It’s official: this year’s budget deficit will be one for the record books. The latest figures released by the Obama Administration contemplate a $1.8 trillion deficit for fiscal 2009 as the United States economy continues to significantly underperform relative to earlier forecasts. This year’s record-setting deficit is now reckoned to be four times last year’s — the previous record-setter. Next year, the deficit is expected to decline but still to exceed $1.3 trillion — and that’s only if everything goes according to plan.
Back in the bad old days of the Great Depression, the breezy assurance of the Hoover Administration that “prosperity is just around the corner” became, as the years of depression dragged on, a mainstay of Vaudeville comedians and Hollywood screenwriters alike. As things turned out, elusive prosperity did not re-appear until after 16 years of depression and world war, and even then was not fully in evidence until after Congress finally removed all wartime price controls and slashed government spending by a third. An entire decade was squandered by eager-beaver social engineers in the Hoover and Roosevelt administrations, who could not be shaken from the notion that more government spending and controls on market activity could solve the economic crisis — a crisis that had been created by government in the first place.
Despite rosy earnings reports from some closely watched corporations, the Great Recession is far from over, according to the latest economic data from the Commerce Department. America’s GDP, which shrank at an annualized rate of 6.3 percent in the last quarter of 2008, was expected to decline at a rate of about 5 percent for the first quarter of this year. Instead, it fell 6.1 percent, suggesting that last year’s meltdown continues more or less apace.
New revelations from the New York State Attorney General’s office have all but proven that Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Hank Paulson committed bank fraud crimes in the case of the Merrill Lynch/Bank of America merger that took place last year. New York State Attorney General Andrew M. Cuomo revealed that Paulson and Bernanke illegally suppressed adverse financial data on the merger and threatened to replace the Bank of America CEO and board of directors if the company backed out of the Merrill Lynch merger. “Secretary Paulson has informed us that he made the threat at the request of Chairman Bernanke,” Cuomo wrote in an April 23 letter to Congress.