Some Comments About Obama's Latest Budget

[BeAChooser]

Ok, let's talk about Obama's proposed 2011 budget of $3.83 trillion dollars, the highest ever. Plus, it would increase spending in FY 2010 to $3.72 trillion. And it projects a 2010 deficit of $1.56 trillion … 10.6 percent of the economy.

And that's with Obama raising taxes on Americans earning $200K or more by canceling the tax cuts Bush enacted.

And that's with Obama raising taxes on businesses by hundreds of billions of dollars … tax cuts that will either be passed on to consumers or result in fewer jobs.

And that's with Obama freezing for three years spending on various programs (such as canceling NASA programs like the Constellation).

And that's with $40 billion more in taxes on energy producers … taxes that will surely just be passed on to consumers, even those making less than $200,000. Not to mention cutting US production of energy, thus eliminating jobs.

And that's with $90 billion in "fees" on banks (even those that didn't participate in the bailout which is the stated rationale for the fee), which will likely only be passed on to consumers in various forms … even those making less than $200K a year.

And that's assuming the economy doesn't continue to flounder. It assumes (rather rosily) that the economy will grow 2.75% in 2010, 3.8% in 2011 and 4% in 2012 and 2013. Many experts are predicting much lower growth.

Now this new budget projects slashing the federal deficit to $1.27 trillion in 2011, $828 billion in 2012 and $727 billion in 2013. But do any of you remember the projections (promises) in last year's budget submittal? Here's a comparison:

http://manyeyes.alphaworks.ibm.com/manyeyes/visualizations/presidents-fy-2010-vs-feb-fy-2011-

And what does the 10 year projected deficit (according to the OMB) look like now? Well add up the numbers in the above linked chart and you get $10.5 trillion (2009 through 2019). That compares with OMB's revised estimate last year (after initially predicting a $7.1 trillion cumulative deficit) of $9 trillion. And since Obama actually only inherited a projected increase of 4.4 trillion (not $8 trillion as he claimed), $6.1 trillion of the increase since he took office is solely his administration's responsibility. That's equivalent to an increase of over $160,000 each all all tax paying Americans.

By the way, note that the budget also contains a 100 billion dollar jobs package. Guess the first TRILLION just didn't do the job … but this time it's sure to work.

Sen. Judd Gregg (R)-NH told CNBC Monday.

"We're going to get ourselves into deep, deep trouble here if we continue to pursue this course of fiscal insanity, in my opinion. It's not just this year, which is the issue of stimulus, it's the year after, it's the year after that and the year after, eight years out the president is projecting a trillion dollar deficit, a trillion dollars every year for the next eight years, that's not acceptable. You just can't do that to this country because you're basically taking us down the road of insolvency."

But maybe that's the plan under the Cloward/Piven strategy. You folks have heard of that, right?

 

[BeAChooser]

For some reason, none of JREF's *skeptics* want to discuss Obama's budget.

But that won't stop me...

http://www.nytimes.com/2010/02/02/us/politics/02deficit.html?hp

By President Obama’s own optimistic projections, American deficits will not return to what are widely considered sustainable levels over the next 10 years. In fact, in 2019 and 2020 — years after Mr. Obama has left the political scene, even if he serves two terms — they start rising again sharply, to more than 5 percent of gross domestic product.

… snip ...

For Mr. Obama and his successors, the effect of those projections is clear: Unless miraculous growth, or miraculous political compromises, creates some unforeseen change over the next decade, there is virtually no room for new domestic initiatives for Mr. Obama or his successors.

Yet, Obama is busy promoting/enacting just such initiatives.

In the early years of the Clinton administration, government projections indicated huge deficits — over the “sustainable” level of 3 percent — by 2000. But by then, Mr. Clinton was running a modest surplus of about $200 billion

Yeah and guess what happened to make that possible? The Clinton administration was prevented from enacting government run health-care, Republicans took over Congress and forced massive reductions in welfare and other government programs (The Contract With America), and Clinton got the benefit of the Peace Dividend which occurred only because Republicans won the cold war. Is there a lesson for us here? Hmmmmm?

 

[BeAChooser]

http://www.powerlineblog.com/archives/2010/02/025508.php

In 2006, the last year in which the Republicans controlled Congress, the deficit was $248 billion--one-seventh what Obama proposes for next year.

In his budget announcement today, Obama said: "[O]ur government is deeply in debt after what can only be described as a decade of profligacy." So he proposes to put the country far more deeply in debt through profligacy of a sort that was undreamed of just a few years ago.

Obama said: "[W]e can't simply move beyond this crisis; we have to address the irresponsibility that led to it, and that includes the failure to rein in spending...." But his budget doesn't rein in spending, it increases it over last year's precedent-shattering total by around $100 billion.

Obama said: "t would be a terrible mistake to borrow against our children's future to pay our way today...." His budget, in just the next year, will borrow $1.6 trillion against our children's future to pay our way today.

Does anyone else sense a disconnect between what Obama says and what he does?

 

[Gangularis]

His budget and spending sucks.. we'll see where it goes in 4 years. I'm still glad he was voted in over the other guy/gal...

 

[BeAChooser]

http://www.nytimes.com/2010/02/02/us/politics/02budget.html

Mr. Obama’s budget director, Peter R. Orszag, said the president would keep his campaign promise to cut the deficit he inherited in half by the end of his term.

Really?

Does anyone really believe this promise (even as bogus as it was in the first place)? A little history is in order.

http://www.humanevents.com/article.php?id=30851

02/25/2009

… snip ...

In the first seven fiscal years overseen by the high-spending President Bush, the annual federal budget deficits were truly obscene. Yet, they never exceeded $500 billion.

In fiscal 2002 through 2008, according to the historical tables published by the Office of Management and Budget last fall, the annual deficits were $157.7 billion, $377.5 billion, $412.7 billion, $318.3 billion, $248.1 billion, $162 billion and $410 billion. (The Congressional Budget Office has since calculated that the fiscal 2008 deficit actually ended up being $454.8 billion.)

President Obama said Monday that his "administration has inherited a $1.3 trillion deficit" for fiscal 2009.

… snip ...

"And that's why today I'm pledging to cut the deficit we inherited in half by the end of my first term in office," President Obama said at his summit.

But what does that mean? The administration says President Obama's promise to "cut the deficit we inherited in half" means he will reduce it from $1.3 trillion in fiscal 2009 to $533 billion in fiscal 2013.

This $533 billion deficit -- that President Obama vows will be the lowest annual deficit he runs in any of the next four years -- is larger than any deficit the profligate President Bush ran before this recessionary year.

In fact, President Obama's planned $533 billion deficit for fiscal 2013 is more than twice as large as the $248.1 billion deficit Bush ran in 2006 and more than three times as large as the $162 billion deficit Bush ran in 2007.

And now Orszag is moving the goal posts but claiming they are in the same spot. Orszag says they will accomplish this halving feat not based on reducing the deficit to $533 billion in the last year of Obama's first term but based on reducing the deficit that year AS A PERCENTAGE OF GNP to half of what it was when Obama took office. But in reality, the lowest they are now promising is $706 billion … 32% higher than the original promise. In fact originally they were promising a lowest deficit that would have been less than a third the size of the deficit Obama supposedly *inherited*. And I cite the leftist NYTimes for that fact:

http://www.nytimes.com/2009/02/22/us/politics/22budget.html?ref=politics

Measured against the size of the economy, the projected $533 billion shortfall for 2013 would mean a reduction from a deficit equal to more than 10 percent of the gross domestic product — larger than any deficit since World War II — to 3 percent, which is the level that economists generally consider sustainable. Mr. Obama will project deficits at about that level through 2019, aides said.

 

[MikeMangum]

His budget and spending sucks.. we'll see where it goes in 4 years. I'm still glad he was voted in over the other guy/gal...

Where it goes in 4 years is multiple trillions of dollars deeper in debt. That's not hard when the federal government alone is spending ~45% of GDP. We will soon have a higher public debt/GDP ratio than we had during WWII.

ETA: just ran across this, which I thought was very characteristic of Obama: say one thing, do the opposite...

http://www.youtube.com/watch?v=t1q8cJwdt6E&feature=player_embedded#

We simply cannot continue to spend as if deficits don’t have consequences. As if waste doesn’t matter. As if the hard earned tax dollars of the American people can be treated like Monopoly money. As if we can ignore this challenge for another generation. We can’t.

This, on the very day that he submits the largest budget ever to Congress, with largest deficit ever in real or nominal dollar terms, and the largest deficit compared to GDP since WWII. But no, we "simply cannot continue to spend as if deficits don’t have consequences".

Ok Barry.

 

[BeAChooser]

http://www.heritage.org/Research/Budget/wm2787.cfm

Over the 10 years in which both budgets overlap (FY 2010-2019), this year's budget would spend an additional $1.7 trillion and run up an additional $2 trillion in budget deficits (see Table 1).

… snip …

In addition, the President's budget would:

- Permanently expand the federal government by nearly 3 percent of gross domestic product (GDP) over 2007 pre-recession levels;

- Raise taxes on all Americans by more than $2 trillion over the next decade (counting health care reform and cap and trade);

- Raise taxes for 3.2 million small businesses and upper-income taxpayers by an average of $300,000 over the next decade;


- Borrow 42 cents for each dollar spent in 2010;

- Run a $1.6 trillion deficit in 2010--$143 billion higher than the recession-driven 2009 deficit;


- Leave permanent deficits that top $1 trillion in as late as 2020; and


- Double the publicly held national debt to over $18 trillion.

…snip …

After harshly criticizing President Bush for running $3.3 trillion in deficits over eight years, President Obama's budget would run $7.6 trillion in deficits over what would be his eight years in the Oval Office.

 

[BeAChooser]

http://www.zerohedge.com/article/obamas-budget-has-one-small-missing-piece-63-trillion-dollars

Today, to much fanfare, the administration released its ridiculous $3+ trillion budget … snip … we are much more concerned with what is not included, namely $2.8 Trillion and $1.9 Trillion of MBS guaranteed portfolios at Fannie and Freddie, and an additional $782 billion and $809 billion in company debt outstanding for the two GSEs, respectively. This amounts to a total of $6.3 trillion in liabilities which should be counted toward the budget. … snip … we are here to remind them about the omission, and also to remind Mr. Orszag, who himself, in that long ago 2008, espoused that these companies should be put on the Federal Budget.

Interesting ...

And scary ...

And guess which political party was primarily responsible for the growth of Fannie and Freddie and the failure to oversee their financially unsound practices (which played a large role in the collapse of the economy in 2008 and the recession)?

Here's a hint. It starts with the letter "D".

 

[BeAChooser]

No wonder the democrats here at JREF don't want to participate in this thread.

 

[joobz]

Yup. Obama is spending more than I'd like.

 

[KoihimeNakamura]

You are of course right, that there are no reasons whatesoever he'd want to keep spending. No recession, no economy issues, no states severely cuttin...

.. Waaaaiit a minute.

 

[KoihimeNakamura]

http://www.zerohedge.com/article/obamas-budget-has-one-small-missing-piece-63-trillion-dollars



Interesting ...

And scary ...

And guess which political party was primarily responsible for the growth of Fannie and Freddie and the failure to oversee their financially unsound practices (which played a large role in the collapse of the economy in 2008 and the recession)?

Here's a hint. It starts with the letter "D".

Hmm.

Zero Hedge is a popular and controversial finance blog, founded by Dan Ivandjiiski, a former hedge fund analyst banned from working in the brokerage business for insider trading

(from wiki)

Hmmm. And it's partisan!

 

[oggiesnr]

For as long as Pork Barrel Politics rule then the deficit is going to be out of control.

For as long as Defence is excluded from any cuts program then the same will happen.

Steve

 

[Magyar]

Well I don't know much about economics, BUT I DO know ******** when I see it!


First - Republicans couldn't even be honest about counting the Billions for the 2 wars they started, but as usual OH SO eager to blame ANY ONE ELSE for their crap! As Usual it's always hold other people responsible for their behavior but not their own.

And that's with Obama raising taxes on Americans earning $200K or more by canceling the tax cuts Bush enacted.

Right, cause taking away a price break from someone who doesn't deserve it, and didn't use it for it's intended purposes is raising their taxes. ONLY in Repugnican land.

And that's with Obama raising taxes on businesses by hundreds of billions of dollars … tax cuts that will either be passed on to consumers or result in fewer jobs.

Cause again, we simply MUST continue to give money to corp that are earning billions in profit so that it will be even easier for them to take jobs out of the US and destroy our economy. Cause THAT's the job of the Govt. To make sure that private interests are served over the Nations, Got it!

The rest of it is just more ignore the fact that

AFTER the LARGEST tax cuts in histroy for the LEAST deserving our country is in the worst ecomonic state since the depression, But your SOLUTION is MORE of the same.

Wall st. Banks that got saved and are handing out RECORD bonuses are STILL not lending money to small businesses.

Mortgage companies are charging RECORD high margins on the few loans they are giving out and STILL whining about how they pay too much at nearly ZERO percent for money from the govt.


YEA that'll work.

 

[Praktik]

Wait BAC, you neglected to adjust your title to include some formulation of "stuck on stupid".

Just don't wanna see you lose points on continuity.

 

[BeAChooser]

You are of course right, that there are no reasons whatesoever he'd want to keep spending. No recession, no economy issues, no states severely cuttin...

.. Waaaaiit a minute.

Waaaaaiit a minute, Rika. Aren't you forgetting something?

We've had recessions, economy issues and state cutbacks in the past and never needed this level of deficit spending in order to recover. Never.

In fact, we recovered far faster in those recessions than it appears we will in this one (I've pointed out the facts supporting this many times here at JREF). The reason for such a sluggish recovery now is the government interference, which has created such a cloud of uncertainty that businesses are hesitant to do the things that in the past led to a prompt recovery, strong growth and falling unemployment. Government tampering with free-market mechanisms, raising taxes and increasing spending, rather than doing just the opposite.

For example, just look at the recession in the early 80's. It saw unemployment just as high as now (almost 11%). It saw real GDP shrink at an annual rate of 6.4%, just as steep as the steepest drop in the current recession. But unlike Obama, Reagan cut taxes and spending. And as a result, during the recover (unlike now), GDP growth rates were phenomenal: 5.1%, 9.3%, 8.5%, 8.0%, 7.1%, etc … well above what is being predicted after this recession.

In fact, did you ever look closely at the charts comparing this recession to the ones in the early 1990s and 2001? Up until 11 months into this recession (till about August of 2008), market losses were tracking with those:

Then all of a sudden those losses started tracking those of the crash of 1929. What happened about August/October of 2008? The government interfered in a massive way. Bush signed the $700 billion dollar bailout package and everyone in Washington started talking about the need for massive spending to *stimulate* the economy. Do you think that's just a coincidence?

Calvin Coolidge was right when he said "Four-fifths of all our troubles would disappear, if we would only sit down and keep still." Obama and the democrats need to sit down and stop making things worse.

Besides, hasn't the Obama administration told us the recession is over.

http://www.marketwatch.com/story/bernanke-declares-the-recession-over-2009-09-15

Sept 15, 2009

WASHINGTON (MarketWatch) -- Federal Reserve Chairman Ben Bernanke said Tuesday that the recession has ended, at least based on the numbers.

So why is all the deficit spending needed now? Hmmmmmm?

 

[Beerina]

Hockey stick oh noes!


So here we sit, faced with an interesting question: Given the cyclic nature of the economy (thank you, differential equations) we have elected politicians panicking, trying to spend to a recovery a year earlier than it otherwise would happen, so they don't get kicked out.

Sounds like a little conflict of interest there, go figure.


Anyway, this massive amount of spending does have a downside as investors wonder whether taxes will have to go up. If they do, it makes their investments more risky, as it's tougher to profit. So this will have a drag on the investment side of the recovery.


Quite frankly, I'm a bit scared. The economist in charge is this huge expert on the Great Depression. I presume he's aware of this effect, that taxing the hell out of profits, which appeals to the common man, can delay recovery? Or, as we sit right now, just the possibility of it is enough.

 

[BeAChooser]

Originally Posted by BeAChooser
And that's with Obama raising taxes on Americans earning $200K or more by canceling the tax cuts Bush enacted.

Right, cause taking away a price break from someone who doesn't deserve it, and didn't use it for it's intended purposes is raising their taxes.

Oh. So you are saying that those people didn't deserve what they earned. And that it wasn't their money to spend as they wished. That's so telling as to where you are coming from, Magyar. No wonder you love Obamanism.

Quote:
And that's with Obama raising taxes on businesses by hundreds of billions of dollars … tax cuts that will either be passed on to consumers or result in fewer jobs.

Cause again, we simply MUST continue to give money to corp that are earning billions in profit

Again, why is profit such a dirty word for you? Perhaps because the economic philosophy you are more comfortable with is communism? And besides, most of those taxes will be on small businesses, not giant corporations. People often making less than $200K a year and putting in long hours to do it.

so that it will be even easier for them to take jobs out of the US and destroy our economy.

Oh that's right. You democrats think that the way to keep corporations in the US is to raise their taxes. You must be totally unaware the the US already has the highest corporate taxes in the world.

(http://www.americanthinker.com/2009/03/us_companies_pay_the_highest_t.html

Yes, you read that right. American businesses, large and small and across all industries pay from 35% to 41.6% of their income in combined state and federal taxes. The 41.6% maximum rate is scheduled to rise to 46.2% in 2010 when President Obama's promised tax increases are implemented. Compare that to socialist France where companies pay only 34.4% in taxes, to China where the rate is 25%, or Russia which levies a mere 24%. Corporations in Ireland, Europe's fastest growing economy for the last 18 years, pay just 12.5% in taxes.

… snip ...

Corporate Tax Rates, US vs. Other Free-Market Democracies

Last year the Tax Foundation, a nonpartisan educational organization with a solid reputation for independence and credibility, released a report that compared the tax rates of US corporations (across all 50 states) with 29 other countries that accept the principles of representative democracy and free-market economy (referred to as OCED countries, 30 total). Their study reveals the surprising finding that US companies are already at a significant competitive disadvantage in the world economy.

When compared to other OECD countries:

- 24 US states have a corporate tax rate higher than top-ranked Japan.
- 32 states have a corporate tax rate higher than third-ranked Germany.
- 46 states have a corporate tax rate higher than fourth-ranked Canada.
- All 50 states have a corporate tax rate higher than fifth-ranked France.

… snip ...

Among other surprises, all 50 US states have a combined corporate tax rate higher than even Italy, Spain, United Kingdom, Greece, Sweden, Norway, Finland, Austria, Switzerland, Denmark, Hungary, New Zealand, Australia, Mexico, Turkey, and South Korea. All 50 US states have higher tax rates than 27 of the other OCED countries.

When compared with companies based in Ireland with a 12.5% flat tax rate, US corporations that face an average 39.3% rate are taxed at 3.1 times Ireland's rate. When contrasted with Iceland (18%), Turkey (20%), Poland (20%), and Switzerland (21.3%) US companies pay roughly twice the tax rates of their foreign counterparts.

Even our cousins across the pond levy lower rates. The United Kingdom requires 30% in taxes while the US companies pay on average 39.3%; that's a 31% premium.

And you want to raise them even higher? Is it any wonder they are leaving this country?

Mortgage companies are charging RECORD high margins on the few loans they are giving out and STILL whining about how they pay too much at nearly ZERO percent for money from the govt.

LOL! You understand what is going on on this issue just as well as you do levels of corporate taxation. In other words, not at all.

You see, the FED is about short term interests rates. Mortgages are about long term interest rates. The FED cuts rates to stimulate the economy. That has an inflationary result. Also, massive deficits (like those Obama is building) are expected to lead to increased inflation. Inflation makes mortgage rates rise. So it really isn't a surprise that mortgage companies are charging record high rates. They are only protecting themselves from the government's interference.

Another reason mortgage companies are charging high rates is that, like it or not, they have to show a profit (that nasty word) to remain in business. To do that, they must make up for the massive losses they've taken in their portfolios and the increasing number of delinquencies and foreclosures, and tighter requirements on loss reserves and capital required by the banks in order that they get the loans to hand out mortgages. Losses and foreclosures, in large part, caused by interference by the government the past several decades (see Fannie and Freddie for a detailed explanation). But I'm sure all that went right over your head or through your ears.

 

[BeAChooser]

Just don't wanna see you lose points on continuity.

I'm not the one losing points here, Praktik.

 

[lomiller]

Pork Barrel Politics...

Has nothing to do with it. Non-defense non-mandatory spending makes up an insignificant portion of the US budget. If you want to make meaningful spending cuts it has to come out of defense and mandatory programs like Social Security, Medicare and Medicaid. (The later must come from Congress and the President has no say in mandatory spending, hence the “mandatory part”)

Anyone who says they want spending cuts but isn’t actively campaigning to cut these items is simply fooling themselves or deliberately deceiving others.