HONOLULU (HawaiiNewsNow) - A government budget has to start with some idea of how much revenue will be coming in. Work on the Obama budget started last fall, when it was reasonable to assume the U.S. economy would grow this year by 2.6%. That now looks too optimistic.
Less growth means less tax revenue which means less money to spend. Republicans already said the Obama budget is dead on arrival but whatever alternative they develop will be created in the same shadow. It's not just Washington.
Just yesterday officials in Louisiana announced a significant budget shortfall caused by tax revenue not growing as much as they expected. Last week we heard a similar cry in the wilderness of North Dakota, where the collapse of the fracking industry has created a billion-dollar shortfall, which is big money in Bismarck.
When Bill Clinton balanced the budget it wasn't federal frugality that did it, it was a booming economy that generated more taxes without raising tax rates. The risk now is that the opposite will occur.