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President Barack Obama has announced some basics of his "fiscal responsibility" plan, which he says will reduce the budget deficit to $533 billion by 2013. Obama, being a politician, spins this as "cutting the deficit in half." You aren't supposed to remember that Obama is ballooning the deficit to begin with.
Here's what it really is: If Obama is successful in pursuit of his goal, he will end his first term with the largest deficit year in the history of the country prior to 2008. He will leave a larger deficit in his last year than Bush left in seven of his eight years, and Obama will run up enormous deficits during every year of his four year term. Obama will oversee four of the five largest deficits in the history of the country. Obama will add as much or more to the debt in four years as Bush, the previous record holder, did in eight years. By 2013, the federal debt would be in the neighborhood of $15 trillion.
And then the entitlement crisis will begin, as 78 million baby boomers retire.
Excuse me if I'm not exactly excited by all this. I'm not as pleased as punch. I'm afraid my country is going to collapse under it's own weight. China has us by the short hairs, and if they stop buying our debt, we'll collapse like the house of cards we've become.
The final details of Obama's fiscal plan are to be announced on thursday, but here's how the Washington Post describes it:
"President Obama is putting the finishing touches on an ambitious first budget that seeks to cut the federal deficit in half over the next four years, primarily by raising taxes on businesses and the wealthy and by slashing spending on the wars in Iraq and Afghanistan," administration officials said.
In addition to tackling a deficit swollen by the $787 billion stimulus package and other efforts to ease the nation's economic crisis, the budget blueprint will press aggressively for progress on the domestic agenda Obama outlined during the presidential campaign. This would include key changes to environmental policies and a major expansion of health coverage that he hopes to enact later this year.
Can anyone doubt the abject stupidity of raising taxes on business during economic times such as these ? Obama is practically begging for further job losses, as American businesses would have a harder time competing. This is exactly the wrong thing to do. He should be taking measures to make American businesses more competitive, but instead he want to burden business with more taxation. If Obama's actual goal was to bring about the Great Depression II, this would be how to go about it. Obama wants to increase the capital gains tax from 15% to 20%, another investment and business killer of an idea if I ever heard one. Maybe his goal IS another Great Depression.
Obama wants to reverse the Bush tax cuts for the wealthy, and we are in such dire financial straits that this is probably unavoidable, though it will also have an economic dampening effect.
The President will reduce military spending as the Iraq war winds down. This is good, and it was going to happen anyway. I think military spending, as with ALL government spending, is too high. There is tons of waste is everything the government does, and defense is no exception.
When it comes to the entitlement crisis, the CATO Institute article I linked to previously contains this:
Boston University Professor Laurence Kotlikoff, who pioneered the concept of generational accounting to project federal tax burdens, calculates that with no change in current law, a child born today would have to pay 84 percent of his or her lifetime income in taxes to finance entitlement programs and other government spending.
This is why I never want to hear another liberal tell me they favor big government in order to "help the children," or because they are "compassionate." It doesn't help anyone to bankrupt the future. It's greedy, irresponsible, and twisted.
Obama's solution to the entitlement crisis is to INCREASE ENTITLEMENTS. Brilliant. While we need to do something about health care, Obama is putting forth the extremely dubious proposition that he can provide health insurance for 45 million uninsured people and reduce health care costs at the same time. Does anybody really believe this to be possible ? Logic says no. So does mathematics. Obama is supposed to unveil his health care plan very soon, so I'll reserve any further comment until then.
But Obama's plan isn't all bad. WaPo says this:
Overall, tax collections under the plan would rise from about 16 percent of the economy this year to 19 percent in 2013, while federal spending would drop from about 26 percent of the economy, another post-World War II high, to 22 percent.
Here, Obama wants to reduce federal spending from 26% of GDP to 22% of GDP.
HALLELUJAH, HALLELUJAH, HALLELUJAH !!!!!!!!!!!!!
Finally, somebody attacks the real problem. Spending at 22% is still way too high, but at least our President would be taking a small step in the right direction. I'm not sure how Obama would accomplish this in conjunction with all his big spending plans and his big spending Congress, but I'm eager to hear any and all details. Federal spending IS the main problem threatening to sink our economy. We can only drag so much dough from our taxpayers. Spending HAS to be brought under control. If we were a serious country, I'd recommend a taxation level of about 18% and a spending level of about 12% until our debt was paid off, but we're not a serious country, so that won't ever happen. We're a gimme country, and probably will be until the day that attitude drives us to become a third world country. After the destruction happens, I imagine we'll wake up a bit.
Nevertheless, Obama's pledge to reduce spending could be the change I can believe in. I'm still pretty skeptical, but at least now our President has my ear. At least now I hold out the HOPE that he's not just a crazy socialist. Yes We Can !