (which is doubtful to pass Congress), it will tend to depress economic activity and result in even lower receipts. I would expect no more than the same $2,303 billion.
That means that in reality, the deficit will climb to $1.7 trillion in 2013. By the end of the year, the national debt will be pushing $18 trillion, or over 110% of GDP. That assumes of course that we haven't yet experienced the likely imminent currency collapse. But by that time, the Fed is going to be monetizing like crazy to keep up with this debt, so it will be a miracle if we last that long.
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Last Updated ( Friday, 17 February 2012 20:49 )
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