The Obama administration released its 2010 budget estimate last Friday, after most of the press had gone home for the weekend.
And it’s easy to see why. The White House expects the budget deficit to hit $1.47 trillion, the largest in history, borrowing 41 cents for every dollar government spends.
The 2010 deficit bested the previous record holder: 2009’s deficit of $1.41 trillion. And things won’t improve soon; the administration expects 2011 to be in the $1.42 trillion range.
That will give President Obama the dubious distinction of holding the top three largest annual budget deficits. Sometimes it’s best not to excel.
The president’s last, best hope—since real spending reductions don’t seem to be part of the discussions, at least from the Democratic side—is increased productivity.
When workers are more productive per unit of time, their incomes rise, government revenues begin to recover and budget deficits begin to fall. But those income gains must be based on real increased productivity. Giving workers more income for the same output—which is all raising the minimum wage does—is inflationary.
But what’s the biggest hindrance to increased worker productivity? Regulations. And that’s where the president is likely to scuttle any chance he had of seeing a robust economic bounce back. Not only is the White House saddling future generations with tons of debt, it’s entangling them with regulations that consume enormous amounts of time—time that workers could spend being more productive.
For example, The Wall Street Journal says the financial reform bill gives the Security and Exchange Commission “vast new powers” including “at least 95 separate rule-makings.” Countless financial-institution employees will be pulled off productive work and tasked with compliance efforts.
The same thing has been going on in the health care and health insurance industries for months. Employees and management are being redirected from productive labor to who knows how many meetings and conference calls, as they try to determine what they can and can’t do under ObamaCare.
And, of course, the Federal Communications Commission (FCC) is currently attempting to subject the vibrant communications marketplace to an entire regime of counterproductive and outdated regulations, for no apparent good reason.
In a world of cheap labor, the saving grace for U.S. workers has been their productivity, when compared to other countries. The new wave of mostly unneeded regulations will hinder a much-needed wave of increased productivity, making it very likely that President Obama will be the budget-deficit king for years to come.