The Bush administration now projects a shocking $455 billion
deficit for the current fiscal year ... $150 million, or
almost 50%, higher than its forecast of just five months ago
... dwarfing the previous record of $290 billion in 1992 ...
and still rising.
What about the claim that the deficit is "manageable" in
proportion to the large U.S. economy? It's wrong. Period.
Consider the facts:
1. Just based on the latest estimates, the 2003 deficit is
already up to 4.2% of GDP, a level that was not exceeded
during 51 of the last 57 years.
2. And that assumes the economy will improve right in line
with the government's forecasts for the rest of the 2003
fiscal year. If it doesn't, the deficit burden could be worse.
3. The $455 billion deficit projection also assumes that the
surplus in the Social Security fund is a part of the
government's budget, available to spend right now on
everything BUT Social Security payments. That's patently
false. The Social Security funds are NOT a part of the budget and never have been. They are NOT to be spent, but rather to be held in reserve to cover Social Security deficits that are inevitable in the future.
What happens if you treat the Social Security surpluses
correctly and you take them out of the government's revenue
calculation? The 2003 deficit burden on our economy
immediately becomes 5.7% of GDP, the second largest in
history.
4. Also excluded from the official deficit estimates are the
costs of the reconstruction efforts in Iraq ... the cost of
prescription drug coverage ... and the deficits of agencies
that are controlled or sponsored by the Federal government.
Add in these, and the actual deficit is close to 10% of GDP!
It's out of control. It looms as the single greatest threat
to the future of our economy. And the saga has barely begun.
Plus, take a look at these other fundamental problems facing
the U.S. economy and stocks ...
* The labor market continues to deteriorate. Unemployment
claims have surpassed the critical 400,000 mark -- which
indicates a weak labor market -- for the 22nd week in a row!
Also, Boeing recently announced that it will layoff 5,000
workers -- that's in addition to the 35,000 jobs it plans to
eliminate by the end of 2003.
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