A harbinger of things to come:
The federal budget deficit rose to $150.4 billion last month, the largest November gap on record. And the government’s deficits are set to climb higher if Congress passes a tax-cut plan that’s estimated to cost $855 billion over two years.
The Treasury Department says November’s budget gap was 25 percent more than the deficit in November 2009…
…analysts say the tax deal President Barack Obama reached with Republicans this week will give the 2011 budget year the largest deficit in history — $1.5 trillion, according to economists at JPMorgan Chase. It would mark the third straight year of trillion-dollar-plus deficits…
Before you liberals start screaming about how the “tax cuts for the rich” are going to push the deficit back to record levels, please understand that under the tax compromise rates stay the same. In other words, nothing is added to the 2011 deficit which had been projected, a couple months back, to come in at around $1.2 trillion. What changed? Obama’s proposal to lop off 2 percentage points on the payroll tax – that is the budget-buster.
And, remember, all the projections for 2011 and beyond have been made on the assumption that the economy is in recovery and thus revenues will grow pretty well. The fact that November’s deficit was a record for the month – 25% higher than a year ago, and one of the highest monthly deficits on record – should make everyone take the revenue predictions with a gigantic grain of salt. Maybe we get lucky and revenues grow – but, maybe we don’t. And what happens to our economy if, by summer, we’re facing a 2011 deficit of 1.6 or 1.7 trillion dollars?
Think “Greece”.
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