There is a lot of talk in Congress about cutting the budget deficit now. That’s good.
The final discussions are about how much less than $60 billion in cuts Congress will make. The Republicans proposed $60 billion and the Democrats are willing to accept something more like $30 billion. It looks like the final number will be closer to the $30 billion than $60 billion, but no one knows for sure.
However, let’s put all this in perspective.
The projected deficit for this fiscal year, which started Oct. 1, 2010, was similar to last year’s deficit of about $1.3 trillion. However, with the December tax cuts and other changes in the budget, that number has now risen to $1.65 trillion. So, the budget deficit has increased about $350 billion in the last six months. Now we we're looking at cutting $30 billion, or about one-tenth, of the increase.
If you can call that “budget cutting,” that deserves a blue ribbon for Washington spin.
Let’s look at it another way. The entire deficit in 2007 was $167 billion. So, just the INCREASE in the deficit in the last six months was more than the ENTIRE deficit in 2007 — almost a 100 percent increase from 2007.
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Let’s get even more perspective. The deficit for the MONTH of February was the largest monthly deficit on record: $222 billion. That means the deficit for the MONTH of February was much larger (about 33 percent larger) than the deficit for the entire YEAR of 2007.
Remember, we’re not talking about chipping away at our debt here.
We're just talking about chipping away at the INCREASE to our pile of debt, which is now more than $14 trillion and will be $15 trillion by the end of this year (the deficit is the annual increase in the debt).
So, we are having a very hard time just keeping away from increasing the increase in our debt. These numbers just take your breath away.
That’s why we need to question what “budget cutting” really means for this Congress. What we are doing now is frankly just silliness, as the numbers show. However, our budget and our government shouldn't be treated as being silly. How this country is managed financially means a lot to 309 million Americans. This isn’t our children’s problem. When the numbers take your breath away, it will very soon be our problem.
And, it’s not just Americans that depend on taking this seriously. If we don’t take it seriously, we may soon find out just how much the rest of the world depends on our financial leadership and our financial stability.
This isn’t high-school government. It’s what America and the world depends on for its future.
About the Author: Robert Wiedemer
Robert Wiedemer is a managing director of Absolute Investment Management, an investment-advisory firm for individuals with more than $80 million under management. He is a regular contributor to Financial Intelligence Report, the flagship investment newsletter of Newsmax Media. Click Here
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