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President Obama has released his proposed budget for the 2011 fiscal year which begins Oct. 1. The dire news in the budget wasn't unexpected, but it's alarming nevertheless.
The President is proposing $3.8 trillion in spending for FY2011. Of this, $1.3 trillion - one-third of the budget, equaling 8.3 percent of our Gross Domestic Product (GDP) - would be paid for with borrowed money.
Under the President's plan, the federal government will borrow $4,122 on behalf of each Wisconsin resident - adults and children alike.
For the long term, the President predicts that deficits will decline to 3.7 percent of GDP in 2017, but then will start rising again.
How much trust can we put in these figures? Consider that President Obama's budget projects $5.08 trillion in deficit spending over the next five years. This is a 35 percent increase over what the Administration projected one year ago.
Further, the President's deficit projections assume that Congress will enact some budget cuts that have previously been proposed without success.
While the President proposes budgets, it is Congress which actually crafts them. Over the next month or two, the House and the Senate will each develop budget proposals which may or may not be influenced by the President's recommendations. The two proposals will then have to be negotiated between the House and Senate to achieve a single budget outline which Congress will fill in over the months ahead. There is little reason to suppose that the leadership in Congress will do any better than President Obama in coming up with a solution for our deficit crisis.
Restoring budget sanity will require spending restraint, but to be successful we need a growing, vibrant economy. The past year's agenda of big health care changes, environmental legislation designed to make energy prices skyrocket, and a generally pro-tax and pro-regulatory attitude toward business have left entrepreneurs and corporate leaders alike uncertain about how the government is going to treat them in the years ahead, and that has helped to stifle growth.
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