The U.S. shortfall will reach 10.8 percent of gross domestic product this year, ahead of Japan and the U.K., the Washington-based agency said in a report released today. It estimates that President Barack Obama will need to cut the deficit by 5 percentage points of GDP in the next two fiscal years, the largest adjustment in “at least half a century,” to meet his pledge of halving it by the end of his four-year term.
Let's not forget that Congress is the other half of any potential deficit-cutting partnership. Both sides will be hard-pressed to come up with a more substantial path to balanced budgets given the difficulty they had reaching an agreement last week. Substantial deficit cuts will of course destroy the phony economic recovery and bring on the second leg of a long-overdue depression.
Hey America, have you noticed that some banks like JPM are doing exceptionally well while your own disposable incomes have stagnated? Don't forget that GS is getting another public tongue-lashing from the same class of people who take its campaign contributions in exchange for no real change. The phony recovery benefited Wall Street and you paid for it with TARP and toothless new regulations. I just thought you'd like to know.
Full disclosure: No position in JPM or GS at this time.