The July federal budget deficit grew by $181 billion. Just in July. The cause: increased spending to save car companies, banks and mortgage firms, plus lowered tax revenue, this according to the CBO.
Spending through July of 2009 has increased by $530 billion, which is 21 percent over the same period in 2008. The bailout money for Freddie Mac and Fannie Mae accounted for almost half of the spending increase. Unemployment benefits have more than doubled, Medicaid spending has grown by a quarter and Medicare spending has increased by 11 percent.
The deficit at the end of July 2009 reached $1.3 trillion. By the end of the fiscal year, September 30, 2009, the deficit is expected to reach $1.8 trillion. On September 30, 2008 the deficit was a whopping $455 billion – an atrocious record high at that time.
Along with the graphic above, The Heritage Foundation says that Obama’s claim that his budget will cut the deficit by half by the end of his term isn’t much to brag about because he he has already “helped quadruple the deficit with his stimulus package.” Halving after quadrupling cannot claim to be sound economics. Note that the decreasing projected deficit begins to increase in 2013.
We continue today, in August 2009, to promote irresponsible home loans backed by the U.S. government, as we did all through the time that Barack Obama sat in the U.S. Senate and supported his comrades, Barney Frank, Chris Dodd and Maxine Waters in the sham of providing sub-prime home loans for those who could not qualify. Blame who you want for the economic downturn, the truth is it was the legislation known as the Community Reinvestment Act (CRA) that allowed Fannie Mae and Freddie Mac to flood the country far and wide with loans for inflated real estate to people should have been renting. It continues now – the “government,” the FHA, is still providing home loans to buyers with bad credit, no credit…
Herein lies the problem. The FHA’s standard insurance program today is notoriously lax. It backs low downpayment loans, to buyers who often have below-average to poor credit ratings, and with almost no oversight to protect against fraud. Sound familiar? This is called subprime lending—the same financial roulette that busted Fannie, Freddie and large mortgage houses like Countrywide Financial.
More from the Wall Street Journal:
Fannie Mae said it will need an additional $10.7 billion from the U.S. Treasury after it posted a $14.8 billion net loss in the second quarter, as rising unemployment led more prime borrowers to default on their loans.
Treasury Secretary Tim Geithner asked Congress on Friday August 7th to lift the ceiling on U.S. debt to…whatever…no ceiling at all – saying that the ceiling of $12.1 trillion mandated by statute can be reached my mid-October 2009.
The latest request comes as the Treasury is ramping up borrowing to unprecedented levels to fund stimulus and financial bailout programs and cope with a deep recession that has devastated tax revenues.
It is expected to issue net new debt of as much as $2 trillion in the 2009 fiscal year ended September 30 and up to $1.6 trillion in the 2010 fiscal year, according to bond dealer forecasts.
See the U.S. National Debt in real time here, including government bailouts.
Take a look at how the big-spending President George W. Bush is dwarfed by the high-flying President Barack Obama.
Deficit graphic courtesy Washington Post and The Heritage Foundation