What If There is Little or No Multiplier?
When you think of fiscal stimulus in this manner it becomes apparent that Barack Obama maybe make the mother of all gambles. This report by the Congressional Budget Office (CBO) indicates that the deficit for 2009 could be as high as $1.2 trillion. Consider that President Obama’s stimulus packages is about $825 billion. Now I don’t know when all that spending will be released/send out/spent/etc., but if it takes place in 2009 as some seem to think, and there is no multiplier we’ll have a deficit of $2 trillion and be in no better shap than we are right now, and maybe even worse.
Now consider the issue with Medicare. With all these baby boomers getting ready to retire that program is going to start eating into the federal budget as well unless we raise taxes, and that probably isn’t a good idea given the state of the economy. These deficits will make that situation even worse. Add on the expectations for increasing health care coverage (i.e. making health care more expensive) and things just don’t really look good from a budget perspective. And if deficits matter, like many on the Left have been saying for the last 8 years, President Obama has some really serious problems.