Looking for a good joke? Did you hear the one about how President Obama is making painful spending cuts in order to reduce the budget deficit?
There is so much to dislike in this budget that it’s hard to narrow it down to the worst ideas. But here are my top ten:
1. Red ink as far as the eye can see.At no point over the next ten years does the president propose that the government actually balance its budget. In fact, the budget deficit never drops below $600 billion. By 2020, the deficits are over $700 billion again and rising.
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2. Greek-style debt. Overall, the president’s budget adds roughly $13 trillion to the national debt over the next decade. By 2020, our gross debt reaches $26 trillion.
3. More spending.Unprecedented budget deficits, unsustainable debt — and what does the president propose? Spending $53 billion over ten years on high-speed rail. Nothing better symbolizes the triumph of narrow special interests over the national interest. In total, the president’s budget includes $8.7 trillion in new spending over the next ten years on everything from education to “green jobs.”
4. Locking in past spending increases. After increasing domestic discretionary spending by 21.4 percent over his first two years in office, the president now proposes to freeze spending, thereby locking his previous increases in place. It is important to remember that Obama’s increases came on top of huge increases during the Bush administration. Thus, for example, under Obama’s budget federal spending on education will have increased by more than 100 percent since 2001. The Department of Energy’s budget is up 134 percent. Even the Department of Agriculture will spend 112 percent more than it did before George W. Bush became president.
5. Bigger government. Under the president’s proposed budget, the size of government would actually increase from the current 23.8 percent of GDP — the second-highest ratio of government spending to GDP since Word War II — to 24.8 percent.
6. Higher taxes. The president’s budget imposes $1.6 trillion in new taxes on families and businesses over the next decade. This includes more than $900 billion in higher income taxes and $435 billion in unspecified transportation taxes.
7. No entitlement reform.Last month, the Congressional Budget Office reported that Social Security had begun running permanent budget deficits. Medicare is facing future budget shortfalls larger than the entire budgets of most countries. In fact, if the unfunded liabilities of entitlement programs were to be included in our national-debt figures, our total future indebtedness could top $127.5 trillion. The president’s response to this looming crisis was to do . . . nothing.
8. Faux Defense Cuts. The president’s budget includes $78 billion in defense cuts recommended by Secretary Gates over the next five years. If implemented, those cuts would amount to barely 2 percent of Pentagon spending over that period. But, as with much of the administration’s budgeting, the cuts turn out to be the usual Washington game of calling a reduction in projected increases a “cut.” In reality, the military’s base budget (excluding the costs of the wars in Iraq and Afghanistan) will increase from $549 billion to $553 billion. Some conservatives may be pleased that Pentagon spending will be at the highest level in history, but it is impossible to make any serious effort at deficit reduction without addressing defense.
9. Phony assumptions. “Rosy scenario” is back. The president’s budget numbers are based on the assumption that the economy will grow, in real terms, 3.6 percent in 2012 and 4.4 percent in 2013. That’s much faster than CBO or private economists forecast, and nearly a quarter point faster than the economy has grown coming out of the last five recessions. The president also projects a dramatic decline in unemployment, with the jobless rate dropping to 6.3 percent in 2014 and then falling to just 5.3 percent in 2017 and beyond. Maybe, but not likely, especially given the impact of the administration’s proposed tax increases and the looming implementation of Obamacare. And speaking of Obamacare, the administration continues to insist that the new health-care law will reduce the deficit by nearly $200 billion, when an accurate accounting suggests that it will actually increase the deficit by as much as $823 billion.
10. More money for Obamacare. The budget includes $465 million next year to implement the Patient Protection and Affordable Care Act. The Centers for Medicare and Medicaid Services (CMS), the agency charged with implementing most of the law’s major provisions, such as Medicare changes, Medicaid expansion, insurance reforms, and the exchanges, will hire an additional 650 bureaucrats. Moreover, CMS director Donald Berwick told reporters that additional Obamacare funding is scattered throughout the budget.
U.S. Debt-to-GDP Ratio Tops 97% with No Debt Reduction Proposals
Many corporate-owned politicians, pundits and other propaganda peddlers appear to be deliberately distorting the difference between "debt" and "deficit" while at the same time heralding "deficit reductions" that are anything but. To clarify in context, the U.S. national "debt" is how much the American government owes, and is presently $14.1 trillion and rising. The U.S. federal budget "deficit" is how much that debt increases in any given fiscal year, and for the current year is projected to be $1.5 trillion. In the real world, a "deficit reduction" would be an actual or mandated increase in revenues or decrease in expenditures which has the effect of decreasing a given year's deficit (ie. decreasing the increase in the debt for that year). And unless and until a deficit reduction is large enough to not only eliminate the deficit but create a "surplus" that is applied to debt retirement, A DEFICIT REDUCTION DOES NOT REDUCE THE DEBT. Furthermore, reducing planned increases in future spending may avoid a contingent deficit increase, but that is not the same thing as actual deficit reduction.
The American Sheeple need to snap out of their TV/iPhone/Facebook-induced trances and listen closely to what the talking heads are saying: The national debt is not the same thing as the federal budget deficit. Deficit reductions do not necessarily (and in fact rarely) result in debt retirement. Much of what Washington is currently proposing is not really deficit reduction anyway. And even if it was, it's all too little and too late:
No, not laughing yet. Where is the great public clamor for high speed rail? Or is it coming from the same "public" clamor for pigtail, mercury filled lights, reduced capacity toilets, electric cars with 2 hour recharge intervals, and ineffective dishwashing machine detergents?
After reading Burton W. Folsom’s New Deal or Raw Deal?: How FDR’s Economic Legacy Has Damaged America and reading this article, one gets a better perspective on how President Obama’s budget and his economic policies will affect the nation in the near and far term.
In the book on page 2, Roosevelt’s Secretary of the Treasury Henry Morgenthau in 1939 is quoted as follows: “We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong…somebody else can have my job. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises….I say after eight years of his Administration we have just as much unemployment as when we started….And an enormous debt to boot.” Folsom writes in summary of the quote: “Morgenthau thereby summarized a decade of disaster.” FDR had seven budget cycles to correct the depression economy. Comparatively, regarding FDR’s era chronicled by Folsom, have we today had as much damage done in 2009-2011 to our debt and deficit standing as was done in the decade of the 1930s?
Along with the political cronyisms of the time, examples of FDR’s anti-business and tax the rich scenarios are numerous throughout the book. However, after Pearl Harbor President Roosevelt then needed all the corporation and CEO horsepower that he had been oppressing during the depression to produce the instruments of war. Throughout the war, he began to soften his policies towards the entrepreneurial workings of the free-market. How convenient.
Parallels of the mid to late 1930s economic/political culture and today’s current situations and policies are striking. One area of difference between the two eras is that Morgenthau was looking towards the possibilities of war; we now are in two wars and still refuse to down-size our efforts at home and abroad. World War II was fought with nearly full employment at home; we now also fight a two front war; however, we are doing this with unacceptable levels of unemployment.
Obama is not to the level of statesmanship or leadership of FDR as a president. Therefore, can we expect more than a “decade of disaster?”
According to watchingfrogsboil’s analysis: “Deficit reductions do not necessarily (and in fact rarely) result in debt retirement. Much of what Washington is currently proposing is not really deficit reduction anyway. And even if it was, it's all too little and too late”, we on the earth today will not live long enough to retire the accumulated debt of this country. The damage truly has been done.
It is actually pretty funny. You couldn't make this stuff up if you tried to write a script for the most inept President in history with fiscal policy and budgets.
This is like President Monty Python and his Merry Men.
The ones that will be rioting in the streets will be the Unions and government workers when they realize the system is collapsing, and they are the first to go down with the ship. That will be a time of laughter, sadly for only a little while, then the rest of us will join them in misery and cry as well.
@ watchingfrogsboil: Great explanation of the differences between debt, deficit, and deficit reduction. I'm gonna write that down. We would all do well to keep those distinctions clearly in mind every time we hear or talk about our nation budget crisis.
Obama not only is incompetent, he is a coward. He wants Republicans to do his work for him so he can point his finger of blame and say Republicans are hurting the poor. Obama couldn't lead his way out of a paper bag left open!
