Will Obama’s agenda, with $3.2 Trillion increase in the national debt in first two years, cripple capitalism?
*AP, by Andrew Taylor, March 20, 2009
“Deficits so big put upward pressure on interest rates as the government offers more attractive interest rates to attract borrowers.
‘I think deficits of 5 percent (of GDP) is unsupportable,’ said economist Mark Zandi, chief economist at Moody’s Economy.com. ‘It will lead to higher interest rates to the point where it will force policymakers to make changes.’
Republicans immediately piled on.
‘Under the President’s plan, our debt will increase to shocking levels that are simply unsustainable and will devastate future economic opportunities for our children and grandchildren,’ said Sen. Judd Gregg, R-N.H., the top Republican on the Budget Committee.
But without referencing the figures, Obama insisted on Friday that his agenda is still on track.
‘What we will not cut are investments that will lead to real growth and prosperity over the long term,’ Obama said. ‘That’s why our budget makes a historic commitment to comprehensive health care reform. That’s why it enhances America’s competitiveness by reducing our dependence on foreign oil and building a clean energy economy.’
Many Democrats were already uncomfortable with Obama’s budget, which promises to cut the deficit to $533 billion in five years. The CBO says the red ink for that year will total $672 billion.
The worsening economy is responsible for the even deeper fiscal mess inherited by Obama. As an illustration, CBO says that the deficit for the current budget year, which began Oct. 1, will top $1.8 trillion, $93 billion more than foreseen by the White House.
The 2009 deficit, fueled by the $700 billion Wall Street bailout and diving tax revenues stemming from the worsening recession, is four times the previous $459 billion record set just last year.
The CBO’s estimate for 2010 is worse as well, with a deficit of almost $1.4 trillion expected under administration policies, about $200 billion more than predicted by Obama.”
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