Throwing gasoline on a deficit fire

Sometime in the next week or so, the Obama Administration is going to deliver the delayed Mid Session Review, which is a budget document that updates the administration's economic and budget forecasts.

It was delayed because they wanted it to come out during the dog days of August when everyone was out of Washington. You can imagine why.

Keith Hennessy has an article over at Real Clear Politics entitled "Understanding the Upcoming Deficit Numbers" that gives a pretty good idea of what is coming.

Deficits are already estimated at huge numbers, but will have to be significantly increased because of actions already taken by Congress.

Growth is predicted at too high numbers already and will have to be reduced if they are honest. They probably won't be.

The deficits are so bad because they are 4 times the average the last 20 years. What does that do?

"Budget deficits crowd our private borrowing and raise interest rates. It costs more to get a mortgage, a car loan, or a student loan. Higher interest rates and their effect on the dollar cause the U.S. economy to grow more slowly, meaning fewer jobs are created and wage growth slows."

What will happen?

"The President has boxed himself in with different messages on fiscal policy and health policy. He argues we must slow the growth of long-term health spending, but has not offered policies that unbiased analysts say would achieve that goal. In health care reform, Congress is in no mood to make the painful choices needed to reduce future deficits, so the President has fallen back to a more modest goal of not increasing future deficits. If health care reform should actually become law this year, expect the long-run budget picture to get dramatically worse. Pending bills would create a rapidly-growing enormous new spending commitment that would quickly outstrip the proposed spending cuts and tax increases. In an effort to rescue health care reform the President has shifted away from a cost control message. Congress will read this signal and look for ways to avoid the pain of deficit reduction, knowing that the President will sign any bill that reaches his desk."

The President entered office with a bad situation. We all grant that. But he has determined to plow ahead and force through a liberal social program that will make a bad situation much worse.

"The President’s social policy agenda is throwing gasoline on a deficit fire."

Read the whole thing here.