Will The Real Deficit Number For 2009, Please Stand Up?

Throughout 2005, 2006, 2007, and early 2008, the Congress Budget Office (CBO) was always behind the curve on projecting the actual deficit by underestimating how fast it was falling as a result increasing tax revenues. The revenue increases were a direct result of the Bush tax cuts and how they stimulated business revenues and, consequently, higher taxes being paid.

Now, the CBO is projecting that the deficit for 2009 is only going to be $1.2 trillion (See Full Story). Once again, this office, one that supposedly is dedicated to budgeting, is and will be totally off base with their projections for the same reason they were wrong over the last 4 years. First, their number doesn't even include the projected stimulus packages from either the incoming Obama Administration, which is nearly 3/4ths of trillion dollars, or the Congressional plans of as high as $1.2 or $1.3 trillion. Further, it is not known at this point if the Congressional number perfectly mates with the Obama number. Logic would say that the Congressional number is the Obama number plus some extras. My guess is that some part of the Obama plans aren't in the Congressional numbers. That's because they never are. As a result, if you mesh the two plans together, we could actually be looking at $1.5 trillion or higher than what is being stated.

Lastly, I suspect that the CBO is way off base on their numbers because they just don't know how to include the real impact of the recession on tax revenues. The reality of the tax revenue situation is that people who are out of work don't pay taxes and there will be a lot of people who will lose their jobs in 2009. Also, companies and small businesses who are falling into bankruptcy or operating at losses don't pay taxes either; and, there will be a lot of those in 2009. My guess is that the $1.2 trillion that the CBO is projecting is really upwards of $1.5 or $1.6 trillion dollars; and, that's "before" Obama or Congress gets their "trillions" in stimulus wishes. I think that the deficit spending for next year could easily be in excess of $2.5 trillion -- maybe even $3 trillion if Congress can't control themselves and Obama wusses-out on his veto pen. As usual, just my opinion!

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