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Playing Politics with the Budget is a Dangerous Game

By    |   Thursday, 24 Feb 2011 10:54 AM

I usually don’t like to delve into politics. Politics is a dirty game — a bit too dirty for my liking. However, when politics can affect the long-term economic fundamentals of a nation, I take notice.

This brings me to President Barack Obama’s latest budget. Mr. Obama proposed a very tepid budget with little to no cuts.

This budget drastically increases the debt much more than the projections outlined in his 2009 budget.

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By the end of the decade, even using the White House’s rosy projections, the national debt will be more than $20 trillion.

However, the White House knows that this budget will never be passed. What they are doing is playing a game. Put forward a soft budget and then have the Republicans counter with the tough choices.

Then if the Republicans talk about restructuring unfunded liabilities, cutting Medicare or Social Security you can paint them as the bad guys or mean-spirited.

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President Bill Clinton did it in the mid-1990s with a Republican congress. However, in 1994 the situation wasn’t so dire. The country didn’t have a deficit of more than $1.5 trillion and the debt-to-GDP level was in the 60 percent range, not in the 100 percent range.

The United States is just one interest-rate spike away from being insolvent. Yet the White House wants to play political games with the national debt and budget.

This is a very dangerous game indeed and if interest rates spike faster and sooner than they think, it will equate to playing a game of Russian roulette with the one bullet going off. That isn’t a chance you should take with a national economy and millions of peoples jobs and livelihoods at stake.

About the Author: David Skarica
David Skarica is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He also writes the Gold Stock Adviser. Discover more by Clicking Here Now.
 

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DavidSkarica
I usually don t like to delve into politics. Politics is a dirty game a bit too dirty for my liking.However, when politics can affect the long-term economic fundamentals of a nation, I take notice. This brings me to President Barack Obama s latest budget.Mr. Obama...
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2011-54-24
Thursday, 24 Feb 2011 10:54 AM
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