Saturday, May 23, 2009

Obama Admits "We're Out of Money"

(Update 4:38pm PST) Here's the link to c-span interview.

The president admits, but it doesn't seem to bother him much.

From the Drudge Report headline "We're Out of Money" (the link may disappear, as this is a news flash at the moment, but the following is an entire post on Drudge plus my grunting in bullet points):

"In a sobering holiday interview with C-SPAN, President Obama boldly told Americans: "We are out of money." C-SPAN host Steve Scully broke from a meek Washington press corps with probing questions for the new president.

  • "Probing"? Well let's see...
SCULLY: You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?

  • Mr. Scully, if the government budget incurs debt year after year, and the country has $11 trillion deficit, that means we ran out of money a very long time ago. The last budget surplus was under Clinton (although this is disputed by many people). For paying off the national debt, you have to go back to President Andrew Jackson .

  • US 2008 GDP is $14 trillion. National Deficit is $11 trillion. (And that's excluding the private debt.) That's almost 80% of GDP. GDP is set to decrease this year, probably substantially. Do the math. No wonder traders were wondering "Will the US be the next (to be downgraded, after the UK)?" Or even worse: turning Japanese and have debt at 200% of GDP.
OBAMA: Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we've made on health care so far. This is a consequence of the crisis that we've seen and in fact our failure to make some good decisions on health care over the last several decades."

  • Ummmm, health care? I'm sorry Mr. President, but increasing number of people are scrambling to come up with the money to pay for groceries, bills, mortgages. Health care reform doesn't come to mind as the most urgent thing we must do when the economy is tanking.

  • Your budget director also talks about "health care" whenever he opens his mouth on any subject. So if you repeat often enough it becomes important?

  • We are in deep deficits. And your proposal is to go even deeper. Only makes sense in this bizzarro world.

"So we've got a short-term problem, which is we had to spend a lot of money to salvage our financial system, we had to deal with the auto companies, a huge recession which drains tax revenue at the same time it's putting more pressure on governments to provide unemployment insurance or make sure that food stamps are available for people who have been laid off.

"So we have a short-term problem and we also have a long-term problem. The short-term problem is dwarfed by the long-term problem. And the long-term problem is Medicaid and Medicare. If we don't reduce long-term health care inflation substantially, we can't get control of the deficit."

  • Short-term or long-term, as you say, WE DON'T HAVE MONEY. Why should we do any of that? So far, the funding method seems to be to PRINT money, and to come up with more and more ways to extort, oh sorry, collect tax money, whether the taxpayers like it or not.

So, one option is just to do nothing. We say, well, it's too expensive for us to make some short-term investments in health care. We can't afford it. We've got this big deficit. Let's just keep the health care system that we've got now. Along that trajectory, we will see health care cost as an overall share of our federal spending grow and grow and grow and grow until essentially it consumes everything... "

  • I am for doing nothing. It sure feels like a good time to hunker down and reduce debt, not incurring it. That's what businesses and individuals have been doing.

  • Money grows on trees. Probably it grows in the new White House organic garden.
SCULLY: When you see GM though as “Government Motors,” you're reaction?
OBAMA: Well, you know – look we are trying to help an auto industry that is going through a combination of bad decision making over many years and an unprecedented crisis or at least a crisis we haven't seen since the 1930's. And you know the economy is going to bounce back and we want to get out of the business of helping auto companies as quickly as we can. I have got more enough to do without that. In the same way that I want to get out of the business of helping banks, but we have to make some strategic decisions about strategic industries... "

  • So you want to get out of GM and Chrysler ASAP. Why did you get in to begin with? Was there some overwhelming support from the taxpayers? Your leaders at Auto Task Force are bankers and a hedge fund manager with no auto industry experience (other than having defaulted on the soon-to-be-ditched owner of Chrysler). How can they actually help? Oh I forgot; your auto czar was surely effective in "persuading" the "recalcitrant" hedge fund managers.

  • Strategic decisions about strategic industries? Who decides what's "strategic"?
SCULLY: States like California in desperate financial situation, will you be forced to bail out the states?
OBAMA: No. I think that what you're seeing in states is that anytime you got a severe recession like this, as I said before, their demands on services are higher. So, they are sending more money out. At the same time, they're bringing less tax revenue in. And that's a painful adjustment, what we're going end up seeing is lot of states making very difficult choices there... "

  • Sure the states will suffer. Your Treasury Secretary says he has to uphold the law so he is not going to give any TARP money to assist the states. The states may be better off that way after all, looking at what has happend to Chrysler and what is about to happen at GM.
SCULLY: William Howard Taft served on the court after his presidency, would you have any interest in being on the Supreme Court?
OBAMA: You know, I am not sure that I could get through Senate confirmation...

  • I suppose that would depend on who becomes the president after him.


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