NYC Letter: Team Barry Tackles The Deficit, Part II

Day 92 of CHOPE

Monday we left Team Barry doing their darnedest to reduce the deficit, which ironically Mr. Obama's showcase legislative triumphs -- a combined $4.3 trillion in spending -- will quadruple this year. Because everyone is new to the job, Mr. Obama only asked the team to find $100M in combined cuts -- over time. Even though over time this will be a teeny tiny reduction, still it's a reduction in spending.

OBAMA SIGNS $5.7 BILLION NATIONAL SERVICE BILL
April 21, 2009 (Cleveland Leader)

Wait a minute. That's 57x more spending than Mr. Obama's $100M cuts directive. That's a $5.6B setback!

OBAMA PROPOSES $100 BILLION US LOAN TO IMF

April 21, 2009 (CNBC) - President Barack Obama on Monday proposed a $100 billion U.S. loan to the International Monetary Fund to boost the IMF's war chest and urged a bigger stake in the IMF for emerging powers like China and India.

In a letter sent to Democrat and Republican leaders in the U.S. Congress, Obama said the U.S. funding "does not represent a budgetary expenditure or any increase in the deficit since it effectively represents an exchange of assets."

... Obama urged Congress to quickly pass legislation to allow the U.S. to keep its G20 promises, and emphasized it would not require budgetary outlays.

The United States transfers dollars to the IMF under the NAB [New Arrangements to Borrow], the United States receives in exchange another monetary asset in the form of a liquid, interest-bearing claim on the IMF, which is backed by the IMF's strong financial position, including its significant holdings of gold.

Yes. Well. Mr. Obama is saying that America will make an off-budget cash outlay to the IMF of $100B and receive in exchange an IMF IOU. The liquidity of such a massive $100B IOU in a cash-strapped world market is pennies on the dollar. [Pause.] Somehow this is a good deal for America.

IMF loan deficit reduction setback: $99.9B!

Combined setbacks: $105.6B!

Here's an idea. If Mr. Obama wants to reduce the deficit -- STOP SPENDING MONEY THAT ISN'T THERE!

This is what deficit reduction by a community organizer looks like.

CHOPE.

(-$100M cuts) + (+$105.7B spending) = Deficit reduction