Budget woes for next few years

Donald Lambro:

If President Obama thinks the political earthquake that hit his party last month in Massachusetts was bad, he had better read the Congressional Budget Office's latest economic forecasts for the next two years.

In testimony before the House Budget Committee last week, which got scant news media attention, CBO Director Douglas W. Elmendorf painted a bleak forecast for the nation's economy under the White House's no-jobs, no-growth tax and spending policies. It spells even deeper political losses for the Democrats in Congress than are presently forecast.

Mr. Elmendorf, who was appointed by Democratic congressional leaders, told the committee that economic growth will be painfully slow over the next several years and that will keep the national unemployment rate at an average of 10 percent throughout fiscal 2011, which ends in September of that year.

Contrary to Mr. Obama's Herbert Hoover mantra that economic recovery and more jobs are just around the corner, the CBO budget chief said the economy will grow by a weak 1.6 percent this fiscal year and the jobless rate will average 10.2 percent.

CBO's outlook for 2011 is just as bleak. The nation's gross domestic product (GDP) growth is expected to reach barely 1.8 percent, while unemployment is projected to show scant improvement, averaging 9.8 percent for that fiscal year.

The administration's unprecedented budget deficits are expected to be more than $1 trillion this year and next and stay at very high levels for years to come.

Deficits like these mean the government's massive debt burden will be at historically dangerous levels that will imperil our country's future and our economy's solvency, he said.

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There is more.

Next year's budget is $1.6 trillion which is $100 billion greater than this year. Obama's budget freeze is not looking very robust. There are several things he could do to improve the situation, but his ideology would make them difficult for him. He could cancel the wasteful "stimulus" spending that is not fit for purpose as the Brits say.

More importantly, he could stop strangling domestic production of energy. This would create thousands of well paying jobs and increase revenues to government treasuries on all levels by about a trillion dollars. This would lower deficits and increase commerce, as well as cut our balance of trade deficits.

He could also push the free trade agreements which would lead to increased business for US manufactured goods such as those made by Caterpillar.