'Amateur hour at the White House' :: Political News and commentaries

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March 21, 2009

'Amateur hour at the White House'

Take, for example, the huge difference between Obama's budget and the realities exposed by the Congressional Budget Office:

[...] The Congressional Budget Office on Friday said that, if the Obama budget unveiled last month were approved, the federal government would run deficits averaging nearly $1 trillion a year over the next decade. The cumulative deficit from 2010-19 would be $9.3 trillion, according to the report -- $2.3 trillion more than the administration forecast last month.

One main reason for the difference in budget estimates is a difference in economic forecasts, with congressional views of long-term growth less optimistic than those of the White House -- in part because of the long-term effects of so much government borrowing. The White House said its projection is more in line with those of private-sector economists. Congressional forecasters also use different accounting rules that tend to be more conservative.

The CBO analysis showed deficits would run around 4% of U.S. gross domestic product for much of the next decade, even after the economy recovers. Administration officials have testified that such high deficit levels wouldn't be sustainable over the long run. Their own budget blueprint predicted deficits would run at around 3% of GDP after the recession has run its course.

The new estimate offers more fodder to the president's Republican critics, who have consistently attacked him in the early days of his administration for heavy spending. "If there was ever any doubt that the administration's budget spends too much, taxes too much and borrows too much, it's gone," Senate Minority Leader Mitch McConnell said.

Does this detract the Obama administration from their huge spending spree-based agenda? Not the least bit:

[...] "In total, our budget would bring discretionary spending for domestic programs as a share of the economy to its lowest level in nearly half a century," Obama said in his weekly radio address.

"And we will continue making these tough choices in the months and years ahead so that as our economy recovers, we do what we must to bring this deficit down."

The president said his administration was scouring every corner of the budget to produce two trillion dollars in deficit reductions over the next decade.

As The Economist puts it, Obama's plans are built on "Wishful and dangerous thinking":

[...] Although Mr Obama's revenue plans are not clad in the ambitious rhetoric of his spending initiatives, they are just as profound. To pay for his plans and get the deficit down to manageable levels, he would return top tax rates to where they were before George Bush cut them, extract more from the rich by capping their deductions, increase taxes on corporations and auction carbon-emission permits. At the same time, he promises permanent tax cuts for 95% of workers.

Sadly, these plans are deeply flawed. First, Mr Obama's budget forecasts that the economy will shrink 1.2% this year then grow by an average of 4% over the following four years. It might if the economy were to follow a conventional path back to full employment. But this is not a conventional recession. The unprecedented damage to household balance sheets could well result in anaemic economic growth for years, significantly undermining the president's revenue projections. The economic outlook continues to darken and the stockmarket has already tumbled to 12-year lows. Mr Obama may either have to renege on his promise to slash the deficit to 3% of GDP in 2013 from more than 12% now, rein in his spending promises or raise taxes more.

Second, Mr Obama's scattershot tax increases are a poor substitute for the wholesale reform America's Byzantine tax code needs. Limiting high earners' deductions for mortgage interest, local-government taxes and other things is certainly more efficient than raising their marginal tax rates even more. But it would be better to replace such deductions for everyone with targeted credits, abolish the alternative minimum tax (an absurd parallel tax system that ensnares a sizeable chunk of the upper middle class), and implement a broad sales tax. Rather than simply eliminating the sheltering of corporate income from abroad, Mr Obama could have broadened the corporate tax base and lowered the rate. In sum, Mr Obama could simultaneously raise more revenue and make the tax code simpler and more conducive to growth. But he hasn't.

Finally, by asking only the richest 2% of Americans to pay more, Mr Obama is building his vision of a more activist government on a shaky foundation. (More)

Regardless of Obama's wishful and dangerous thinking, and the flowery rhetoric he uses to defend it, his socialist (bodering on Marxist) health care, education and energy plans can only be paid for by taxing all of us, not just the rich. So just how much will President Barack Obama's budget cost each of us? Would you believe $25,573.48?

[...] The projected 2010 budget of $3.552 trillion can be found on page 114 of the "New Era of Responsibility" budget here.

The US Census bureau estimates that the current US population is 304,059,724. Dividing the $3.552 trillion by that gives us close to the $11,833 that Drudge came up with. ABC's Jake Tapper reports that there wil be $989 billion in new taxes over the next decade.

I'm an American taxpayer and the starkest figure is what this could cost me. The latest figure I could find for the number of US taxpayers is 138,893,908 returns in 2007 here. By my reckoning, that's $25, 573.48 each.

And that amount is what it would cost each of us, assuming every American taxpayers paid taxes totaling $25,573.43 over the next decade which we know isn't a valid assumption. Clearly, Obama's budget and plans are not the kind of "change" Americans were "hoping" for.

Posted by Hyscience at March 21, 2009 10:19 AM

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