When the far-left economic columnist Paul Krugman at The New York Times called the new budget proposal “Obama’s impressive budget…” it is time to bury your cash in the forest. Because at the same time that public approval of Obama averaged out at 62.4% on Saturday, February 28 on realclearpolitics.com, his budget is proposing more than $3.6 trillion in spending in an attempt to buy us out of the current recession. It will not work.
The ongoing giveaway of government cash is driving Obama’s popularity. Tens of millions of Americans, many of whom pay no taxes, are expecting the money directly, and so they approve of his performance. Meanwhile tens of millions of other Democrats are unrealistically optimistic about this approach even though it always has failed in the past. Because they see that stingy George Bush was a bad man and that Obama is a demi-god. Or at least that is what the New York Times always has maintained.
As recently as 2006, however, during a period in which more than one economist was calling it the best American economy ever, liberals were trashing Bush every minute. Which shows their disconnect between reality and liberals’ reflexive rage at conservatives. Who would not want today to return to the conditions of 2006?
Obama’s plan to give away all this easy money ignores the essential fact that our current economic mess was caused in the first place by easy money (credit) via millions of unsecured home loans. Throwing more easy money at the problem will only make the economy worse by further subsidizing the previous failure. In short, Obama is doubling down on the crisis in a very dangerous way.
Here are some of the numbers:
*Obama is planning to let the “Bush tax cuts for the rich” expire in 2010, raising the rate from 35% to 39.6%, which was the rate under Clinton. But the 35% rate is not a “Bush tax cut”. It was simply the Bush-era tax rate. There is no set number at which a reduction is a “cut” unless you assume, as liberals do, that all money belongs to the government and that any reduction in that government ownership is a “cut” in the tax rates.
*Obama plans to raise federal taxes on the top 2% of wage earners to 39.6% to fund his plans. But the Wall Street Journal said that if Obama took ALL of the income of the top 2%, that he could not solve the budget deficits he is proposing, which are $1.75 trillion for 2009 and $1.17 trillion for 2010. These are huge increases, in just two years representing almost 25% of all the debt incurred by the United States since 1787.
Yet already the top 2% of taxpayers are paying 35% of the federal taxes, and tax increases on wealthy Americans have in the past caused big drops in economic activity as they did leading up to the depression of the 1930s. Many in the top 2% are small business owners who are creating the vast majority of jobs in America. When Obama raises their taxes, particularly at this fragile time, they will have less capital to invest, will produce fewer jobs and less wealth, and end up creating less revenue overall for the Treasury.
In New York City recently, mayor Michael Bloomberg said that out of a population of 8 million people, that 40,000 wealthy individuals were paying more than 60% of the city’s taxes! So why chase them away or make them less productive by taxing them even more?!
*That $1.75 trillion deficit is 12.3% of our total national wealth (Gross Domestic Product or GDP) of $14.2 trillion. It is the largest percentage deficit since World War II when military spending pushed federal spending over 45% of GDP and the deficit to almost 25% of GDP.
*Under Obama federal spending is going to be about 27% of GDP in 2009, and 25% in 2010. During the Reagan boom years, federal spending reached about 24% of GDP, and that was a time when military spending was 150% of what it is today, in order to confront the Soviet Union and finally bring it down by strengthening our defenses.
*By 2013, Obama says his deficit will be only $533 billion, or 3% of expected GDP. But this is highly unlikely to happen because his growth projections are considered far too optimistic and he will in the meantime load up huge amounts of new spending.
Obama’s budget is going to cause these other economic changes:
*Businesses are going to pay more taxes in a “cap and trade” scheme, under which emissions are capped and limited. This is going to cause prices to rise because it is yet another tax on business, this time over energy use. This will send more jobs overseas.
*Spend $150 billion on ‘alternative’ energy including wind power, which is as inefficient as ethanol. Only continuing subsidies are keeping the ethanol industry alive. And all this new money is a gift to Al Gore and his wind-power friends for an energy source that is highly inefficient.
*The plan will limit the value of deductions for charitable gifts. This will cut charitable contributions at the same time that it shifts power over charities to the government. The government then can decide which charities it wishes to support.
*A $634 billion ‘downpayment’ on a 10-year ‘health reform reserve’ which the New York Times describes as “a downpayment to finance disease prevention, wellness programs and research on cost-effective treatments to ultimately cut health costs.”
Two things to think about: Further federalizing health care will be putting our health system in the hands of the government while we at the same time are acknowledging that our public education system is an unmitigated and costly disaster. And Obama never will address the three factors that are causing health care costs to rise in the first place – Democrat trial lawyers getting rich while costs spiral out of control as health care workers need more and more insurance to protect against lawsuits; unionized health care workers, who are overwhelmingly Democrat, getting exorbitant salaries, pushing up health costs for all; and Democrats’ successful effort to kill the “managed care” programs of the 1990s which were very effective at capping costs.
*More government help to pay college tuitions, which shifts the exorbitant costs of college to the taxpayer rather than asking the universities to contain their costs. This is a gift to Obama’s college-professor supporters who have been jacking up tuitions far beyond the rate of inflation over the last 30 years.
*David Leonhardt of the New York Times says that Obama’s budget will “seek to reverse the rapid increase in economic inequality over the last 30 years”. Yet that increase has been caused by over-taxation, over-regulation and environmental extremism pushing good jobs overseas. In Michigan, Democrat labor unions harassed Japanese car companies that considered locating in Michigan. Those companies ended up locating in the South. And today, the states with the worst economies, even before the recession, are dominated by Democrats and their policies – California, New Jersey, Michigan, Massachusetts, Vermont, Rhode Island.
*Save $9.8 billion over 10 years by cutting agricultural subsidies to big agribusiness companies. This is a pittance compared to the spending that Obama is planning.
*Move toward an 83% reduction in ‘greenhouse gases’ by 2050. This essentially means that we will move away from oil, coal and natural gas, which will kill economic growth in the US and drive jobs overseas.
This is a far-left budget that is going to further indebt the public to government and weaken our economy in the long term. Remember how liberals caterwauled about the cost of the Iraq war? Yet we won that war, while Obama is planning to spend twice as much as we spent in Iraq in deficit spending in one year alone.
Please visit my website at www.nikitas3.com for more. You can print out for free my book, Right Is Right, which explains why only conservatism can maintain our freedom and prosperity.