Getting Desperate

The Obama administration has suddenly awakened to the possibility that Obama’s spend and tax policies are likely to prove unpopular and put the Democrats in a bad position in 2010 elections. Not that they have any clue how to fix the problem, however.

But Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, said, “The second five years is where we’re on a completely unsustainable course.”

“People know we have an overall situation here that doesn’t add up,” he said.

Results from a Gallup survey released last week show that although more than six in 10 Americans approve of Obama’s overall job performance, fewer than half say they approve of how he is handling the deficit and controlling federal spending. The poll also shows a decline from the previous month in the percentage of Americans who approve of Obama’s handling of the economy, although a majority still does.

During a town hall forum in New Mexico last month, Obama acknowledged that the “long-term deficit and debt that we have accumulated is unsustainable.” The statement followed several fiscal reform initiatives, including changes in defense procurement policy, that advisers say will save tens of billions of dollars a year.

Other measures have held a whiff of desperation. In April, he publicly instructed his Cabinet secretaries to find $100 million in savings, a fraction of the more than $3 trillion annual budget.

I rather suspect that numbers like these from the Congressional Budget Office are what are beginning to penetrate even the thus-far clueless administration:

Receipts in the first eight months of this fiscal year were about $1.4 trillion, almost $300 billion (or 18 percent) lower than in the same period last year. Corporate receipts fell by $108 billion (or 61 percent) during the period. Continued weakness in corporate profits, recently enacted legislation (most notably bonus depreciation), and the ability of firms to use current-year losses to reduce tax liabilities from previous years all contributed to lower corporate receipts.

Declines in individual income and payroll taxes of $175 billion account for almost 60 percent of the overall decrease. Nonwithheld receipts of individual income and payroll taxes, consisting mainly of quarterly estimated payments made in January and April and final payments for 2008 made during the February-May tax-filing season, fell by about $101 billion (or 28 percent) in the first eight months of the year. The decline probably stems in part from a substantial drop in nonwage income in 2008.

The latest CBO projections show a rapidly increasing deficit of nearly $2 trillion with outlays roughly double income ($4 trillion spending versus just over $2 trillion in receipts).

 That kind of spending can’t be sustained for even a short time. Yet Obama is still piling on the spending.

And people are beginning to notice. That’s why they are getting desperate.

An awful lot of Democrats are going to have to face the voters in 2010 and explain how they spent this much this quickly. When they didn’t have the money in the first place.