August Surprise: A Lower Deficit
On August 25, the Office of Management and Budget will release its latest estimate of the federal budget deficit. In May, the administration projected a deficit of $1.84 trillion. That’s now down to about $1.58 trillion, according to an administration official. The basic reason: the financial sector didn’t hit rock bottom, and so a lot of the money the administration set aside to pay for emergency actions wasn’t needed. Still, $1.58 trillion is… a big number. But remember: the WH was initially very worried that the August estimate would dwarf previous numbers… and would infect the health care debate. It’ll be interesting to see whether the Congressional Budget Office revises its deficit projection downward, too; the CBO releases its number the same day as OMB.
Fewer than anticipated bank failures.
Let’s just play pretend forever! As much as I think the regulators in the S&L crisis went overboard, at least they successfully prosecuted fraud. The current political climate, not economic climate, has made fraud acceptable. Fraud is never acceptable, though. Prosecution of fraud is the foundation of every free market theory (they just differ in how they want to administer it). Sigh. Can we bring back William Black? I’ll tolerate his desire for over-regulation as long as I get his genuine interest in prosecuting fraud. Our current regulators are perfectly happy to acquire more power for themselves, but show no interest in dealing with the rampant and persistent fraud. Granted, some of this reluctance is because our current regulators are responsible for some of the fraud themselves.
