Always look on the bright side of life…

The Obama administration proposed its budget to the congres and the figures were far from nice. Obama is expecting a budget deficit of $1,300 Billion.

And I even think this is way too optimistic. Obama’s figures expect a rise in the tax incomes of nearly 19%. Obama stated in his report the government should watch expenses and let the economy grow without using debt to finance this growth. ‘We have to do what all families in America have to: save wherever we can.’

Those are beautiful words, but I fear it’s nothing more than that. Who has a brief look at the figures will quickly notice Obama is just planning to continue his current way of spending. He is talking about spending less while the government expenses will only rise in the coming 10 years according to his own figures.

Obama announced he found ways to spend 20 billion less, relieving the taxpayer! That sounds quite amazing, but relatively we are talking to about 0,5% of the total expenses. Peanuts.

The most amazing thing was the article in the NY times where Obama showed his plans to cut down the deficit to 5% of GDP in 2014. The US would only have around $700 billion of debt left.

Even a 5-year old child will very, very easily notice this is not going to happen. Obama is not planning to cut back on expenses and estimates a growth in tax incomes of 59,6% from 2010 to 2014. Dream on…

Also, a deficit of ‘just’ $700 billion is not an achievement at all. Until not too long ago the US had never even had a deficit of $500 billion and today we are celebrating achieving a deficit that is projected to be $700 billion in a couple of years.

Furthermore, one of the most important flaws in the document is that the estimates do not expect a rise in interest that has to be paid on the debt. The US have a government debt of around $12,000 billion (and actually we are able to add another 6,000 billion for Freddy and Fannie). For 2011 Obama is expecting to spend around $250 billion interest expenses.

That is just 2% of the total debt!

Apparently the current government thinks these interest rates are always going to stay this low? Maybe Obama should have a brief look at Greece, Greece has shown that interest rates might go to around 6%...