U.S. Deficit Out Of Control! $1.6 Trillion! Freeze Not Enough!

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Obama White House To Paint Grim Fiscal Picture


The White House will predict a $1.6 trillion U.S. budget deficit in the 2010 fiscal year, a fresh record and the biggest since World War Two as a share of the economy, a congressional source told Reuters on Sunday.

The grim forecast adds to the challenges facing President Barack Obama, who is emphasizing a message of fiscal discipline but is also seeking stimulus measures to boost the struggling economy in the near term.

Obama's budget proposal, which will be released at 10 a.m. EST on Monday, will predict a narrowing of the deficits to $700 billion by fiscal 2013 before they gradually rise back to $1 trillion by the end of the decade, the Capitol Hill source said.

He will submit his spending blueprint for the 2011 fiscal year that begins October 1 and runs through September 30 next year.

Obama is trying to strike a balance between long-term deficit reduction and easing the pain of double-digit unemployment through proposals such as tax credits to encourage business hiring and tax breaks for middle class families.

He is to deliver remarks on the U.S. fiscal situation at 10:45 a.m. EST.

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Criticized by Republicans as a big spender, Obama used his State of the Union address last week to tell Americans he would dig the country out of a "massive fiscal hole."

That hole is even deeper than previously believed, according to the estimate by the White House's Office of Management and Budget.

The estimate for the current 2010 fiscal year that ends September 30 is significantly higher than the $1.35 trillion figure forecast by the nonpartisan Congressional Budget Office last week.

Despite the difference, both estimates indicate that the deficit will continue to hover near 10 percent of gross domestic product, a level not seen since World War Two, when measured as a percentage of the economy.

Last year, the government posted a $1.4 trillion deficit, equivalent to 9.9 percent of GDP.

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THREE-YEAR FREEZE WON'T BE ENOUGH

In his budget, Obama will propose a three-year freeze on some domestic programs to save $20 billion next year and $250 billion over the coming decade.

But that will not be enough to get deficits down permanently to the 3 percent of GDP that most economists consider sustainable.

Deficits are projected to fall as the economy recovers, but they will still average roughly 4.5 percent of GDP over the coming decade, according to the estimate.

Deficits are expected to rise again toward the end of the decade due to the increasing cost of retirement and healthcare programs as the "baby boom" generation retires.

Obama has warned that the burgeoning U.S. debt could unnerve U.S. financial markets, driving up borrowing costs and putting future economic growth at risk.

China, the biggest foreign holder of U.S. Treasuries, has urged the United States to get its fiscal house in order.

The bleak numbers could help build support for a bipartisan commission proposed by the White House that would recommend ways to address the budget problems.

Obama and his fellow Democrats face a growing voter backlash for the aggressive spending measures they have taken to stimulate the economy.

But Democrats point out that most of the fiscal mess has been inherited from the previous administration of Republican George W. Bush, who cut taxes and created an expensive prescription drug-benefit while pursuing wars in Iraq and Afghanistan.

The recession, which began in December 2007, also worsened the fiscal picture by depressing government revenues while forcing up spending on unemployment benefits and other safety-net programs.

The U.S. economy returned to growth last year after the worst downturn since the 1930s.


Sources: Reuters, NY Times, The Daily Beast, MSNBC, CNBC

President Obama Slashes Sexual Abstinence Education Funding....Supports Teen Pregnancy Prevention

Washington Post--

HEALTH AND HUMAN SERVICES

$77 Billion — down 2%

The Health budget also set aside $178 million to Prevent Teen Pregnancy, but slashed funding for programs that limited themselves exclusively to teaching Sexual Abstinence. The budget emphasized that it was devoting money to teen-pregnancy prevention approaches that had been proven to work, in effect saying there was no scientific evidence that favored abstinence-only programs over those that situated abstinence education within a larger framework that included teaching teenagers how to practice safe sex if they chose not to be abstinent.

Sources: Whitehouse.gov, Washington Post, MSNBC, Today Show, Flickr

President Obama Terminates or Shrinks 121 Ineffective Government Programs

"We're doing everything that we can to create jobs and to get our economy moving while building a new foundation for lasting prosperity -- a foundation that invests in quality education, lowers health care costs, and develops new sources of energy powered by new jobs and industries.

But one of the pillars of this foundation is fiscal responsibility. We can no longer afford to spend as if deficits don't matter and waste is not our problem. We can no longer afford to leave the hard choices for the next budget, the next administration -- or the next generation.

That's why I've charged the Office of Management and Budget, led by Peter Orszag and Rob Nabors who are standing behind me today, with going through the budget -- program by program, item by item, line by line -- looking for areas where we can save taxpayer dollars."

"In addition, we're going to save money by eliminating unnecessary defense programs that do nothing to keep us safe, but rather prevent us from spending money on what does keep us safe. One example is a $465 million program to build an alternate engine for the Joint Strike Fighter. The Defense Department is already pleased with the engine it has. The engine it has works. The Pentagon does not want and does not plan to use the alternative version. That's why the Pentagon stopped requesting this funding two years ago. Yet it's still being funded.

These are just a few examples. But the point to remember is that there are consequences for this kind of spending. It makes the development of new tools for our military, like the Joint Strike Fighter, more expensive -- even prohibitively so -- and crowds out money that we could be using, for example, to improve our troops' quality of life and their safety and security. It makes government less effective. It makes our nation less resilient and less able to address immediate concerns and long-term challenges. And it leaves behind a massive burden for our children and grandchildren."


LORAN-C ($35 million). This long-range, radio-navigation system has been made obsolete by GPS.

· Abandoned Mine Lands Payments ($142 million). This program now pays to clean up mines that have already been cleaned up.

· Educational attaché, Paris, France ($632,000). The Department of Education can use e-mail, video conferencing, and modest travel to replace a full-time representative to UNESCO in Paris, France.

· Los Alamos Neutron Science Center refurbishment ($19 million). The linear accelerator housed here was built 30 years ago and no longer plays a critical role in weapons research.

· Even Start ($66 million). The most recent evaluation found no difference between families in the program and those not in it across 38 of 41 outcomes. Strengthening early childhood education is accomplished through significant investments in proven, more effective programs such as Head Start, Early Head Start, and the Early Learning Challenge Fund.

· Christopher Columbus Fellowship Foundation ($1 million). Due to high overhead, the Foundation would spend only 20 percent of its 2010 appropriation on the fellowships it awards.

· Advanced Earned Income Tax Credit ($125 million). This program benefits very few taxpayers, and has an extremely high error rate: GAO found that 80 percent of recipients did not meet at least one of its requirements.

· Javits Gifted and Talented Education Program ($7 million). Grants from this program go to only 15 school districts nationwide, and there are no empirical measures to judge their efficacy.

· Public Broadcasting Grants ($5 million). USDA made these grants to support rural public broadcasting stations in their conversions to digital broadcasting. That transition is now almost complete.

· Rail Line Relocation Grants ($25 million). This program, duplicative of a merit-based program, is loaded with earmarks.

President Obama's Budget for the Fiscal Year 2010.



Sources: Whitehouse.gov, MSNBC, Huffington Post, ABC News, USA Today, Political Base, Youtube