Coburn Predicts $1.6 Trillion Dollar Deficit

Based upon falling revenues and increased financial stimulus and bailout spending by Washington, Senator Tom Coburn predicted America will see a 1.6 Trillion dollar budget shortfall next year.

Ed at Hot Air has some details from the call:

Noel Sheppard: The underlying assumptions on employment and revenue in the ‘09 budget have fallen by the wayside, and we’re spending a ton more money than the $3.1 trillion budgeted. What’s your prediction for the deficit next year? — Coburn predicts $1.6 trillion, quadrupling what we have now. That comes from short-term thinking, and spending without consideration of where the money will originate. Politicians have no perspective outside the next election. The reason people aren’t even looking at the numbers is because of this peculiar parochialism.

Coburn left the questioning wide open for the call and struck me as one of the more engaging and down to earth Senators I've been fortunate enough to join on such a call. Unfortunately for his particular cause, the $1.3 billion Worst Waste of the Year he sought to highlight may have trouble getting much attention with projected overall deficit numbers like he mentioned.

However, Coburn did take time for some Math, pointing out how and where various savings can be made to significantly offset even that large a deficit. Coburn didn't seem very confident his colleagues would have the will to do it, calling for fresh blood to step up, as opposed to career politicians, to consider serving in DC.

In a candid moment, Coburn remarked that for many DC pols they've probably risen higher through government than they could ever have hoped to achieve in the "real world." And it was people of integrity and accomplishment from the private sector opting to serve in DC that was required to turn Washington around.

In my question I wove together three threads he had already touched upon: a lack of a long term view in Washington; concern over today's government's socialist tendencies; and his early work with Obama's transition team on eliminating waste. I asked if Conservatives were justified in fearing an Obama administration with potentially Socialist-like tendencies implementing a long term view in DC that would promise continued government growth and spending for years?

Coburn praised his early work with Obama's people on eliminating waste and redundancy, while saying he was not sure if Obama held such a long term view. He then suggested that with the deficits we are likely to see for some time, even if Obama did harbor such tendencies, they were likely to be stymied by a simple lack of government cash. He cited Health Care as one area where America simply cannot afford what Obama and former Senator Daschle, slotted for HHS, might have in mind.

I'll link back over to Ed at Hot Air for more details on the call.

Comments

[IslamoLlama]

"-- Based upon falling revenues and increased financial stimulus and bailout spending by Washington, Senator Tom Coburn predicted America will see a 1.6 Trillion dollar budget shortfall next year. --"

This means we'll be trimming back the military budget, right? Right? No?

Oh. I guess there's always room for a few more Osprays, M1 Tanks, and floating fortresses in the budget during the middle of a recession. Better start taking the axe to Children's Health Care, then.

That said, it is nice to know Coburn can count up the budget. Shame he didn't do anything to help balance it during his six years in the majority. Ho-hum. Vote Republican! We'll get it right next time, we swear!

[mark l.]

the component that is going to explode this years budget is a 700(or 860) billion dollar bailout. compound that with the fact that there will be almost no capital gains for the year, slashing govt tax revenues from that source and our 2008 defict is explained.

2009?
I was unaware that we are going to drop another 700 billion dollar bailout. The capital gains should roll in towards the latter half of 2009.

If obama has the guts to produce a followup trillion dollar deficit in 2009, without the excuse of a 2nd 700 billion dollar bailout, his goose is cooked.

The libs seem to think that they need to follow the 'new deal' policy, but fail to consider the outcome of the Japanese 'new deal' from the 90's. They jacked govt spending and did get out of their funk, 10 years later.

[jharp]

"America will see a 1.6 Trillion dollar budget shortfall next year"

That is only one of the problems left to us by George Bush and his enablers. Wait til the state budgets alarms go off. California's already has. We are in for a long and deep recession.

"He cited Health Care as one area where America simply cannot afford what Obama and former Senator Daschle, slotted for HHS, might have in mind."

Health care is one area America cannot afford to do nothing. Thank God the Republicans are out of power. It's probably the best opportunity to save us some money.

[jharp]

"If obama has the guts to produce a followup trillion dollar deficit in 2009, without the excuse of a 2nd 700 billion dollar bailout, his goose is cooked."

Wrong. It is the republicans whose goose is cooked. Or haven't you noticed?

We're in deep doo doo. Deep. And economists agree that deficits provide good short term relief.

[mark l.]

"Wrong. It is the republicans whose goose is cooked."

president: democrat.
house: democrat.
senate: democrat.

Do you think faith in govt will increase if the debt keeps on exploding?

Do you honestly believe that you will be able to defend 2009, 2010 deficits by blaming the gop from 2008? How's that going to run in a campaign commercial?

2008
president: republican.
house: democrat.
senate: democrat.

[mark l.]

"That is only one of the problems left to us by George Bush and his enablers."

hmmm...

enablers in the democratic house, or the democratic senate?

The trick of hot potato with a greande is to make sure you aren't holding the grenade when it goes off. I congratulate the dems on their consolidation of power.

[Dion]

Oh crap, jharp is going to "skool" us on socialist health care again.

Islamowhatsit said:

"Oh. I guess there's always room for a few more Osprays, M1 Tanks, and floating fortresses in the budget during the middle of a recession. Better start taking the axe to Children's Health Care, then."

Perhaps you can show us how to defend ourselves with suicide bombers. I think you'd make a great martyr, so you go girl!

[jharp]

"Do you think faith in govt will increase if the debt keeps on exploding?"

I think that when Obama gets things turned around it will sink the Republicans for decades.

As much as you'd like to pin this on the dems, no one but the 25%ers are buying it.

[jharp]

Minnesota elections officials unanimously voted to require local election boards to count approximately 1,600 absentee ballots that were disqualified by clerical error, the Minneapolis Star Tribune reports.

Huge. Huge win for Franken.

[IslamoLlama]

"-- Do you think faith in govt will increase if the debt keeps on exploding? --"

Absolutely. Assuming unconstitutional wiretapping and imprisonment is rolled back, troops are pulled out of the Iraq theater, people feel safer in airports and in major downtown areas, unemployment rises, productivity rises, the infrastructure gets rebuilt, health care is extended to all citizens, and our country gets back on the track to Clinton-era normalcy.

Ultimately, year-over-year debt wasn't what sunk the Bush Administration. It was the massive boondoggles he spent our money on. If our nation wracks up a budget deficit creating jobs, protecting the citizens, and fueling the economy Obama's deficits will be more than forgiven. If he runs off and loses $9 billion in hard cash in a foreign country, not so much.

[IslamoLlama]

"-- Perhaps you can show us how to defend ourselves with suicide bombers. --"

Over 55% of discretionary spending is dropped on the US Military. That doesn't include additional war-specific funding.

Have we won yet?

Meanwhile, cancer, diabetes, heart disease, or the flu. Pick one. Then compare US fatalities to these versus fatalities to terrorist attacks.

:-p

Because the newest wave of F-22 fighters is going to save so many more lives than the trade-off thousands of chemo treatments.

[jharp]

http://www.balloon-juice.com/?p=14583

We need to invade Michigan and rebuild the state from the ground up. We will be greeted as liberators, we have clear supply lines, and we can easily rebuild the auto industry with the kind of money we spend on other countries we invade. Hell, our new Secretary of State, Hillary of Clinton, spent the better part of the past year fighting for the rights of average folks from Michigan, so think of the good will we have with the public. This is very doable. Just tell Congress we will give KBR no-bid contracts to fix Detroit.

And citizens of Baltimore, Altanta, St. Louis, and DC- you better get your shit together or you are next.

[Dion]

"Assuming unconstitutional wiretapping and imprisonment is rolled back, troops are pulled out of the Iraq theater, people feel safer in airports and in major downtown areas, unemployment rises, productivity rises, the infrastructure gets rebuilt, health care is extended to all citizens, and our country gets back on the track to Clinton-era normalcy."

It was "Clinton-era normalcy" that made us less safe in airports or any where else for that matter. Maybe you meant "Carter-era normalcy?" We were all safe back then, huh Ahmadinejad? What about the other "theaters?" Are we still planning on bombing Pakistan?

Our citizens have access to the best health care in the world, BTW. And so do Mexicans, it's free, just go to your nearest ER and see for yourself.

[mark l.]

2008-the deficit is bad becuase of the sitting president. Don't blame the democratic congress.

2009-the deficit is bad becuase of bush, don't blame the democratic president or democratic congress.
2010-the deficit is bad, again, becuase of bush, don't blame the president or democratic congress for being in power for 2 and 4 years respectively, and ignore all the handouts and spending increase in their pet projects.

Bush will have been out of office for two years, and the dems believe they can still capitalize off of him for 2010?

"Because the newest wave of F-22 fighters is going to save so many more lives than the trade-off thousands of chemo treatments."

chance of survival of any cancer is greater in the US than any other country, despite the reported quality of their healthcare.

If you want to discuss chemo tx, ask youself why our cancer survival rate, for males, is 50% better than the UK rate.

[Andrew Garland]

The housing shock and recession came from the realization that $1.6 trillion ($1,600 billion) in sub-prime loans were likely to default, not be paid back, and cause at least $1 trillion in losses. That, and from the decline in house values because so many extra houses were built for people who could not pay for them.

Think of what it will be like when the market, including foreign governments, decides that the U.S. will not be able to repay it's borrowings. This will happen suddenly, without warning.

We are at a point where raising taxes will NOT increase the revenue of the federal government, and most of the states are going bankrupt. The feds will print money, devaluing the currency by 20%, so that even people holding cash as an asset will lose. This dramatic loss of wealth and loss of desire to take the risks of operating businesses is the stuff of the Great Depression, deepened by government action.

The feds are currently borrowing and spending huge amounts of capital needed to recover, that will not be available for recovery. Raising taxes will not acquire wealth that is not there, but it will prolong the misery as it dissuades risk and innovation.

[Dion]

Don't forget that a WPA-type stimulus (which is what Obama is proposing) would take a long time to implement and would be fraught with big government bureaucratic red tape. It did not work in the 30s and it won't work now.

[mark l.]

"Think of what it will be like when the market, including foreign governments, decides that the U.S. will not be able to repay it's borrowings."

The only currency that has appreciated in value since Jan 08?

the us dollar. (caught a chinese citigroup worker. she wasn't happy about how much they are buying, but she smiled when she pointed to it as one of the only assets that is performing in a world of sh*t.) It's the only winner now, and probably for the next two years. The EU is so far behind us right now, that they are the worst case scenario. Oil is going to be low...

when our stock market turns the corner in about six months, usaully the at the bottom of a recession) and given our appreciating dollar, we become the only game in town. serious bull run.

a guarantee? only a possiblity, but stranger things have happened.

I hate our govt, but they did get out in front, and begrudgingly have to admit that they dealt with a problem head on. Europe doesn't have a plan. They can't swing a bailout, with their existing external debts and depreciating currency. God forbid, but we may even have to help them...(not saying we would help them).

[jharp]

2008-the deficit is bad becuase of the sitting president. Don't blame the democratic congress.

2009-the deficit is bad becuase of bush, don't blame the democratic president or democratic congress.
2010-the deficit is bad, again, becuase of bush, don't blame the president or democratic congress for being in power for 2 and 4 years respectively, and ignore all the handouts and spending increase in their pet projects.

Bush will have been out of office for two years, and the dems believe they can still capitalize off of him for 2010?

Posted by: mark l. | Friday, December 12, 2008 at 03:56 PM

Now you're starting to get it. Congratulations. You aren't as ignorant as I thought. By 2010 the enormity of the Bush catastrophe will be well understood. And the Republicans will become even more irrelevant.

[Dion]

"Now you're starting to get it. Congratulations. You aren't as ignorant as I thought. By 2010 the enormity of the Bush catastrophe will be well understood. And the Republicans will become even more irrelevant."

Actually, the Democrats have been in power for 2 years and the catastrophe occurred on their watch. It certainly is well understood by sentient beings and will someday even dawn on pompous, hide-bound ideologues like jharp.

[Dion]

It's funny that the Democrats are always proffering a candidate that's surrounded by a fog of corruption. If the media did it's job rather than advocate for the latest leftist, The Obama would still be cleaning Rezko's laundry.

[mark l.]

your going to run on an anti-gop sentiment, reaching back two years to explain the actions that the dems in office chose to commit?

must be the "yes we control the govt, but we are also not responsible for anything" argument.

sounds like a winner for 2010.

The auto bailout bill? 37% approval and they still want it? must be a 'divine wind'.

[IslamoLlama]

"-- Actually, the Democrats have been in power for 2 years and the catastrophe occurred on their watch. --"

Quick! Pass the buck!
Who was warning of the mortgage bubble back in 2005 and 2006? Why it was hyper-liberal blame-America-first NYT Nobel Economist Paul Krugman.

Who was chanting "the fundamentals of our economy are strong" like a mantra straight through the end of last September? Why it was the GOP candidate for President John McCain and his trusty sidearmkick Sarah Palin.

How many filibusters and vetoes did we see in '07 and '08?

If I were you, I'd start taking pot shots at the history budgets of every primary and college level school. Cause anyone who knows diddly jack about the political atmosphere of the last two years can tell you exactly how effective the non-veto proof Congressional majorities have been.

Which legislation - specifically - did Congress pass in the last 2 years that brought about the economic downturn. Answer that question and maybe you'll have some credibility to build on.

[IslamoLlama]

"-- Actually, the Democrats have been in power for 2 years and the catastrophe occurred on their watch. --"

Quick! Pass the buck!
Who was warning of the mortgage bubble back in 2005 and 2006? Why it was hyper-liberal blame-America-first NYT Nobel Economist Paul Krugman.

Who was chanting "the fundamentals of our economy are strong" like a mantra straight through the end of last September? Why it was the GOP candidate for President John McCain and his trusty sidearmkick Sarah Palin.

How many filibusters and vetoes did we see in '07 and '08?

If I were you, I'd start taking pot shots at the history budgets of every primary and college level school. Cause anyone who knows diddly jack about the political atmosphere of the last two years can tell you exactly how effective the non-veto proof Congressional majorities have been.

Which legislation - specifically - did Congress pass in the last 2 years that brought about the economic downturn. Answer that question and maybe you'll have some credibility to build on.

[mark l.]

"Who was warning of the mortgage bubble back in 2005 and 2006?"

who was warning of fannie mae and freddie mac creating a market for buying subprime mortgages?

the gop tried the same argument vis a vis, fannie and freddie. Got nowhere. Wish you luck on trying to make your case.

If your warnings were heeded, what efforts by the dem congress from 2006, lead you to believe they did anything to stop it?

[Dion]

"Who was warning of the mortgage bubble back in 2005 and 2006? Why it was hyper-liberal blame-America-first NYT Nobel Economist Paul Krugman."

Wrong! Bush warned about it back in 2003. Frank and Dodd were getting kickbacks from Freddie Mac and Fannie Mae and just continued the Carter CRA mantra. The housing melt down is easily laid in the leftist lap. Try again, Islamowhatsit. Try a different burqa--maybe tie-died with a peace sign. Don't forget the Che Beret.

[Dion]

Did Krugman write this:

http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print

Here are some quotes:

"At the time, the companies and their allies beat back efforts for tougher oversight by the Treasury Department, the Federal Deposit Insurance Corporation or the Federal Reserve. Supporters of the companies said efforts to regulate the lenders tightly under those agencies might diminish their ability to finance loans for lower-income families. This year, however, the chances of passing legislation to tighten the oversight are better than in the past."

Remember this guy:

"After those assurances, Franklin D. Raines, Fannie Mae's chief executive, endorsed the shift of regulatory oversight to the Treasury Department, as well as other elements of the plan."

Now why didn't Fan mae and Fred mac receive more oversight? Hello?

[Dion]

Google the names "Barney Frank," and "Chris Dodd." Let's see...uh.....yeah they were really receptive to reform. jharp will be happy to know that they are Democrats. Talk about culture of corruption.

[Dion]

I offer this to all the good Obamatons--jharp, islamowhatsit, etc:

http://www.youtube.com/watch?v=UYGmX85sB4c

[IslamoLlama]

"-- chance of survival of any cancer is greater in the US than any other country, despite the reported quality of their healthcare.

If you want to discuss chemo tx, ask youself why our cancer survival rate, for males, is 50% better than the UK rate. --"

You're dodging the issue Mark I. Chances of survive without treatment plummet no matter what country you are in. For those with the money, the US has a great medical infrastructure. The trick is extending that treatment to more individuals.

The UK also has a full blown military budget of less than $100 billion. We spend $12 billion a month just on maintaining a troop presence in Iraq. Year over year we spend over six times the UK on defense. And the UK is between the 2nd and 3rd largest military in the world.

http://www.nchc.org/facts/cost.shtml
You can insure a family of four at $12.1k per family. For $2 billion you can insure 165,289 families - or over 660,000 individuals (that's roughly the entire state of Alaska) for a year. Assuming the '01 to '04 Alaskan average - http://statecancerprofiles.cancer.gov/incidencerates/index.php?stateFIPS=02&cancer=001&race=00&sex=0&age=001&type=incd&sortVariableName=rate&sortOrder=default - you have the potential to save 2,100 lives per year at the cost of $2 billion.

Meanwhile, we spend six times that per month in Iraq, and so far we've managed to KILL over 350 servicemen in the last year in direct combat, with another estimated 18 veteran suicides per day. And you can add in the loss of US Contractors, civilians, etc, etc.
http://icasualties.org/oif/

At the end of the day, universal health care saves more lives than war (which is totally unexpected!), so if you're top priority is preserving the lives of US citizens the choice is clear.

[IslamoLlama]

"--
"Who was warning of the mortgage bubble back in 2005 and 2006? Why it was hyper-liberal blame-America-first NYT Nobel Economist Paul Krugman."

Wrong! Bush warned about it back in 2003. Frank and Dodd were getting kickbacks from Freddie Mac and Fannie Mae and just continued the Carter CRA mantra. The housing melt down is easily laid in the leftist lap. Try again, Islamowhatsit. Try a different burqa--maybe tie-died with a peace sign. Don't forget the Che Beret.
--"

My goodness, who controlled Congress in 2003? Why, with majorities in both House and Senate along with the Presidency... that would be the Republicans!

And Bush warned of the instability of the credit market and the massive rise of mortgaged backed securities and other derivative assets back in 2003? Good thing he sent his loyal Fed Chairman Greenspan to sort that out.

OOPS!

"What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn't be taking it to those who are willing to and are capable of doing so," Greenspan told the Senate Banking Committee in 2003. "We think it would be a mistake," to more deeply regulate the contracts, he added.

http://www.heraldtribune.com/article/20081009/article/810090400

"-- Mr. Greenspan repeated his opposition to regulating derivatives, but said heavy concentration in the market ''gives me and others some pause.'' --"

http://query.nytimes.com/gst/fullpage.html?res=9A07E1DD173FF93AA35756C0A9659C8B63&fta=y
You'll want to check the date on that one, chief. Looks like its dated 2003.
Even when he warns about them, he staunchly refuses to do anything about it. "Derivatives are bad, but we can't regulate them" isn't much of a policy position. But it's a great way to fiddle while Rome burns.

[mark l.]

"And the UK is between the 2nd and 3rd largest military in the world."

28th in the world, active duty.

[Bruno Laksevaag]

Is it true that the U.S. NATIONAL DEBT is more than $10.000.000.000.000? Does it mean that every one of you 300.000.000 Americans have borrowed $33.333? And now you say that every single one of you will borrow more than $3.333 more next year?
Ja, right.

How long do you plan to keep this up?

You have already borrowed more than 80% of GDP.

But when borrowing you this money, we ask you to govern wisely now. Don’t drag the borrowers with you by bad governing of the money.

I would not give any American $3.333 next year if I did not see a good plan, and it better not shoot the lender in the foot.

[WAHOO WILLIE]

"I think that when Obama gets things turned around it will sink the Republicans for decades."

Gawd I fear for you when your socialist dreams come crashing. Get someone to hide your guns and sharps please.

[Todd]

"Think of what it will be like when the market, including foreign governments, decides that the U.S. will not be able to repay it's borrowings."

The only currency that has appreciated in value since Jan 08?

the us dollar. (caught a chinese citigroup worker. she wasn't happy about how much they are buying, but she smiled when she pointed to it as one of the only assets that is performing in a world of sh*t.) It's the only winner now, and probably for the next two years. The EU is so far behind us right now, that they are the worst case scenario. Oil is going to be low...

when our stock market turns the corner in about six months, usaully the at the bottom of a recession) and given our appreciating dollar, we become the only game in town. serious bull run.
Posted by: mark l. | Friday, December 12, 2008 at 04:31 PM
------------------------
The USD has depreciated against the Japanese Yen by 22% since Jan 1, 2008. I believe that the USD has rallied as a result of hedge funds and other investors being forced to unwind the carry trade after suffering massive massive losses in that trade since this past July (approximately -50% against Euro, Aussie $, Canadian $, Swiss Franc), although there are other factors. It's perverse to think that the US is a safe haven in this economic storm considering how screwed we are and how much more deleveraging will take place in the U.S. economy. I think the US Dollar is a house of cards. Consider the case(and the currency) of Canada, which has not run a national budget deficit since 1997 (although it will this year due to the recession) and whose major banks are in very strong financial positions despite the credit crisis. Why would the US be a better place to invest than Canada?

As for the stock market, you can have that Mark. I'm in total agreement with Louise Yamada that we are in a structural bear market for another 5-8 years. At least keep an eye on the Japanese Yen for guidance as to when it's a good time to take a risk-oriented position. Until the yen stops appreciating against all major currencies, it's definitely not a time to be in the stock market for more than a quick trade.

Here's a video of Louise Yamada from November. She's been so accurate in her calls over the last few years about the SP500 and the financial sector, that you risk your financial health not to listen to her opinion. http://www.hoanewsnetwork.com/media/node/6370/play

[Todd]

"Bush will have been out of office for two years, and the dems believe they can still capitalize off of him for 2010?"
-----------------------
Yes, Bush is just that hated and people will not forget who put us in this mess for quite a few years, which is why no publisher thinks a Bush memoir should be written for many years.

http://www.guardian.co.uk/commentisfree/cifamerica/2008/nov/19/george-bush-sarah-palin-books