The $1T Deficit Blame Game

Budget Analysts have projected another $1 trillion-plus deficit this year. From Fox News:

The nonpartisan Congressional Budget Office projected Wednesday that the deficit for 2012 will run $1.1 trillion, the fourth year in a row the shortfall will exceed $1 trillion.

The projection is down a bit from an earlier estimate pegging the deficit this year at $1.2 trillion.

The report also warned that a new recession is likely if an ongoing stalemate over tax and spending cuts continues between Democrats and Republicans.

In its annual summertime report, the budget office said Wednesday that letting decade-old tax Bush tax rates expire and sweeping spending cuts occur in January — which will happen without congressional action — “would lead to economic conditions in 2013 that will probably be considered a recession.”

If that happened, the economy would contract by 0.5 percent — a gloomier projection than the budget office made earlier this year when it envisioned slight growth under that scenario. Unemployment would rise to around 9 percent by late next year if the standoff persists, the analysts said.

CBO Director Doug Elmendorf, who urged Congress to act in September said:

“The stakes of fiscal policy are very high right now. The sooner that that uncertainty is resolved, the stronger the economy would be in the second half of this year,” he said. “Economic growth right now is being held back by the anticipation of this fiscal tightening.”

Of course not, Mr. Elmendorf! The reason that the economic growth is slowing, is because of those dirty 1 percenters and their big banks holding us back and stealing all our paychecks.

Elmendorf continued to say:

“At some point we will need to adopt policies that require people to pay significantly more in taxes, accept substantially less in government benefits and services, or both.”

Speaker of the House John Boehner had this to say on the matter:

“Instead of threatening to drive us off the fiscal cliff and tank our economy in their quest for higher taxes, I would urge President Obama and congressional Democrats to work with us to stop the coming tax hike that threatens our economy and replace the looming defense cuts with common sense reforms.”

Meanwhile House Budget Committee member Chris Van Hollen, a Democrat from Maryland responded with:

“President Obama has a plan to create jobs, stabilize debt, protect Medicare and Social Security, and replace the damaging, indiscriminate cuts from the sequester with a targeted, balanced approach to deficit reduction.”

“The President’s plan would also extend tax relief for 98 percent of Americans,” he said. “Yet Republicans in Congress refuse to enact the President’s plan, choosing instead to protect special interests and tax breaks for the wealthiest in our country.”

Ah, politics. Where a serious problem can ensue, the neutral team will identify a solution and both sides continue to bicker over which solution is less bad than the other.