I wrote last night that one striking feature of President Obama’s State of the Union speech was his failure to acknowledge the depth of the fiscal hole the country is in, or the role that his own failed policies have played in digging it. He said that “[w]e need to take responsibility for our deficit,” but failed to do so. On the contrary, he told Americans that “[w]e are living with a legacy of deficit spending that began almost a decade ago.”
The fact, however, is that Obama’s out-of-control spending policies, and those of the Democratic Congress, caused the deficit to balloon from $163 billion in FY 2007, the last budget enacted by a Republican Congress, to $1.3 trillion in FY 2010–an increase of around 700%. For blowing the biggest hole in history in the federal government’s finances, Obama took no responsibility at all, and his proposed solution–a five-year freeze in discretionary spending which he said would save $400 billion over the next decade, will have hardly any impact.
Today the news got even worse, as the Congressional Budget Office released a report titled “The Budget and Economic Outlook: Fiscal Years 2011 to 2021.” The CBO now expects the federal deficit for FY 2011 to be $1.5 trillion:
The resulting federal budget deficit of nearly $1.5 trillion projected for this year will equal 9.8 percent of GDP, a share that is nearly 1 percentage point higher than the shortfall recorded last year and almost equal to the deficit posted in 2009, which at 10.0 percent of GDP was the highest in nearly 65 years.
Assuming that Obama’s freeze, if enacted promptly, could reduce the 2011 deficit by $40 billion, that would represent 2.7 percent of this year’s deficit. The CBO’s latest warning underscores the President’s failure to address, in any meaningful way, the fiscal crisis that he did much to create and that is now engulfing his administration.