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Wednesday, February 16, 2011

Obama's Budget is RIDICULOUS!

For anyone that takes 5 minutes to look at this thing, I think the best word that comes to mind is ridiculous..... how so you ask?

For starters, how about GDP growth assumptions. The administration is assuming US GDP Real growth is +3.2%/year for the next 11 years. Are they crazy? If this happens, this will be the longest peace-time economic expansion in US history. With Obama's policies, we'd be lucky to get half of this. This is important because we need to estimate what tax revenues will be over the next 11 years. Obama assumes both individual and corporate tax revenues DOUBLE (on an inflation adjusted basis). They TRIPLE after considering inflation. I say NO CHANCE!

Next, if we look across all the cost items - yes, you'll notice, there aren't any reductions across any department.

But the bottom line is also very different from advertised. If you heard Obama take the podium yesterday, you probably heard him say that the budget would be balanced by mid decade. Ok, his math isn't perfect, but it will be in 2017. But that's only a half truth.

If you look carefully, you'll notice that the White House calculates both PRIMARY BUDGETS, and ON-BUDGETS. The difference is that the primary budget excludes interest payments on debt. This is the budget Obama is telling us will be balanced in 7 years. But the real budget includes interest payments and the forecast is for a deficit of $850 Billion dollars in 2021. So according to Obama we'll still have a deficit of almost a trillion dollars in 11 years time.

This is progress?