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Monday, February 14, 2011

SBE Council Chief Economist on Bottom Line of Obama Budget

Raymond J. Keating, chief economist for the Small Business & Entrepreneurship Council (SBE Council), issued the following statement on President Barack Obama's proposed budget:

"Small business owners tend to be bottom-line people. So, what's the bottom line on the President's proposed budget? The Obama White House offers no serious effort to rein in the unprecedented expansion in government spending that we've experienced over the past three-plus years.

"To the contrary, the President presents a budget agenda that calls for a small one-year reduction in spending for 2012 - after outlays will have increased by 40 percent over four years - and then federal spending resumes its growth. As a share of the economy, spending would remain at unprecedented levels over an extended period of time. That's a big negative looming over the economy.

"Meanwhile, the growth in federal government revenues under the President's budget is projected to be robust over the coming five years. And while the budget deficit is expected to start shrinking after this year, it would still remain huge under this plan.

"Key problems with this entire scenario are the underlying economic assumptions. The budget assumes robust economic growth starting in 2012 and for several years thereafter, along with very low inflation. Given the negatives in this budget for the economy and the many questions swirling around monetary policy, these assumptions can in no way be counted on as realistic. If growth turns out to be slower than projected and inflation runs hotter, then this already dismal budget picture will only grow grimmer."

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