Yale Professor Jeffrey Garten: ' Obama's economic blueprint is based on rosy assumptions and political impossibilities' :: Political News and commentaries

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February 2, 2010

Yale Professor Jeffrey Garten: ' Obama's economic blueprint is based on rosy assumptions and political impossibilities'

Yale Professor Jeffrey Garten cuts right to the quick, and not only calls Obama's budget a sham, but also says it may take China and others to force us into doing what we cannot do ourselves:

[...] Set aside the fact that it is based on overly optimistic growth assumptions and policy decisions that are only remotely feasible. For example, the underlying economic projections on which the budget is based presupposes a full recovery, even though nearly all experts believe high unemployment on the order of 9 percent to 10 percent is likely to remain for all of next year and maybe beyond. From such a rosy scenario stems unrealistic projections of tax revenues and reduction of various social-welfare subsidies. The budget also assumes that a good deal of the Bush tax cuts are repealed, which is hardly a certainty.

And not only is Obama's budget a sham, so was candidate Obama's promise not to "pay for the recovery" on the backs of anyone outside of "the rich," as evidenced by this Reuters report: Middle class to get hit with "backdoor taxes":

The Obama administration's plan to cut more than $1 trillion from the deficit over the next decade relies heavily on so-called backdoor tax increases that will result in a bigger tax bill for middle-class families.

Update: Apparently Reuters has pulled the article, but Clyde Middleton still has the full article (Rumor has it the White House told Reuters to scrub the details of the middle class tax hit.)

Update 2: It turns out that the above-referenced Reuters story was inaccurate. The Obama budget wouldn't raise income taxes on the middle class. But it would increase marginal tax rates, threatening the long-run growth that sustains the well-being of Americans in all income groups. The truth is:

As Arthur Brooks, Alex Brill, and I have pointed out, the middle-class tax cuts that the president would extend have large revenue losses and do relatively little to promote economic growth. The tax cuts at the top that the president would allow to expire would significantly lower marginal tax rates on saving and investment and promote long-run growth. Letting those tax cuts expire would ultimately harm the middle class by lowering their wages.

As the truth about Barack Obama's agenda emerges, the more he looks like the ShamWow man.
Obama ShamWow.jpg