Congressional Budget Office has new Numbers

About two weeks ago the Obama Administration was blushing as it boasted about the "favorable" numbers its administration received from the Congressional Budget Office (CBO). The fact that the CBO is appointed by members of the President's own party (the majority in Congress are Democrats) made some skeptical. However, the experts outside of the CBO and the White House looked at the numbers and said, "wait a minute!" The numbers are scary and the budget is pointing at a direction that will make the US appear to be little more than a typical debtor nation. This is not something "down the road," but just a few years away.

Now, the Congressional Budget Office itself is releasing new numbers that make it appear it has had its own rude awakening. The Hill is reporting "The federal government would record total deficits of 9.8 trillion between 2011 and 2020 under President Obama's fiscal 2011 budget, according to an analysis released Wednesday by the Congressional Budget Office. The deficit would be $1.5 trillion in 2010 and and would decline to 8.9 percent of gross domestic product or $1.3 trillion in 2011, $346 billion more than the deficit that CBO projects in its March 5 baseline, based on current policies and laws not changing." Ironically, the Administration made the case for health care reform on the March 5th numbers. The "mistake" could not have been at a better time for Obama, Speaker Pelosi and Sen. Reid, and I'm sure the corrections will be used to make the case for more tax increases. "Isn't that convenient."

The article also goes on to point out that "under the president's budget debt held by the public would grow from $7.5 trillion or 53 percent of GDP at the end of 2009 to $20.3 trillion, or 90 percent of GDP, at the end of 2020, about $5 trillion more than under the assumptions underlying the baseline." These numbers have horror picture written all over them and show huge weaknesses in the fundamentals of our economy in the very near future.

The timing of the initial release of numbers on March 5th helped Obama get his socialized medicine program passed. I doubt he would have promoted these new numbers a few weeks ago. Questions of politics will certainly come up and should. Did Pelosi and Reid put undue influence on the CBO? Was the mistake a mere accident or perfectly times to help the Obama agenda? I am waiting for Republican members of Congress to raise those questions.

I have always worked to articulate what is going on in politics and the economy in the context of "results" rather than "intentions." Those who focus on the latter are dismissed as conspiracy theorists and nut jobs. Furthermore, they typically have no credibility in the eyes of the media or even the general public. However, with stating that, I have never seen an administration raise suspicions about politics, agendas, and deceit than that of Barack Obama.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN 650). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Cut in Deficit Shows Tax Cuts Work

Newspapers around the country are reporting that there was a significant drop in the deficit for the first five months of the budget year. How significant? More than 25 percent than it was a year ago.

Was this due to a significant decline in spending? No, federal spending is at an all time high.

Was this due to a huge tax increase? Not yet, but we do know future tax cuts are going to the way side because the Democrats have pledged to not support new ones and abolish as many as they can of the ones on the books.

According to the White House and the Congressional Budget Office, the reduction in the deficit is due to a dramatic increase in revenue. The San Diego Union Tribune reports "for the first five months of the budget year, revenues are up by 9.3 percent to a record $954.4 billion." If not due to a new tax increase, what is the cause of this increase in revenue? The tax cuts passed earlier in this decade would be the single biggest contributor.

Tax cuts make it cheaper to participate in economic activity and makes the potential for profit worth the risk of lost income. This is, of course, tax cuts that are geared towards those who are paying the most in taxes, because they also are the creators of wealth. I have argued this point over and over again. The tax cuts work and we should demand Congress to remove more barriers to wealth creation in order to get more revenue, more jobs, and more prosperity. Remember what John F. Kennedy stated so eloquently: "A rising tide lifts all boats." The tide he was talking about was tax cuts that would have a profound ripple effect on the whole economy. He was right then and it is right now.