Obama wants to cut deficit in half Budget plan being drafted BY LIZ SIDOTI The Associated Press
WASHINGTON — President Barack Obama wants to cut the federal deficit in half by the end of his first term, mostly by scaling back Iraq war spending, raising taxes on the wealthiest and streamlining government, an administration official said Saturday as the president worked to finalize his first budget request. Obama’s proposal for the 2010 fiscal year that begins Oct. 1 projects that the estimated $1.3 trillion deficit he has inherited from former President George W. Bush will be halved to $533 billion by 2013. That’s a difference of 9.2 percent of the overall economy now vs. 3 percent in four years. “We can’t generate sustained growth without getting our deficits under control,” Obama said in his weekly radio and Internet address that seemed to preview his intentions. He said his budget will be “sober in its assessments, honest in its accounting and lays out in detail my strategy for investing in what we need, cutting what we don’t and restoring fiscal discipline.” He’s expected to outline some broad themes of his budget request Monday at a White House summit on fiscal policy and touch on it during his first speech to Congress on Tuesday evening. He is slated to officially send at least a summary of it to Congress on Thursday, barely a week after his $787 billion economic stimulus plan became law. Obama’s budget also is expected to take steps toward his campaign promises of establishing universal health care and lessening the country’s reliance on foreign oil. The official, who spoke on the condition of anonymity because the president has not yet released his budget, said Obama hopes to achieve his deficit-reduction goal by generating savings as he follows through on three core campaign promises over the next four years. He has pledged to wind down the Iraq war by withdrawing most combat troops within 16 months of taking office. He also has said he would let the temporary Bush tax cuts expire in 2011 for people making more than $250,000 a year, effectively raising taxes on those people. And he has vowed to scale back spending and improve government efficiency by eliminating programs that don’t work. The budget projections suggest that Obama hasn’t backed off any of those priorities, despite relatively little movement on them and at least one misstep in his first month in office as he concentrated on lobbying for the economic stimulus plan and rescuing the housing, auto and financial sectors. Pentagon officials still are trying to determine exactly how to scale back the U.S. troop commitment in Iraq. The president’s sweeping economic plan didn’t include any of the tax increases Obama, as a candidate, had said he would impose on wealthy taxpayers. And Nancy Killefer, his selection for a newly created position charged with eliminating inefficient government programs, withdrew amid personal tax issues. Cutting the deficit by half in a mere four years is a lofty goal at any time, let alone in such dire economic circumstances. The question is whether Obama can do it while also turning around a recession now well into its second year. Obama has pledged to make deficit-reduction a priority both as a candidate and as president. But he also has said economic recovery must come first. In his first month in office, he has overseen enormous amounts of spending aimed at stabilizing the economy, reversing the recession and heading off even more turmoil. Last week, he signed into law the $787 billion stimulus measure that is meant to create jobs but certainly will add to the nation’s skyrocketing national debt. He also is implementing the $700 billion financial sector rescue passed on Bush’s watch; about $75 billion of it is being used toward Obama’s plan to help homeowners facing foreclosure. At the same time, the administration is weighing requests by General Motors Corp. and Chrysler LLC for an additional $21.6 billion. The ailing automakers already have received a combined $17.4 billion in federal loans. Yet even as he’s spending a ton of taxpayer money, Obama also is pressing the need for getting “exploding deficits” under control. The nonpartisan Congressional Budget Office says that this year’s budget deficit will be at least a record $1.2 trillion — about two times that of the year before. That total includes financial bailouts and rescue plans Congress approved since last Oct. 1, the start of the government’s budget year, but not Obama’s hefty stimulus package that’s now law. Some private economists are ..................http://www.dailygazette.net/De.....amp;EntityId=Ar00101
Obama pledges to slash deficit — after increase BY LIZ SIDOTI The Associated Press
WASHINGTON — Urging strict future restraint even as current spending soars, President Barack Obama pledged on Monday to dramatically slash the skyrocketing annual budget deficit as he started to dole out the record $787 billion economic stimulus package he signed last week. “If we confront this crisis without also confronting the deficits that helped cause it, we risk sinking into another crisis down the road,” the president warned, promising to cut the yearly deficit in half by the end of his four-year term. “We cannot simply spend as we please and defer the consequences.” He said he would reinstitute a payas-you-go rule that calls for spending reductions to match increases and would shun what he said were the past few years’ “casual dishonesty of hiding irresponsible spending with clever accounting tricks.” He called the long-term solvency of Social Security “the single most pressing fiscal challenge we face by far” and said reforming health care, including burgeoning entitlement programs, was a huge priority. Wall Street seemed unimpressed by all the talk. The Dow Jones industrials dropped 251 points for the day. Obama goes before Congress and the nation tonight to make the case for his agenda and his budget plans, which the White House is to release in more detail on Thursday. On Monday, he sought to prepare people for tough choices ahead. He summoned allies, adversaries and outside experts to what the White House characterized as a summit on the nation’s future financial health one week after triumphantly putting his signature on the gargantuan spendingand-tax-cut measure designed to stop the country’s economic free fall and, ultimately, reverse the recession now months into its second year. Obama said there would be another summit next week on health care reform. “It’s not that I’ve got summititis here,” he added wryly. By the president’s account, the administration inherited a $1.3 trillion deficit for the current fi scal year from the Bush administration — that’s the figure Obama says he’ll cut in half — and the stimulus law, coupled with rescue efforts for ailing automakers, the financial industry and beleaguered homeowners will raise this year’s red ink to $1.5 trillion. The administration hopes to trim the deficit by scaling back Iraq war spending, raising taxes on the wealthiest and streamlining government. “We are paying the price for these deficits right now,” Obama said, estimating the country spends $250 billion — $1 in every $10 of taxpayer money — in interest on the national debt. “I refuse to leave our children with a debt that they cannot repay.” As an example of a purchasing process “gone amok,” the president said he had ordered a thorough review of his new fleet of Marine One helicopters, now far over budget. He was asked about the fleet by former presidential rival John McCain at the end of the White House meeting. “The helicopter I have now seems perfectly adequate to me,” Obama said, to laughter. “Of course, I’ve never had a helicopter before. So, you know, maybe I’ve been deprived and I didn’t know it.” Earlier, Obama met with Republican and Democratic governors who are poised to benefi t from his unprecedented emergency economic package. He told the chief executives, attending a three-day National Governors Association meeting in Washington, that he would begin distributing $15 billion to their states within two days to help them with Medicaid payments to the poor. The recession has strapped state budgets, in particular in regard to the Medicaid program that is jointly underwritten by states and the federal government. In total, states will eventually receive $90 billion for Medicaid from the new law. One month into office as the economy continues its downward spiral, Obama is seeking to balance twin priorities: turning around dismal conditions with a huge injection of spending while lowering huge budget deficits. With his re-election race just a few years away, he also has an interest in avoiding being labeled as a big-government, big-spending Democrat. The meetings opened a jampacked White House week that includes a State-of-the-Unionstyle address to Congress tonight and the president’s first budget proposal on Thursday. A common thread: addressing current economic turmoil while controlling the country’s long-term costs. “This will not be easy,” Obama told his White House audience, which included congressional leaders, 2008 GOP presidential nominee McCain and Republican Sen. Judd Gregg of New Hampshire, who recently backed out as Obama’s commerce secretary. After Obama spoke, attendees broke into five groups to brainstorm how to address costly areas including military weapons, Social Security, health care and tax reform. During one, Rep. Henry Waxman, D-Calif., said, “Our defi cit really cannot be ...................http://www.dailygazette.net/De.....amp;EntityId=Ar00101
OK, I have a couple issues with this. I heard actual audio today of this point...that he's going to reduce the deficit by 50%. Now, what you'll actually here if you go back and listen to the footage is...that he'll reduce the deficit that he INHERITED by 50%. Now, he did NOT say that he wouldn't keep spending at the same rate. He did NOT say that he would try to curtail any future spending to make sure the ENTIRE deficit was reduced by 50% by the time he leaves office, he only said that he'd reduce the deficit that he enherited by 50%, not stating how much it might balloon with NEW spending that he plans to put into place.
Quoted Text
“We are paying the price for these deficits right now,” Obama said, estimating the country spends $250 billion — $1 in every $10 of taxpayer money — in interest on the national debt. “I refuse to leave our children with a debt that they cannot repay.”
He refuses to "leave our children with a debt that they cannot repay." Instead, he has decided to put off the time that the "stimulus" package is going to need to be repaid, therefore, it won't be our children who have to repay it, but, instead, our grandchildren and great-grandchildren.
A conversation on the same subject today on the Mike Church show, Sirius Patriot, 144. (I really like the part down lower about the insurance agent. Pay close attention.)
Mike: All right. Let’s see here. Who’s on? Rick is in Virginia. All right, Rick, you’re next. Mike Church Show, Sirius Patriot 144, America Right XM 166. Telephone number is 866-957-2874. Hello, Rick.
Rick: Morning, Mike. You can go ahead and wear that T-shirt I sent you. I’ll just send you another one. Everybody’s not noticing something about what Obama said yesterday. He said he’s going to cut the deficit that he inherited in half. He didn’t say anything about cutting the deficit that he’s created in half....
Mike: Oh, I didn’t catch that sleight of hand.
Rick: Yeah, he did that. Listen to it again. He says we are going to cut the deficit that we inherited in half. So he can come back in two or three years and say [stammering], well, I just said we were going to cut the deficit that we inherited in half. Listen to it again. This guy is slicker than Slick Willy is. He is. This guy really is. I mean, he just – he’s amazing. He just amazes me every day. Every time he opens his mouth I just sit here totally appalled.
Mike: But Rick, he’s making it up as he goes. These people are clueless. Let me say to you, when I say that, that that is a qualified statement. Because I do not believe that any governing authority could fix this. The only thing a governing authority could do to fix this would be to totally abdicate all the things that they’ve already started and get out of the way.
Rick: Correct, yeah.
Mike: And allow the market to find its own bottom, allow the market to work this thing out, allow new and fresh capital and ideas to come in without interference there. That’s the only way. There is no conservative solution to this. It pains me when I hear, “Well, the conservatives need a plan.” Well, the conservative plan is going to be, “Well, we just need to have some tax cuts in there, and we’ll grow our way out of this.” And you could. You could get back to status quo, I would imagine here. But you’d still be running deficits up. You’d still have a bubble bursting every three or four years. And you’d still have all this misery and melee spread around here. And you wouldn’t actually get to the heart of the matter here, and you wouldn’t restore freedom and liberty to the republic. But having said that, listen, there’s no – there is no man, and not enough money on earth, to fix this.
Rick: No, Mike, but don’t you think that if they were to just allow GM and Chrysler to go through bankruptcy, for people to get foreclosed on, the economy would have corrected itself probably within a year or so.
Mike: Well...
Rick: But now, I mean, I don’t see an end to it now. I don’t – I just – everything these people do just aggravates the heck out of me, you know, I mean...
Mike: Well, and you haven’t even gotten to the – we haven’t even seen really the ravages that runaway inflation, which is coming, are going to cause here.
Rick: No.
Mike: I mean, because runaway inflation is – not only does it destroy the current generation, it makes it that much harder for the next one to get a foothold because they just – they can’t accumulate anything. Whatever they accumulate is then liquefied or is then inflated and cut in half by the stroke of the government or the Fed’s pen or whatever here. I mean, the heart of the matter of all this, the heart of the matter is the fractional banking and the Federal Reserve. If you’re, I mean, just imagine, imagine – and this was actually somewhat debated in the Federal Convention that yielded the Constitution. And Thomas Jefferson is famous for having said this, that if private individuals are ever allowed or ever given the power of running a national bank, or running national banks or overseeing the currency, that it would lead to ultimate tyranny and despotism. Which is what it has done. And if you don’t eliminate that, I mean, all these things are short-term fixes. The Fed has got to be handed its walking papers. The Treasury has got to get its house in order. And the states have got to come back to the forefront of governing their people. As in limited a fashion as the people’s – as the people are willing to suffer under in their individual states. But if that doesn’t happen, I’m telling you, this is – how did that British guy that wrote that piece, I’m trying to remember his name now, this is going to end in tears.
Rick: Correct.
Mike: This is going to end horrifically. There is no good ending. There’s no happy ending to what you’re seeing here. You have the CEO of AIG or Citibank sneaking into the – under the cover of darkness into the White House last night to go figure out how they can break the original agreement that was made with the Senate that they could only own a certain portion of Citibank, so that the federal government, which last I checked is not a sovereign entity, may take ownership of it. Under whose authority?
Rick: They don’t have any authority, Mike.
Mike: They don’t, that’s right, they are not a sovereign being. We, the states, the people are sovereign. The federal government is our agent. I made this comparison to someone today Think about it like this. You people that aren’t getting this, think about it like this. Let me ask you, Rick, do you have an insurance agent?
Rick: Sure I do.
Mike: Okay, sure you do. Do you own a home, by any chance?
Rick: Sure I do.
Mike: Okay, fantastic. So you have an insurance agent. We’ll just call him Pete the Insurance Agent.
Rick: Okay.
Mike: You call Pete the Insurance Agent up, and you say, listen, as my agent, I want to buy some insurance for my home and my car. Pete the Insurance Agent says okay. Well, I can get you this from this company, this from this company, this from that company. And you say okay, well, I want that company for the home and that company for the car. And he says, well, I need a check, and you sign the deal. A month later you find out – you come home, and there’s a For Sale sign on your lawn. And your car, your second car, there’s a guy walking around your second car, kicking the tires. And there’s Pete standing in your driveway going – and you drive up, and hey, Pete, what’s going on here? Well, I’m your agent, and I kind of have sovereignty over your home and your car, and I decided that I was not having such a good day over there at Pete’s Insurance. And we’re having some problems, and I needed some revenue. So I’m selling your house, Rick.
Rick: Okay.
Mike: Well, dude, you can’t do that, you’re just my agent. Oh, no, I’m sovereign over your assets, sir. That’s what the – that is an accurate comparison to the federal government.
Rick: Yes.
Mike: The federal government was created to be the agent of the states in dealing with commerce and trade affairs and national defense. End of story here. There were 18 enumerated powers, and that’s it. That’s all they were committed to do. Therefore they cannot be sovereign because they weren’t created as an entity. They were not created as a people. They were created as an agent of the states. I want you people to understand this. “Mike, Mike, where are you getting this from?” I’ll tell you where I’m getting it from. A guy named Thomas Jefferson.
Rick: Yeah.
Mike: And the early Virginians of the early 19th Century who wrote reams on this, thousands upon thousands of pages about this, because they saw what was coming, and they saw what the Nationalists, the Hamiltons, the Madisons, and John Marshall and the rest of the Nationalists and the consolidated government types, the early precursors to Obama and to Kennedy and all the other libs, they saw what they were trying to do, and they argued, and they wrote about it, and they said no, that is not the deal you made. You are not sovereign. You may not do these things. And that’s where I get this from. I’m not making it up. I’ve researched it, and I’ve learned it, and I suggest that the rest of you learn it, too. But, I mean, just imagine, just use the insurance agents, use the insurance agent as a model here when discussing this, and I think you can even probably explain this to some of your lib friends.
Rick: But Mike, wasn’t the government set up to enact treaties with foreign countries; correct?
Mike: Yes, yes.
Rick: Foreign countries. Not to dabble in our dealings from state to state; correct?
Mike: Even then, this is why senators were apportioned numerically and not by population, to make sure that every state had a stake in the ratification of a treaty.
Rick: Right.
Mike: It takes three-quarter vote to pass a treaty. And you’ve got to have an overwhelming support to pass a treaty. You can’t pass a treaty with 51 votes in the Senate. You’ve got to have three-quarter vote in the Senate.
By CALVIN WOODWARD and JIM KUHNHENN Google sponsored links $27,383 Stimulus Checks - It's Official. The Gov Is Giving Away Money! How Much Do You Get? http://www.ObamaStimulus.org
WASHINGTON (AP) - President Barack Obama knows Americans are unhappy that the government could rescue people who bought mansions beyond their means.
But his assurance Tuesday night that only the deserving will get help rang hollow.
Even officials in his administration, many supporters of the plan in Congress and the Federal Reserve chairman expect some of that money will go to people who used lousy judgment.
The president skipped over several complex economic circumstances in his speech to Congress - and may have started an international debate among trivia lovers and auto buffs over what country invented the car.
A look at some of his assertions:
OBAMA: "We have launched a housing plan that will help responsible families facing the threat of foreclosure lower their monthly payments and refinance their mortgages. It's a plan that won't help speculators or that neighbor down the street who bought a house he could never hope to afford, but it will help millions of Americans who are struggling with declining home values."
THE FACTS: If the administration has come up with a way to ensure money only goes to those who got in honest trouble, it hasn't said so. Defending the program Tuesday at a Senate hearing, Federal Reserve Chairman Ben Bernanke said it's important to save those who made bad calls, for the greater good. He likened it to calling the fire department to put out a blaze caused by someone smoking in bed.
"I think the smart way to deal with a situation like that is to put out the fire, save him from his own consequences of his own action but then, going forward, enact penalties and set tougher rules about smoking in bed."
Similarly, the head of the Federal Deposit Insurance Corp. suggested this month it's not likely aid will be denied to all homeowners who overstated their income or assets to get a mortgage they couldn't afford.
"I think it's just simply impractical to try to do a forensic analysis of each and every one of these delinquent loans," Sheila Bair told National Public Radio.
---
OBAMA: "And I believe the nation that invented the automobile cannot walk away from it."
THE FACTS: Depends what your definition of automobiles, is. According to the Library of Congress, the inventor of the first true automobile was probably Germany's Karl Benz, who created the first auto powered by an internal combustion gasoline engine, in 1885 or 1886. In the U.S., Charles Duryea tested what library researchers called the first successful gas-powered car in 1893. Nobody disputes that Henry Ford created the first assembly line that made cars affordable.
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OBAMA: "We have known for decades that our survival depends on finding new sources of energy. Yet we import more oil today than ever before."
THE FACTS: Oil imports peaked in 2005 at just over 5 billion barrels, and have been declining slightly since. The figure in 2007 was 4.9 billion barrels, or about 58 percent of total consumption. The nation is on pace this year to import 4.7 billion barrels, and government projections are for imports to hold steady or decrease a bit over the next two decades.
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OBAMA: "We have already identified $2 trillion in savings over the next decade."
THE FACTS: Although 10-year projections are common in government, they don't mean much. And at times, they are a way for a president to pass on the most painful steps to his successor, by putting off big tax increases or spending cuts until someone else is in the White House. Obama only has a real say on spending during the four years of his term. He may not be president after that and he certainly won't be 10 years from now.
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OBAMA: "Regulations were gutted for the sake of a quick profit at the expense of a healthy market. People bought homes they knew they couldn't afford from banks and lenders who pushed those bad loans anyway. And all the while, critical debates and difficult decisions were put off for some other time on some other day."
THE FACTS: This may be so, but it isn't only Republicans who pushed for deregulation of the financial industries. The Clinton administration championed an easing of banking regulations, including legislation that ended the barrier between regular banks and Wall Street banks. That led to a deregulation that kept regular banks under tight federal regulation but extended lax regulation of Wall Street banks. Clinton Treasury Secretary Robert Rubin, later an economic adviser to candidate Obama, was in the forefront in pushing for this deregulation.
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OBAMA: "In this budget, we will end education programs that don't work and end direct payments to large agribusinesses that don't need them. We'll eliminate the no-bid contracts that have wasted billions in Iraq, and reform our defense budget so that we're not paying for Cold War-era weapons systems we don't use. We will root out the waste, fraud and abuse in our Medicare program that doesn't make our seniors any healthier, and we will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas."
THE FACTS: First, his budget does not accomplish any of that. It only proposes those steps. That's all a president can do, because control over spending rests with Congress. Obama's proposals here are a wish list and some items, including corporate tax increases and cuts in agricultural aid, will be a tough sale in Congress.
Second, waste, fraud and abuse are routinely targeted by presidents who later find that the savings realized seldom amount to significant sums. Programs that a president might consider wasteful have staunch defenders in Congress who have fought off similar efforts in the past.
---
OBAMA: "Thanks to our recovery plan, we will double this nation's supply of renewable energy in the next three years."
THE FACTS: While the president's stimulus package includes billions in aid for renewable energy and conservation, his goal is unlikely to be achieved through the recovery plan alone.
In 2007, the U.S. produced 8.4 percent of its electricity from renewable sources, including hydroelectric dams, solar panels and windmills. Under the status quo, the Energy Department says, it will take more than two decades to boost that figure to 12.5 percent.
If Obama is to achieve his much more ambitious goal, Congress would need to mandate it. That is the thrust of an energy bill that is expected to be introduced in coming weeks.---
OBAMA: "Over the next two years, this plan will save or create 3.5 million jobs." THE FACTS: This is a recurrent Obama formulation. But job creation projections are uncertain even in stable times, and some of the economists relied on by Obama in making his forecast acknowledge a great deal of uncertainty in their numbers.
The president's own economists, in a report prepared last month, stated, "It should be understood that all of the estimates presented in this memo are subject to significant margins of error." Beyond that, it's unlikely the nation will ever know how many jobs are saved as a result of the stimulus. While it's clear when jobs are abolished, there's no economic gauge that tracks job preservation. The estimates are based on economic assumptions of how many jobs would be lost without the stimulus.
How does obama expect to put these unemployed people back on payrolls again? He wants to tax the rich. When was the last time anyone went to a poor person for a job? I understand that some corporates got greedy. Just like our politicians did and are still doing.
We give our tax dollars to banks so they can survive. And what do they do? They raise our interest rates on credit cards. They raise the interest rate on the same people who bailed them out. And try to get a mortgage. That is next to impossible.
Then obama is going to give us $13/wk as of 4/1/09. Isn't that our money to begin with? Isn't that taxes we have already paid? And so they will give us our tax money back ONLY to claim it AGAIN on our income tax.
Come on sheople! This is not a democratic/republican thing any longer. This is our future they are ALL screwing up. Remember they are just a different side of the same coin!!! Were is the outrage? Where is the revolt?
Ya wanna get their attention? For one week, just one week.....claim 9 for dependents on you pay check. It's legal, really. If enough people in this country did this...it would surely get their attention.
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
The Department of Water and Power (DWP) San Fernando Valley Generating Stat...
President Barack Obama will propose raising new revenue through a greenhouse gas cap and emissions trading scheme when he unveils his first budget on Thursday, US media reported. The budget he will present assumes an emissions trading system will generate revenue by 2012, the Washington Post reported.
Fifteen billion dollars of the money generated would be directed to clean-energy projects, the Post said, citing sources familiar with the document.
Another 60 billion would go to tax credits for lower- and middle-income working families, and the rest to help families, small businesses and communities deal with higher energy costs, the paper reported.
The Post cited testimony to Congress in September by Peter Orszag, currently Obama's budget director, estimating that revenue from a cap-and-trade scheme could reach 112 billion dollars by 2012.
According to Orszag, who at the time was director of the Congressional Budget Office, the program -- which would force companies to buy permits if they exceed pollution emission limits -- could generate between 50 and 300 billion dollars a year by 2020.
The New York Times also reported that the projected revenues would subsidize research and development of alternative energy sources.
The recently passed economic stimulus package already includes billions of dollars to help develop a national electricity grid to distribute energy from alternative energy sources such as wind farms.
Carbon dioxide, methane and other greenhouse gasses are the main culprits in causing global warming.
According to the Times, which cites unnamed administration officials, Obama's budget will also propose reducing the tax benefit of itemizing deductions, a move that would mostly affect wealthy Americans.
The placing of a fee[buying carbon credits] on business will drive the price that we the people pay for electricity, natural gas, heating fuel, gasoline, and any product made that has a carbon tax placed on it. In the end we're going to be taxed indirectly, just what Obama said he wouldn't do.
Obama Declares War on Investors, Entrepreneurs, Businesses, And More Friday, 27 Feb 2009 | 4:39 PM ET Text Size Posted By: Larry Kudlow
Let me be very clear on the economics of President Obama’s State of the Union speech and his budget.
He is declaring war on investors, entrepreneurs, small businesses, large corporations, and private-equity and venture-capital funds.
That is the meaning of his anti-growth tax-hike proposals, which make absolutely no sense at all — either for this recession or from the standpoint of expanding our economy’s long-run potential to grow.
Raising the marginal tax rate on successful earners, capital, dividends, and all the private funds is a function of Obama’s left-wing social vision, and a repudiation of his economic-recovery statements. Ditto for his sweeping government-planning-and-spending program, which will wind up raising federal outlays as a share of GDP to at least 30 percent, if not more, over the next 10 years.
This is nearly double the government-spending low-point reached during the late 1990s by the Gingrich Congress and the Clinton administration. While not quite as high as spending levels in Western Europe, we regrettably will be gaining on this statist-planning approach.
Study after study over the past several decades has shown how countries that spend more produce less, while nations that tax less produce more. Obama is doing it wrong on both counts.
And as far as middle-class tax cuts are concerned, Obama’s cap-and-trade program will be a huge across-the-board tax increase on blue-collar workers, including unionized workers. Industrial production is plunging, but new carbon taxes will prevent production from ever recovering. While the country wants more fuel and power, cap-and-trade will deliver less.
The tax hikes will generate lower growth and fewer revenues. Yes, the economy will recover. But Obama’s rosy scenario of 4 percent recovery growth in the out years of his budget is not likely to occur. The combination of easy money from the Fed and below-potential economic growth is a prescription for stagflation. That’s one of the messages of the falling stock market.
Essentially, the Obama economic policies represent a major Democratic party relapse into Great Society social spending and taxing. It is a return to the LBJ/Nixon era, and a move away from the Reagan/Clinton period. House Republicans, fortunately, are 90 days sober, as they are putting up a valiant fight to stop the big-government onslaught and move the GOP back to first principles.
Noteworthy up here on Wall Street, a great many Obama supporters — especially hedge-fund types who voted for “change” — are becoming disillusioned with the performances of Obama and Treasury man Geithner.
There is a growing sense of buyer’s remorse.
Well then, do conservatives dare say: We told you so?
I have an uncle with financial problems. As of Jan. 1, he was $280,000 in debt. But that’s OK, he makes about $43,000 a year. The problem is, he spends about $74,000 per year, putting him $29,000 further in debt each year. There is good news however: He’s fi gured out a way to get his finances in order. Next year, instead of spending $74,000, he’s only going to spend $76,000. Hmmm... that won’t work. He’s going to have to get more money somehow. He claims to now have the solution. He has a son who has worked hard all his life and become very successful. If my uncle could only get his son to pay his fair share toward my uncle’s overall welfare, he could bring in an additional $1,000 a year. That should solve the problem. But wait, my uncle has 48 other kids who depend on him, either partially or entirely, and they keep screaming that they don’t have enough. If he doesn’t give them more next year, they may suffer due to my uncle’s cruelty and lack of compassion. At this rate, my uncle can never get out of the hole he has dug. Did I mention that his is Sam, and he’s your uncle, too? A fi nancial adviser would call this scenario insane, unsustainable, but we keep trudging forward (or maybe backward), as if we have a real plan, when, in reality, we’re continuing to spend 40 percent more than we make every year, with no end in sight. The numbers I’ve used are actual 2011 and 2012 (projected) budget numbers, rounded off and divided by 5 million to make them easier to understand. The $1,000 from Uncle Sam’s son represents the extra revenue Obama wants to bring in by taxing the wealthiest Americans. The “48 other kids” represent the 48 percent of Americans who pay no income tax. Everything is in proportion. America would have to nearly double its revenue just to break even every year, and it would still take 28 years to eliminate the debt. That would require doubling the taxes on every single taxpayer — not just the 1 percent. Can we really afford [that]? Isn’t it obvious that the real problem in this country is spending? There just aren’t enough tax dollars available to feed this grossly overbloated federal government. Conversely, at the present rate, the national debt will double again in less than 10 years. This will not only rob everyone’s Social Security and other benefits, it will place a huge burden on the next generation. We are robbing from our own children. Is there anything more despicable than that?
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