Obama: Too short on details of balance budget
President Obama said in his address before Congress that he believed that his financial experts have found $2 trillion in budget expense cuts over the next 10 years. He also said that he planned to cut the deficit in half by the end of his term.
Impressive goals, but the description of how these will be accomplished was to a large extent missing from the address. There was a good deal of talk about how money would be spent on tax cuts, eduction, and health-care reform. But, Obama said that it would be wrong to leave the nation's children with a huge deficit that would have to be paid for by their tax dollars.
The plan for improving the deficit appears to be based on two premises. One is that the cost of the war in Iraq will drop. The other is that people making over $250,000 will be taxed heavily. The second part of the equation may not take into account that the number of people with incomes above a quarter of a million dollars may be dropping rapidly as their jobs disappear along with their investment portfolios.
The biggest flaw in the notion of balancing the budget is how much it will cost to pull the economy out of the recession. There is already talk about a new TARP. There are also concerns that a second economic stimulus package will have to be considered at mid-year if the early results from the first one look weak.
The programs being suggested by the administration may turn the economy around, but, for a number of reasons, the deficit goals are unrealistic.
Douglas A. McIntyre is an editor at 24/7 Wall St.