Where was Joe Wilson when Obama said “It will not add to the deficit”?

President Obama – and most lib-pundits – seem to have completely forgotten the debt ceiling and credit downgrade.

Pssst … we have no money !!!

And, they appear  hopelessly confused re: what’s  “debt” and what’s a  “deficits”.

Let’s review …

A deficit is an annual shortfall —  when spending exceeds revenues.

In a gov’t context, a deficit happens when spending exceeds tax receipts in the current year !.

Debt is the amount of money that is owed to other people or entities.  It is the sum of annual deficits.

Now, the important point …

A deficit needs to be funded by borrowing, which adds to outstanding debt.

OK, with that as clarifying background …

Obama said a couple of times that his laundry list of potential job creating ideas ” …  will not add to the deficit.”

Here’s what the AP had to say about that:

It’s hard to see how the program would not raise the deficit over the next year or two because  most of the envisioned spending cuts and tax increases are designed to come later rather than now, when they could jeopardize the fragile recovery.

Deficits are calculated for individual years.

The accumulation of years of deficit spending has produced a national debt headed toward $15 trillion.

Perhaps Obama meant to say that, in the long run, his hoped-for programs would not further increase the national debt, not annual deficits.

Said differently, the only way that the 2012 deficit doesn’t increase is if other spending is cut or taxes are raised in 2012.

Neither is likely to happen (a) because there isn’t time (b) because there isn’t will, and (c) because either would neutralize any impetus from O’s spending.

So, it’s practically certain that the deficit will increase, and that short-term debt will increase.

Most interesting: the added borrowing may push Obama up against the debt ceiling again before the 2012 election … his only real line in the sand during the debt ceiling negotiations.

Hmmm.

>> Latest Posts

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s