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.

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.

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 national debt is the total amount of money that the US Government owes.  This differs from the budget deficit in the the budget deficit  is the difference between what the government takes in through taxes and what it spends in a given year.  In years when their is a deficit, the national debt goes up.  In years with a surplus, the national debt can go down if Congress chooses to apply the surplus to retiring debt.

According the the Congressional Budget Office, the current level of budget deficits predicted for the next 10 years will drive the national debt to over $20 trillion by 2019.

 As reported by CPHQ roughly 6 months ago, the national debt  passed the $12 trillion mark for the first time.  At this pace, the national debt will top $14 trillion before the end of 2010.  This is expected to continue to grow higher in 2011 as the CBO and the White House predict a 2011 Obama budget deficit of over $1 trillion.

According to the national debt clock, that $13 trillion breaks down to $42k per citizen and over $118k per tax payer.  The interest payments alone amount over $195 billion.

Over the last few years, Americans have learned the hard way the taking on too much debt can lead to personal ruin.  The US government needs to learn from American’s personal mistakes and take steps to dramatically reduce the Obama deficits and begin to pay down the debt before it becomes entirely unsustainable.

The government took in $135 billion in October, but the Obama administration spent $312 billion delivering a $177 billion budget deficit.

Most Americans don’t understand the trouble large budget deficits can cause.  In September this year, the American tax payer payed $17 billion in interest payments on the national debt that we have accumulated as a nation.  That doesn’t even address the principle on the roughly $12 trillion of national debt the American tax payer is on the hook to pay off.

To make it easier to understand those numbers, consider that $17 billion in interest equals $567 million a day in interest payments or $24 million an hour.  Now consider that taking into account the budget deficit projections for the next 10 years, by 2019 the national debt is expected to double.  This would mean the American tax payer would be on the hook for over $1 billion a day in interest payments.

They nation is headed toward a similar situation that faced many Americans in the last few years.  Many Americans ran up debt by purchasing homes they couldn’t afford (aided by banks and the government) and spending more than they made in income.  Many faced losing their homes and bankruptcy and had to be bailed out by the American tax payer.

When the government is facing not being able to meet its interest and debt obligations, who will bail us out then?

Today it was reported that the Obama administration blames the 10 year deficit on the current crisis and the Bush administration.  Odd that the White House would blame deficits 10 years from now on the policies of a prior administration all the while dramatically increasing spending to unprecedented levels.   Why not blame Bush 41 or Carter?

One of the most alarming facts is that the current national debt is around $11.7 trillion.  This would lead to a national debt of almost $21 trillion.  This is expected to be 75% of our entire economy.  The interest payments on that debt will severely cripple the U.S. for years to come.

The AC360 blog over at CNN did a nice job of summing up how this will be very bad for our economy.  One striking figure is that it will burden future tax payers with over $900 billion in annual interest payments.  Even if we payed back zero on the money that we are borrowing, we would have to pay $900 billion each and every year to keep the interest current.  One would question where the money is to come from.  Certainly not a 1% surcharge on wealth.

Deficits of that magnitude would be extraordinarily dangerous and irresponsible for the country. They would double the national debt, risk much higher inflation, saddle future taxpayers with annual interest payments of over $900 billion, make us even more reliant upon China as a creditor, and over time would weaken us as a great nation.

Many people are starting to question the estimating abilityof the current administration.  Aside from updating the deficit numbers by almost 30% in a few months, they also changed the estimate for the retraction in GDP from 1.2% to 2.8%.

They have also mismanaged the impact of the stimulus.  Back when the stimulus bill needed to be passed in the middle of the night, the American people were told that if we did nothing, unemployment could get as high as 8%.  With the stimulus, unemployment is now at 9.4% and expected to reach over 10%.

This doesn’t even take into account the impacts of health care reform which the CBO estimates will cost trillions.

At some point we need to decide that the federal government can not keep borrowing from the future to pay for items that special interest groups are demanding.