October 17, 2010

$1.3 TRILLION BUDGET DEFICIT

The Obama administration said Friday the federal deficit hit a near-record $1.3 trillion for the just-completed budget year – as reported by the Associated Press.

That means the government had to borrow 37 cents of every dollar it spent, as tax revenues continued to lag, while spending on food stamps and unemployment benefits went up as joblessness neared double-digit levels in a struggling economy.

While expected, the eye-popping deficit number provides Republican critics of President Barack Obama’s fiscal stewardship with fresh ammunition  -- less than three weeks ahead of the midterm congressional elections.

The deficit was $122 billion less than last year – a modest improvement.

ANGER

Voter anger over deficits and spending are a big problem for Democrats this election year.

Republicans are slamming Democrats, who face big losses in November, for votes for Obama’s $814 billion economic stimulus last year and on former President George W. Bush’s $700 billion bailout of Wall Street.

Democrats say the recession would have been worse if the government hadn’t stepped in with those programs to prop up the economy.

They also note that most of the bailout -- which began during the previous administration, and was supported by many Republicans in congress -- has been repaid.

FEDERAL BUDGET

Outside of the bailout, the federal budget went up by 9 percent in the 2010 budget year to $3.5 trillion -- which the Congressional Budget Office reported last week.

Food stamp payments rose 27 percent as record numbers of people took advantage of the programs -- while unemployment benefits rose 34 percent and Congress extended benefits for the long-term jobless.

According to Treasury Secretary Timothy Geithner, and acting White House budget director Jeffrey Zients, said in announcing the results:

“The FY2010 deficit remained elevated as a result of the severe economy recession, high unemployment, and the financial crisis inherited by the current administration.”

DEFICITS

Rising deficits will present headaches for policy makers regardless of which party controls Congress after November.

The administration is projecting that the deficit for the 2011 budget year – which began on October l – will climb to $1.4 trillion.

Over the next decade, it will total $8.47 trillion.

Deficits of that size will constrain the administration’s agenda over the next two years, and will certainly be an issue in the 2012 presidential race.

 OUR VIEW

A world recession is on its way -- with China the banker.

Never throw a brick straight up.

If you don’t get a lawyer who knows the law, then get one who knows the judge.

--- Oliver Wendell Holmes

Character is how we act when we think no one is watching.

By Lindsey Wilger Williams, retired newspaper publisher and syndicated columnist