Let's all recall the Obama originally pledged to cut the Federal Deficit in Half by the end of his first term.
Obama also promised to cut the federal budget deficit by more than half in his first term. That now appears unlikely, given the spending on the stimulus and the billions of dollars spent on bank and auto company bailouts. The 2009 federal budget deficit hit a record $1.42 trillion, and the red ink in the first two months of fiscal 2010 was nearly 6 percent higher than the same period in 2009.
So what he's supposed to be unveiling tomorrow is actually a considerable walk-back from his original goal. Plua what he's being criticized for - "Hooverism" - isn't what's happening.
Time and time again Bernstein explains that this is really about reseting priorities with some items cut and other items increased in a deficit neutral manner, with the exception of Economic Stimulus, Education, Homeland Security & Defense.
Here's his first try:
BERNSTEIN: Well, first of all, not in the middle, because we‘re talking about a freeze that would take effect in 2011.
But I think the important thing, Rachel, that your comments didn‘t get to is that we‘re not talking about an across-the-board freeze. That entitles this president to comb through the budget and find policies that help to create jobs and boost the middle class—like the policies we announced today which is what I was going to talk about anyway here—and to cut back on spending on the wasteful stuff, stuff that accumulates over the years that Congress has a very hard time pulling back on, that the lobbyists love. So, we‘re talking about boosting the spending that helps the middle-class pushing back on the special interests.
So, for example, today, we talked about a set of programs that will be in the State of the Union, that will be in this budget, the very budget we‘re talking about—programs that nearly double the child care tax credit for middle class families, cutting much higher into the middle class than the current policy, retirement security policies, policies that help students facing burdensome debt from college loans, policies that help with elder care. All of those are policies that can be boosted while this freeze is pulling back on some of the wasteful stuff that is nothing to do with jobs in the middle class.
Then he tried again....
BERNSTEIN: What I‘m saying is that, that is an aggregate freeze but it‘s not an across-the-board freeze.
Let me explain what I mean. If you have an across-the-board freeze, you say, OK, folks. Every agency, everything goes down by 3 percent, end of story. It‘s real simple.
That‘s not what this is. Some things will go down. Some things will go up. More things will go down than will go up. That‘s how you achieve some of the deficit savings.
Now, on the other—there‘s also a bunch of emergency spending that‘s outside of this freeze. The Recovery Act will continue to create employment. By the way, that‘s one of the other things I wanted to talk to you about because I know you get this.
The Recovery Act saved or created 2 million jobs so far, on track to create or save another 1.5 million before it‘s done. That‘s going to be in effect, of course, the rest of this year and in 2011 as well. This freeze won‘t affect that at all.
New jobs initiatives that the president will be outlining in the State of the Union—those will also be accommodated under this program.
So, we‘re going to really shift our focus here to stuff that works and
to help stabilize what is truly a long-term, unsustainable budget picture,
by squeezing stuff that doesn‘t help.
That's didn't work either... so he tried a third time.
MADDOW: I have to tell you, it sounds completely, completely insane.
BERNSTEIN: Two hundred and fifty billion over 10 years, but—by the way, I think it‘s wrong that we‘re not talking about additional programs to foster job growth.
The president, last month, talked about new jobs initiatives in areas of clean energy investment, building on some of the successes of the Recovery Act that you mentioned, but also considerable deep investments in clean energy, manufacturing for example, here in the United States, building the components of the new clean energy economy, education spending. The president talked about some favorable tax policies for small businesses. That‘s very much part of this targeted jobs agenda that you‘ll hear more about on Wednesday night and infrastructure spending—and, by the way, to that the president attached a number $50 billion.
So, we‘re talking about some serious investments in job growth to boost the middle class and I would again remind you about a set of announcements the president and vice president made today in the area of child care, elder care, student lending, retirement security, all part of new initiatives or expanded initiatives that you‘ll hear going forward—totally consistent with the freeze we‘re talking about.
The President is NOT going to be putting the brakes on job growth while attempted to implement a responsible budget.
I quoting so extensively because obviously Rachel wasn't listening, neither was Keith based on his program today which just completed.
Meanwhile Paul Krugman is freaking out. Robert Reich is freaking out - and somehow forgetting that when he was Secretary of Labor President Clinton cut the budget, cut deficit spending and reduced the overall Federal Workforce by an average of about 12% - and the Economy did pretty well during that time.
According to the tables current online at the OMB when President Obama came into office the Federal Budget Deficit was $1.8 Trillion, yet as of the start of this year the Budget Deficit for 2010 is - TADA - $1.2 Trillion which is a $600 Billion reduction.
The projection for 2011 is $900 Billion, and the 2012 projection is $575 Billion. That would be a more than a 50% reduction in the deficit over that time, pretty much what Obama said he was going to do. The primary reason for this deficit reduction isn't so much that President Obama has implemented a lot of spending cuts - the fact is that TARP, which alone was reason for about 30% of the huge 2009 deficit, has largely been Paid Back.
The government got $68 billion Wednesday from 10 financial firms eager to escape the curbs that came with taxpayer-funded capital infusions.
Repayment of the bailout cash J.P. Morgan Chase & Co., Goldman Sachs Group Inc., Morgan Stanley and the other companies got under the Troubled Asset Relief Program essentially leaves them on their own to wrestle with the recession and financial crisis. Some firms said they plan to immediately start the tricky task of negotiating to repurchase warrants that the government received in return for the infusions.
Also the end of 2010 is when the Bush Tax Cuts Finally Expire injecting a huge amount of cash back into the Federal System and putting us back on track to the Balance Budget we had when Bush first came into Office.
Let's also recall that Obama still has about $300 Billion of TARP funds still under his belt which he can put forward toward direct SBA Loans, as well as Small and Community Banks to help small Business grow and hire more people. And not nearly all of the Stimulus has been spent yet - so it's not like the White House is putting on the spending breaks, their simply reseting their priorities.
It's not an issue of Big Government Vs Small Government, it's Dumb Government vs Smart Government.
So calm down.