The CBO estimated that the 2012 budget deficit will top $1 trillion for the fourth consecutive year under the Obama administration.  The CBO estimated that the 2012 budget deficit will be approximately $1.1 trillion in a year that President Obama will be making the case to the American people that he deserves four more years in office.

President Obama is adding to the budget deficit nearly four times faster than President Bush.  During the first four years of the Bush administration, just over $1.4 trillion was added to the national debt.  With the 2012 budget deficit estimate from the CBO, President Obama is on track to have added over $5 trillion to the national debt.  At that level of deficit spending, President Obama is adding to the national debt just over 3.6 times the debt added during Bush’s first term in office.

The Obama administration likes to consider the 2009 $1.4 trillion deficit as part of the Bush years.  However, that argument forgets the inconvenient fact that Obama signed the $800 billion stimulus bill in 2009 adding to the deficit.  Democrats also like to say that President Clinton handed Bush a surplus, but that argument would have Bush responsible for the budget during his first year in office and have Bush responsible for the budget in the first year of Obama’s presidency.

The CBO estimate also contained more bad news for President Obama as the CBO predicted lower GDP growth in 2012 due in part to higher taxes and reduced spending.  The CBO also predicted unemployment to head back toward 8.9% in 2012, over 9% in 2013, and stay above 7% until 2015.

Look for President Obama to indicate how much worse it would have been had he not been in office and how much worse it will be if the American people send him to the unemployment line this year.  I think we should take the chance.

It is important to note that the number of jobs gained or lost by the economy is determined by a survey of established payrolls while the unemployment rate is calculated from a survey of households.  A survey is conducted of employers to determine if they added or subtracted from their payrolls to determine the number of jobs added by the economy.  To get the unemployment rate, a survey is conducted of households to determine if they are employed, looking for work, or have given up looking for work.

This explains why employers adding 100k jobs one month can lead to an increase to the unemployment rate while adding 100k jobs in another month can decrease the unemployment rate.

So, what accounted for the drop in the unemployment rate from 9% to 8.6% in October?  It was not the 120 thousand jobs added.  According the the Bureau of Labor Statistics, 315 thousand people left the work force in October and the number of people not in the labor forced increased by 487 thousand.  Had those people stayed in the work force, the unemployment rate would have remained 9% or dropped to 8.9% depending upon the calculation.  If the workforce participation rate been the same as when Obama took office, the current unemployment rate would be 11%.

Look for the administration to hype the drop in unemployment while not mentioning the number of people who have given up.  As a reminder, here is a great chart that shows the Obama administrations prediction of where things would have been with and without the stimulus and the actual numbers.

Update: Here is another chart showing the labor force participation rate barely above a 30-year low.

The results fall far below the  7/7 ADP report that had expected unemployment to hold steady at 9.1% with employers adding over 100,000 jobs.

This comes as more bad news to the Obama administration as it attempts to make the case that President Obama deserves another 4 years in office.

Since Obama took office, the economy is down 2.5 million jobs with the jobless rate above 9% for 24 of the past 26 months.  And some are calling the current situation the worst economic recovery since the 1930′s.  The unemployment situation continues to look bleak with long term unemployment not declining and the number of short term unemployed rising sharply.

The Obama administration faces an uphill battle to convince the American people that the Obama policies should continue with Obama possibly facing the highest unemployment rate of any post-war president.

Since Obama took office, the country has suffered:

• Rising unemployment
• Rising energy costs (in line with the President’s desires)
• Rising food costs
• Record deficits
• Errosion of freedom

Look for President Obama to use the struggling economy to make that case for more spending and heavy taxation of businesses and the wealthy as the cure for the current economic situation.  Hopefully the President’s “spread the pain around” approach to fixing the economy will not be well received.

Bush Tax Cuts

President Obama indicated that he will not extend the Bush tax cuts as part of his plan to solve the budget deficit and attack the national debt.  This plan is purely red meat for Progressives who are disappointed with Obama’s performance on delivering extreme leftist policies.

Had the Bush tax cuts for the wealthy been allowed to expire, the federal government would have brought in an extra $40 billion this year, falling far short of eliminating the $1.6 trillion dollar budget deficit the Obama administration will rack up this year.

The fact is that the Bush tax cuts allowed the middle class to keep far more.  For the 2 years the Bush tax cuts were extended by President Obama, the federal government will take in roughly $81.5 billion less from those making over $250k, but $463 billion less from those making less than $250k.

But if you think the United States has a revenue problem, think again.  Had President Obama not extended the Bush tax cuts, the Obama deficit for this year would have still been over $1.3 trillion.

Tax The Rich

Obama’s plan to tax the rich to solve the budget deficit is more class warfare than a serious economic proposal.  The Obama administration and the extreme far left constantly moans that the rich need to pay their fair share.  What would be considered a fair share?

The top 5% of earners currently pay 59% of the total income tax while the bottom 50% pay less than 3%.  Should the rich pay 80%, 90%, 100%?  Would it seem fair for 5% of Americans to pay 100% of income taxes?

To put it into perspective, let’s assume that the United States dumps the notion that we are a free society and the bottom 51% of earners vote to take 100% of money earned over $250k.  The federal government would take in an extra $1.4 trillion falling short of addressing the budget deficit that Obama delivered this year and well short of addressing Obama’s $3.7 trillion one year spending record for 2011.

The simple fact is that the federal government has a spending problem and not a revenue problem.  This year’s spending is over double what was spent in any year prior to 2005 and the national debt has increased 300% since 2007 (source:CBO). 

Americans need to start demanding that our representatives look to address the out of control spending that has been the norm for the last several years.  Proposals that seek to bridge the gap by tax the rich strategies are far more effective at gaining votes from progressives, maxists, and communists than putting the country on a sound financial path.

According to CBO estimates, the government is on track to spend over $3.7 trillion this year which is roughly $1.6 trillion more than the federal government takes in through taxes.  This will add $1.6 trillion to the over $14 trillion in current national debt.

A great video following the logic that we can simply “get our money back from the rich” details just how bad off we really are.  You can watch the Eat the Rich video and decide for yourself.

Many Progressives insist that if we only would allow the Bush tax cuts on the wealthy expire, we would be able to right our financial ship.  However, the facts don’t bear that out.

Extending the Bush tax cuts for 2011 would keep the government from collecting an additional $40 billion dollars.  That would reduce the Obama deficit for this year to only $1.56 trillion or roughly 2%.  This hardly puts the United States back on the path to financial stability.

But let’s say we go all in taking the Progressive Socialist agenda and raise taxes to 100% on incomes over $250k.  Surely that would enable us to live out our dreams of a utopia where everyone is equal and happy.  By taking all the money that people make over $250k the government would take in roughly $1.4 trillion dollars.  That would still leave us with a deficit of roughly $200 billion.

What about those evil rich companies that cheat us out of all our money and earn obscene profits?  Well, if we took all the nasty profits of the biggest 500 corporations we could raise roughly $394 billion, which would not get us anywhere near even covering the Obama deficit for this year.

Perhaps we could go further and establish a Progressive dictatorship.  We then could go after all the greedy rich people and get what we deserve.  We could take all the wealth of the greedy immoral wealthiest billionaires in the United States.  According to Forbes, the total net worth of the 400 richest people in the country is  approximately $1.5trillion.  That would teach Bill Gates a lesson, but would still be short of even covering the Obama deficit for this year and not come close to covering the trillions of dollars of debt the Obama White House expects to add to the national debt over the next few years.  George Soros would also be out the funding Progressive organizations business, but I am sure they would do OK without his money.

The simple fact is that the United States government is on a spending spree that we can not afford.  The Progressive dream of crushing taxes and confiscation of personal property would not even come close to covering the costs of funding the bloated Federal government.

Sadly, many people will fall for the Progressive talking point that we just need to “get our money back”.  Arm yourself with the facts and fight back before America takes a giant step toward a Progressive Socialist utopia.

The November unemployment rate of 9.8% represents a seven month high as non-farm payrolls increased a dismal 39,000 while economists were expecting a 140k increase in employment.

As the economy improves, the unemployment rate could be expected to raise as discouraged workers or those who have given up looking for jobs return to the workforce are counted again.  However, the numbers reflect a rise in the unemployment rate due to job losses rather than a return of people who have given up hope for finding employment.

Austan Goolsbee, chairman of the White House Council of Economic Advisers indicated that these numbers indicate just how fragile the recovery is and advocated the immediate extension of tax cuts for the middle class and an extension of unemployment benefits.

Mr. Goolsbee’s comments underscore the lack of understanding that by rasing taxes on “the wealthy”, the government will crush many small businesses that can create jobs and lower the unemployment rate.

The simple fact is that the government does not create jobs.  The sooner that the Administration and Congress understand this, the sooner we can expect the economy to improve.

The news of the Obama deficit comes at a bad time for Democrats who hope to keep hold of Congress.  Polls predict that Republicans will take the house in the November elections and will come close to taking the Senate.

According to US Debt Clock, the current national debt stands at over $13.5 trillion and climbing.  With the CBO forecast for the Obama deficit for 2011, the national debt could top $15 trillion going into 2012.

Regardless of who controls Congress in 2011, reducing the deficit will be difficult.  Republicans favor cutting government spending to reduce the budget deficit while Democrats favor additional taxes.

The President is claiming that without all of the deficit spending, the economy would be in worse shape.  However, this argument discounts the damage to future years as we continue to borrow money to fund additional spending and print money to pay off the debt.

When the economy picks up again, there will be pressure to raise interest rates.  The higher interest rates on the national debt will mean that the American people will be on the hook for higher interest payments to avoid defaulting on debt payments.

Americans need to remember the issues that excessive consumer debt caused in the recent past.  The same issues will be faced by the entire nation as the debt and the interest on that debt continues to climb.

The trendline of initial jobless claims has been steadily rising since October.  This initial jobless claims chart shows how the weekly number moves up and down, but the trend is continually increasing.

The massive hiring of census workers over the last few months has somewhat masked the worsening picture.  The growth of hiring in the public sector has kept the unemployment rate from moving away from 9.7%.  It is also important to note that the census jobs are temporary and will end is several months.

Small businesses and large corporations need to start hiring in order for the unemployment rate to decline.  Raising taxes and creating new credits a few thousand dollars will not lead to new jobs being created.  Hiring in the public sector is also not the answer as those jobs are funded by taxes collected on the private sector.

The Obama administration needs to get serious about creating jobs.  A first step would be a massive cut in government spending eliminating the deficit and attacking the debt. 

Income tax cuts for individuals and companies would further stimulate the economy.  This would be accomplished through reductions in the tax rates and not through credits which only transfer money from the 53% of people who income taxes to the 47% of people who do not pay income taxes.

Sadly, the odds of this happening are low as these steps place more power in the free market and takes power away from Washington.

If deficit spending is the way out of an economic downturn, as leftist economists like Paul Krugman keep telling us, then one way to characterize President Obama’s approach to reviving the ailing economy is “killing it with kindness.”

Another is “tough love” – not the kind where you force hard choices and self-discipline, but the kind where you shoot the poor beast to put it out of its misery.

James Clyburn, House Majority Whip, recently crystallized the Democrats’ position on fiscal responsibility when he announced, “We’re not going to save our way out of this recession. We’ve got to spend our way out of this recession, and I think most economists know that.”

Here are some fun facts about Obama’s proposed federal budgets over the next decade:

- The projected deficit for Obama’s 2010 budget is $1.6 trillion, which is 10% larger than the 2009 deficit, which was three times as big as the record 2008 deficit under President Bush.

- The projected 2010 deficit is 10 times as large as the deficit for Bush’s 2007 budget, the latter of which included funding for the troop surge that won the war in Iraq. Nearly matching our accomplishment in Iraq, the White House Travel Office has approved a trip for Obama to go to Cambridge, Massachusetts in November to get a Democratic dogcatcher elected in Harvard Square.

- The projected 2010 deficit will render our national debt 13% bigger on the last day of this year than it is today. Projected 2010-11 deficits will cause the debt to swell 23% bigger than it is now. By 2020, the debt will be twice as big as it is today.

- By 2013 the deficit will recede to $700 billion, a “mere” half of the 2009 deficit, then ratchet up again to $1 trillion by 2020. Even this will happen only if Congress agrees to drastic spending cuts before 2013, which it has already expressed strong resistance to doing.

- All of these numbers are conditional on what many private sector economists call overly optimistic expectations held by the current administration regarding growth of the economy.

These sobering statistics raise a number of tough questions about the measures Obama proposes to bring down the deficit-which, naturally, he will never answer satisfactorily.

For example: in his budget address on Monday, Obama stated, “Because small businesses are critical creators of new jobs and economic growth, the budget eliminates capital gains taxes for investments in small firms and includes measures to increase these firms’ access to the loans they need to meet payroll, expand their operations, and hire new workers.”

Why only small businesses? Why not medium and large businesses? Who adds more jobs to the economy-Sal’s Pizzeria, a local franchise of Linens ‘n Things, or Microsoft Corporation?

Obama proposes letting the Bush tax cuts expire for families making over $250,000 a year. He wants to impose a new tax-sorry, “financial crisis responsibility fee”-on banks and corporations who received TARP money, some of whom were forced by the administration to take it. Obama wants to strip away tax breaks from oil and gas corporations.

So why would Obama want to choke the engines of growth and job creation by saddling them with tax increases? If the absence of a $5,000 tax credit would hinder a small business from new hiring, what does he think the addition of hundreds of thousands of dollars in taxes to corporations would do to their hiring? Do big corporations hire workers out of the goodness of their hearts, with no concern for the bottom line?

Also, given that many of those families who make over $250,000 are headed by small business owners, how does Obama justify giving them tax credits while simultaneously increasing their taxes? Is his administration even feigning consistency here?

History shows that cutting individual and corporate tax rates increases long-term tax revenue. Obama was specifically asked about this proven fact by George Stephanopoulos during a primary debate with Hillary Clinton. Obama stated outright that even if this pattern were true, he would still favor higher taxes on the wealthy to promote “fair” taxation.

Obama is free to endorse Marxist policies if he desires, but how can he turn around and claim that his proposal to increase taxes for the wealthy is an effective way to reduce long-term deficits?

When you’re handed a hot potato such as the sickly economy – a fate Obama has reminded us of precisely eight million times since he was elected office-the responsible solution is to let it cool down.

Instead, Obama proposes to cremate it.

http://www.scottspiegel.com

Article Source: http://EzineArticles.com/?expert=Scott_Spiegel
http://EzineArticles.com/?Incinerating-a-Hot-Potato&id=3694855

According to a post at Hot Air, the United States national debt was $12,031,299,186,290.07 at 3:00 pm.  This indicates that it took the Obama administration less than 8 months to add $1 trillion to the US national debt.

The 2009 budget deficit was $1.42 trillion or 3 times the 2008 budget deficit.

Despite what the White House says on TV, its report indicates that the US national debt at the end of  this fiscal year could top $14 trillion by adding $2 trillion more in the next 12 months.  The report goes on to indicate that by end of the decade, the United States national debt will hit $24.5 trillion in 2019 which will exceed the projected GDP.

America is headed toward an economic catastrophe as our politicians seek to gather power today by mortgaging our and our children’s future.  To many, the promises of our politicians sound good, but most Americans don’t think about paying for those promises.

As Americans, we need to demand that our government stop spending away our future to gain power today.