Changes

The Obama Administration based its domestic policies on the assumption of a rapid economic recovery generating the tax revenue needed to fund [[Direct spending|permanent new spending]] program for [[Obamacare]] and "greening the economy".  Administration forecasts were more starry-eyed than private sector forecasts. Both parties agree that stimulus spending is needed to deal with the recession but Congress is unlikely to approve permanent new spending programs unless the economy improves, since a large number of conservative Democrats were elected who may vote with Republicans to keep down spending and deficits.<ref>[http://www.nytimes.com/2009/02/28/business/economy/28recession.html?_r=1&th&emc=th Sharper Downturn Clouds Obama Spending Plans], Peter S. Goodman, ''[[The New York Times]]'' Feb. 27, 2009</ref>

The Obama Administration based its domestic policies on the assumption of a rapid economic recovery generating the tax revenue needed to fund [[Direct spending|permanent new spending]] program for [[Obamacare]] and "greening the economy".  Administration forecasts were more starry-eyed than private sector forecasts. Both parties agree that stimulus spending is needed to deal with the recession but Congress is unlikely to approve permanent new spending programs unless the economy improves, since a large number of conservative Democrats were elected who may vote with Republicans to keep down spending and deficits.<ref>[http://www.nytimes.com/2009/02/28/business/economy/28recession.html?_r=1&th&emc=th Sharper Downturn Clouds Obama Spending Plans], Peter S. Goodman, ''[[The New York Times]]'' Feb. 27, 2009</ref>

===== FY 2011 Budget =====

'''FY 2011 Budget'''

Obama's first two budget deficits (FY 2009 and FY 2010) were more than $1 trillion, or 9% of [[GDP]]. The [[Democrat]]ic Congress failed to pass, and President Obama did not sign, a budget for fiscal year 2011, as required by law. But the administration continued spending anyway with a deficit projected to be at least another $1 trillion again for 2011. Combined with a shrinking economy, the publicly held federal debt increased by over 20% of GDP in Obama's first two years, and was projected to increase by another 7% in 2011. Experts warned the President that deficits of this size were not sustainable in the long run because the federal debt cannot indefinitely grow faster than economic output. Eventually a greater and greater share of national income would be devoted to interest payments, until eventually the government would be forced to finance the debt through money creation ([[inflation]]) or [[default]].

Obama's first two budget deficits (FY 2009 and FY 2010) were more than $1 trillion, or 9% of [[GDP]]. The [[Democrat]]ic Congress failed to pass, and President Obama did not sign, a budget for fiscal year 2011, as required by law. But the administration continued spending anyway with a deficit projected to be at least another $1 trillion again for 2011. Combined with a shrinking economy, the publicly held federal debt increased by over 20% of GDP in Obama's first two years, and was projected to increase by another 7% in 2011. Experts warned the President that deficits of this size were not sustainable in the long run because the federal debt cannot indefinitely grow faster than economic output. Eventually a greater and greater share of national income would be devoted to interest payments, until eventually the government would be forced to finance the debt through money creation ([[inflation]]) or [[default]].