Trillion dollar deficits for years, says Obama

Barack Obama obviously hasn’t been waiting for the manicurists and spin doctors to come up with new ways of describing the U.S. economy. This isn’t a weather report he’s delivering.

Deficits, and big ones, mean the man’s been getting his information from the big rock quarry full of boulders in the professional economic databases. This is major management material. The idea, so far, is to run deficits then wind them down as the economy recovers. This means revenue is basically static, and borrowing is likely to increase. The New York Times has a very sober piece on Obama’s predictions and the tough calls which have to be made:

Big deficits force the government to borrow more money, saddling future generations with large financial burdens and leaving the nation reliant on foreign governments and other big investors to lend cash. The problem is even more acute now because credit markets, which in recent months have made it much harder and more expensive for businesses and individuals to borrow, could be further strained by financing a huge government deficit.

Nobody’s cheering, least of all Obama. This no honeymoon. This is business, and it has to be done properly, as he’s making a point of telling people. The realities are that this is how things have to be done, when the financial sector is on life support and the domestic economy is looking like roadkill in terms of cashflow. The other bit of news is that Obama is obviously a realist. The assessment is very much in line with the economic realities. There’s not a hint of cosmetics in the statements. Bloomberg:

Obama met with congressional leaders from both parties at the Capitol yesterday to help craft and shore up support for a two-year plan to boost the sagging economy. He said the plan would cut taxes for individuals and businesses and spend money on government programs to rebuild the nation’s infrastructure.

“We have to act now to address this crisis and break the momentum of the recession, or the next few years could be dramatically worse,” Obama told reporters after a separate meeting with top economic advisers.

This isn’t window dressing either. The talk about things getting "dramatically worse", coming from the President elect also means "Don't argue, this is serious". The stimulus is the method with the approved pedigree for kick starting a comatose domestic economy. Think of it as economic defibrillation, and you’ll see the logic. Start the heart again, and the rest of the carcass should come back to life. What hasn’t yet been seen is the standard obstructionism of previous years. It is quite likely that the Republicans are in favor of the basics, like most of the financial and economic media. Let’s hope we never again see economic nitpicking on the levels of former years, because the money just isn’t there to pay for it.