WASHINGTON — The White House on Monday projected 2009 and 2010 federal budget deficits far higher than it forecast just two and a half months ago, even as it continued to defy most experts and predict that the economy is headed for a strong comeback starting late this year.
"If they keep playing this game, they're going to have real credibility problems," predicted Brian Bethune, the chief U.S. financial economist at IHS Global Insight, an economic research firm.
The new administration budget said
I was deciding whether to renew my contract, enter into the Army Reserves or leave altogether. I decided to join the Reserves and use my college money. I remember thinking to myself that I could not imagine the United States being involved in a major war. Its not that I ever minded the idea of going to war, I just wanted it to be for a good purpose, like in World War II. Not a quagmire like Vietnam.
Exactly two years later, 9/11 occurred. The impossible, the unreal and the unthinkable happened – the United States was in the first crisis of my lifetime. My father had lived through the seventies stagflation, the Cuban Missile Crisis and Vietnam. My Grandfather’s lived through the Great Depression and Pearl Harbor. Now it was our turn.
Which is what has me so concerned today. People of our generation have never experienced a real financial crisis. It is only something that we read about in history books (at least those of us who read history). In fact, even older people seem to think the U.S. economy is invulnerable and the dollar will maintain confidence no matter what. Well, I am writing this to say that this is fantasy. Just like real estate prices were a fantasy two years ago, the dot.coms were a fantasy 12 years ago and world peace was a fantasy on Sept 10, 2001. Disasters do occur and they do hit home.
Take a look at the above chart. It is staggering. And this is just the beginning of the estimates. The government has already committed far more money to the current financial crisis than the U.S. spent on the entire New Deal and World War II. So the question becomes: are we solving a crisis with investment money? Are we creating a new crisis to solve the current one? Or are we doing something else?
Well what is the worst that could happen? The answer is inflation, debasement of the currency and loss of confidence in the dollar. If this happens the U.S. is in a lot of trouble. If we are to know what will happen, we need only look at places where it has happened. This is not something I want for my country. But many of us will oppose this as much as we can. We will look for leaders who will stand up for the Constitution and conscientious policy. Soon the disasters will occur and new champions of freedom will emerge, as did Ronald Reagan and Margaret Thatcher. Hopefully we will be relieved of the nausea induced by these fake conservatives we got in the 2008 elections.
Many of us will hope for the best, but prepare for the worst. The politicians certainly are good at encouraging the first part of that saying; but what about the second part?