Friday, February 27, 2009

Deficit reduction?

President Obama's budget promises to reduce the deficit from 12% to 3%. Rather than the accounting gimmicks favored by the Bush administration, he uses rosy forecasts to reach the goal:

...[Economists at the Brookings Institution] think the deficit will bottom out near 5% of GDP in 2013 then climb to almost 6% by 2019, while debt continues to rise as a share of GDP. That is before the government has to deal with the full impact of the surge in health and pension entitlement costs. The academics reckon higher taxes or lower spending equal to a staggering 8% of GDP a year are necessary to contain those costs and stabilise the long-run debt.

But he doesn't address our looming entitlements problem:
...He called on Americans to “address the crushing cost of health care” but proposes to spend many billions more, not less. He reportedly abandoned support for a commission to restore solvency to Social Security, the public-pension system, because congressional Democrats objected to this loss of their authority.
UPDATE: I hope this is not the best they can do:
...the Obama White House has added a link to the Financial Report of the US Government on its website, a step the Bush administration never took. The report will tell you that the per capita share of America's total obligations, including entitlements, is more than $184,000 each. The typical American family's share is roughly half a million dollars.

1 comment:

  1. I will say thanks to this great blog for putting up all these financial reports, as it helps a lot while we must remember we should never be going with forecasts, as they can be wrong as well. I have been doing trading and I always work with careful approach, as that’s the only way I will get success and right now thanks to OctaFX broker that I work with, it is providing us with daily market news and analysis updates which is pretty easy to follow and highly beneficial.