Tuesday, July 21, 2009

Beware the Budget Billions

Exhibit A (from Bloomberg):
[A] spokesman for the White House budget office said postponing the review from mid-July until mid-August isn’t unusual during a president’s first year in office.

“Because of the unique circumstances of a transition year, we are, like President George W. Bush in 2001, releasing the mid-session review a few weeks later than as is usual in non- transition years,” Kenneth Baer, communications director for the Office of Management and Budget, said.

Bush’s first mid-year review was released Aug. 22, 2001, and the one issued in former President Bill Clinton’s first year in office came out on Sept. 1, White House press secretary Robert Gibbs said. ...

A worsening jobs picture compared with February’s forecast and a still-weak economy may make the deficit picture look worse than the $1.84 trillion forecast this year, about four times the previous record of $455 billion. Next year’s deficit was projected to decline to $1.26 trillion.

Gibbs said he expected the review to show “the budget situation is going to be even more challenging” than February’s forecast. He didn’t elaborate.

Exhibit B (Economist's Voice):
Although this year's record deficit has attracted a lot of attention, the real concern is the unsustainability of the federal budget over the next 10 years and longer. The budget situation presents policy makers with a very delicate balancing act between encouraging economic recovery and establishing fiscal sustainability, according to Alan Auerbach of U.C. Berkeley and William Gale of Brookings.
The following sentence in Exhibit B is a mind-boggler:
In 2009, the U.S. federal deficit will be larger than the entire GDP of all but six other countries.
All but six other countries have GDPs less than the US federal government's deficit. What a way to understand how huge our economy is!

Anyway, let us see what the state of the government is when the report comes out, and how that might affect healthcare and other policies that are in competition for lots of resources.

No comments: