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New Fiscal Year, but No Money to Party

Socialites Nicky Hilton, left, and Paris Hilton attend a New Years Eve Party at LAX Nightclub in the Luxor in Las Vegas, Monday, Dec. 31, 2007.
Socialites Nicky Hilton, left, and Paris Hilton attend a New Years Eve Party at LAX Nightclub in the Luxor in Las Vegas, Monday, Dec. 31, 2007. (AP Photo/Chris Weeks) AP Photo/Chris Weeks

Happy New Year!

But only in the bowels of the Office of Management and Budget would they immediately know it is indeed New Year - for the federal government.

This is Day One of the 2011 fiscal year. But don't ask for a glass of champagne with which to celebrate. If you examine the deficits for the fiscal years just ending and beginning, you'll know the government has no money with which to party.

The final numbers for FY'10 won't be in for a few weeks, but OMB's most recent assessment projected the deficit for the year just ended would hit $1.471-trillion, the biggest in U.S. history. It's a number that amounts to 10 percent of the total economy.

The deficit projection for the new fiscal year is better, but not by much. It's $1.416-trillion or 9.2 percent of the Gross Domestic Product.

FY'10 was the fiscal year in which the national unemployment rate hit double digits for the first time since 1983. It soared to 10.2 percent in October 2009, the first month of FY'10. And since then it has declined, but slowly. Too slowly to suit President Obama. It now sits at 9.6 percent.

"We still have those eight million jobs that were lost, and that's a lot of jobs to make up -- the economy is still not growing as fast as it needs to," Mr. Obama said at one of his "backyard chats" this week in Des Moines.

The government forecasts the national civilian unemployment rate will average 9.0 percent in Calendar Year 2011 and 8.1 percent in 2012. GDP will average 3.1 percent in 2010 says the government and rise to 4.0 in 2011.

The numbers tell why no one's marking the new fiscal year with hats, horns and streamers.

Adding to the gloom is the fact that Congress failed to pass a budget or a single appropriations bill for the new fiscal year. And had it not been for a Continuing Resolution signed by Mr. Obama just yesterday, funding for much of the government would have run out at midnight and most departments and agencies would have had to shut down.

The measure will keep the government funded until December 3rd. Congress will come back into lame duck session after the midterm election to try and pass some appropriations measures before the Continuing Resolution expires Dec. 3. Or it can pass another Continuing Resolution.

Even so, Mr. Obama says there's reason to revel in the progress that has been made.

"There's no longer a possibility of a second depression," he said Thursday night at a Democratic Party fundraising event. "The economy is growing again. Private sector jobs we've created for eight consecutive months. There are about three million Americans who would not be working today if it weren't for the economic plan we put in place."

It's a selective rendering of economic conditions by Mr. Obama. He didn't mention the National Debt, which within a few weeks, will top $13.626-trillion and be $3-trillion larger than on the day Mr. Obama took office.

Also after the election, the National Commission on Fiscal Responsibility and Reform will report its recommendations on how to reduce the annual deficits and soaring National Debt. Its recommendations will involve cutting spending and raising taxes. There's no other way to achieve their objectives. If Congress enacts their recommendations, it's sure to be unpleasant if not painful.

So forget about Happy New Year. Put the hats, horns and streamers back in the box.

Maybe next year. Or not.

Mark Knoller is a CBS News White House correspondent. You can read more of his posts in Hotsheet here. You can also follow him on Twitter here:
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