First, the bottom line: this budget is a total of slightly less than $4 trillion -- an increase of 32% from last year -- with a deficit of $1.75 trillion, more than the previous five years' deficits combined! Shazam!!! Though Obama is quick to say he'll cut that deficit in half by 2013, his plan also shows the deficit spiraling upward quickly for the four years after that. Not exactly inspiring. Now, let's look at some of the specific things in this fattened pig.
You know how we all gritted our teeth at the initial $700 billion to failed banks? At the time there was at least a semi-plausible argument for it (though many conservatives never did support it, and for good reason). Then, when that did nothing to help, some of those banks started coming back for seconds, and people got pissed. Fool me once, shame on you; fool me twice, shame on me. Well, we weren't fooled (though apparently Congress was...or bought off). Guess what? Obama's budget contains another $750 billion for troubled banks. Remember, one definition of insanity is doing the same thing over and over and expecting a different result. I think we can safely say Congress is insane now.
There are massive tax increases in this budget. Here are some
- the top two marginal income tax rates will be raised to 39.6 percent and 36 percent
- itemized tax deductions will be limited - taxes on capital gains will be increased from 15% to 20%
- a “down payment” of about $635 billion will be allocated to begin the nationalization of health-care (yes, you read that right - it's a done deal now)
- there will be a crackdown on offshore tax havens, netting about $220 billion
- there will be a crackdown on business transactions that are solely designed to reduce companies’ tax bills, netting about $5 billion
- the Advance Earned Income Tax Credit, a tax break for low-income earners, will be eliminated, netting about $882 million
- a cap-and-trade system that requires companies to buy credits if they exceed greenhouse-gas limits will be implemented, netting about $75 billion in 2012
- spending will be decreased on weapons systems and programs (remember this?)
There are a couple good things:
- 4 percent increase in the Pentagon’s budget to $534 billion
- agriculture subsidies also are targeted for reductions
- proposing to cut federal subsidies to student loan providers
Those good things are minor, though - the Pentagon increase is the smallest required by law. The ag subsidies only go to rich corporate farmers, so that's not really helping the little guy, anyway. And, cutting student loan subsidies is likely to increase the amount of reliance people will have on government for education assistance.
These are some of the tax increases specifically for businesses:
- $17 billion - Reinstate Superfund taxes
- $24 billion - tax carried-interest as income
- $5 billion - codify “economic substance doctrine”
- $61 billion - repeal LIFO
- $210 billion - international enforcement, reform deferral, other tax reform
- $4 billion - information reporting for rental payments
- $5.3 billion - excise tax on Gulf of Mexico oil and gas
- $3.4 billion - repeal expensing of tangible drilling costs
- $62 million - repeal deduction for tertiary injectants
- $49 million - repeal passive loss exception for working interests in oil and natural gas properties
- $13 billion - repeal manufacturing tax deduction for oil and natural gas companies
- $1 billion - increase to 7 years geological and geophysical amortization period for independent producers
In short, the administration’s budget contains $1.4 trillion in tax increases – tax hikes that will impact everyone, from small businesses, charities, and seniors to everyone who owns a 401(k) and anyone who flips on a light switch...uses electricity, drives a car, or relies on energy in any way. How does that promise of tax cuts for 95% of Americans look now? Just a little bit like a LIE, don't you think?
Here's another bit of wonderfulness on those tax 'cuts' that the administration is going to start sending out in a few weeks. First, let's be real - they're not cuts at all, since all income tax rates are either going up or remaining unchanged. It's simple redistribution - taking money from the top earners and giving it to the bottom earners, many of whom don't pay taxes at all. It is, in effect, welfare disguised as a tax 'cut'. But, it gets even worse. If you're one of those people who gets a tax 'cut' check, you would do well to save it, because that will count as income on your tax returns next year. That's right, the tax 'cut' that Obama is redistributing is going to be taxed as income! So much for your $65/month increase.
This deceptive liberal methodology is exactly what conservatives were warning of for months before the election, and now we're seeing it play out in real life. For those of you who voted for Obama: thanks. The coming economic disaster is your fault.
Just out of curiosity, how much does all this debt equate to per taxpayer? There are about 140 million taxpayers, so that equals just over $25,000 per person! Not family, person. That means Obama's budget is effectively heaping another $25K of debt onto each and every one of you. If you're married, you now owe $50,000 more. And all you get out of the deal is more government meddling in your life.
How much money is $4 trillion, really? Here's a great video that helps put it into perspective:
And that doesn't even take into account the baseline increases. Remember, government establishes its level of spending based on a certain percent increase from the previous year. So, if it's $4 trillion this year, it'll never go back down to less than that. It's a spiraling snowball of economic doom.
But that's only half of the story. This is just the spending side of things...what about the money coming in? Can we count on this plan's projected numbers? Uh...no:
The [budget's] 2010 forecast is more optimistic than the 1.5 percent growth rate estimated by the nonpartisan Congressional Budget Office in January or the February Blue Chip consensus for an increase of 2.1 percent.So, if less money is taken in than what he's projecting, that will only make things worse, right? Great. Charles Krauthammer commented this way on Obama's speech a few days ago when he unveiled this budget pig:
His projections are pure, deceitful fiction, based on figures that are hopelessly unrealistic, and even then they show America falling into more debt than a normal mind can conceive. It's no wonder Senator Judd Gregg -- the man Obama himself tapped to be Commerce Secretary -- is saying this is a plan that will bankrupt America.The president used the word "honest." That's astonishing. Look, all budgets are fiction. This one is fantasia.
Obama has promised to cut the deficit by the end of the first term in half. He does it by pretending that in 2011 there will be a growth in the economy of about 5.5 percent, and in the next year it will be over six.
Now, these are Chinese-level numbers, and even the Chinese aren't achieving them anymore. It is completely fictional, those numbers.
Next year he says we will grow at about 3.5 percent. Next year we could still be in negative territory.
The 'rich' are going to be the ones by far the hardest hit. The obvious problem in Obama's logic, then, is this (emphasis mine):
Obama's assumptions are particularly rosy, considering his plans to burden the economy with a crushing tax plan.That's the real misunderstanding of liberals. History and basic economics both show us that to tax something is to decrease that thing; similarly, to reduce taxes on something is to promote (and therefore increase) that thing. Obama is raising taxes on the highest earners in this country, on businesses, and on productivity. What does that tell you about what's about to happen under these new policies? Exactly.The 'rich' are going to get especially soaked. Basically, Obama is making the very dangerous assumption that increasing taxes don't affect taxpayer behavior.
Needless to say, he's wrong. And we all get to see just how wrong in a few years. Won't that be fun?
But what about those savings Obama touted in his speech? Just another deceit, as it turns out:
In his speech, Obama didn’t want his listeners to think he’s a big-government heir to Lyndon Johnson, so he talked of slashing waste. He said his team had begun going “line by line” through the budget, and “we have already identified $2 trillion in savings over the next decade.”It's unfortunate especially in light of the fact that there are already some signs of recovery, and some forecasters are now predicting we'll be back into strong growth by 2010. In fact, a number of top budget specialists -- some of whom attended Obama's fiscal responsibility summit -- recently warned Obama that the kind of long-term debt he's racking up will have major consequences. Of particular concern is the fact that China has funded about 3/4 of America's debt over the past four years, but there are now signs of economic hardship in China, so there is no guarantee that they'll keep funding our spending. If foreign investment dries up, the only other viable choice the U.S. government would have is to print its own money, but that will lead to serious inflation. We're stuck between a rock and a hard place, and Obama's policies are wedging us ever deeper in there.
In common parlance, “savings” is taken to mean . . . well, savings. But half of this $2 trillion is accounted for by Obama’s planned tax increases on the rich — in other words, he has identified revenue, not savings. Much of the rest is arrived at by assuming the Iraq War would cost $170 billion a year for the duration, even though Obama has long planned a drawdown. Obama portrays himself as ruthlessly paring back government when he is simply raising taxes and leaving Iraq.
But maybe this isn't that much different than in other tough times. Have we been here before? How does this all figure into history? Take a look (emphasis mine):
When do deficits go below 3% of GDP in President Obama's projections? Basically, never. Two years after his second term would end, in 2018, he projects them at 2.9%. But then they go back up to 3.1% in 2019, the last year of his projections.Folks, 3% of GDP is considered high for a deficit. The European Union sanctions it members if their deficits exceed that level. Obama can't even see his way to that low by 2019, much less a balanced budget.And how does he expect them to come down even that much? By assuming that by 2012, the last year of his first term, revenues will exceed the average of the previous ... 50 years ... for every year from then on. In short, he assumes unprecedented revenues to start flowing in, year after year, from 2012 onward. He also assumes unspecified savings in those years way past his first term.Concerning the short term, where numbers are more solid, don't even look at his budget if you are at all squeamish. He puts the deficit at 12.3% of GDP in 2009. Throughout the Great Depression, whether under Hoover or FDR, the deficit never exceeded 6% of GDP. Under Reagan, with his inherited recession and his tax cuts, it never exceeded 6% of GDP. Under George W. Bush, with his inherited recession and his tax cuts, it never even got to 4% of GDP.In fact, in only five years since 1930 has the deficit exceeded 6% of GDP: 1942-46. It has exceeded Obama's 12.3% only from 1942 to 1945. That was World War II. Then, defense spending was about 40% of GDP. Now it is about 4%.President Obama projects debt held by the public at 59% of GDP in 2009, and about 65% of GDP thereafter, as far as his projections go.You have to go back to Truman to see debts that high. And Truman was paying off World War II costs. It's been below 50% of GDP since 1957. For the first time since then, it will exceed that level this year, going from 41% to 59% of GDP in a single year.This is not what Obama fears; it is what he hopes. The reality will be even worse than his projections -- after Congress, the real behavior of the economy, and who-knows-what in terms of future bailouts, hurricanes, earthquakes, terrorist attacks, etc. are factored in.
Well, he was the candidate of hope. It's just unfortunate that he gave us such a foolish and irrational hope for something that just can't happen in any normal universe.
And there are other effects that will ripple down from this snowball that are even harder to calculate: the damage to charities and non-profit helping organizations. Think about it. What's one of the first things to go when you have to tighten your budget? It's not food or electric bills, right? No, it'll be charitable giving. Churches, charities, and non-profits all depend almost exclusively on the generosity of people who have a surplus of wealth every month, so when they start giving less, those helping organizations will shrivel and die. What happens to all the people who no longer have food and shelter provided by those organizations? My guess is they'll turn to the government, which is exactly what Obama wants.
Two of the worst provisions in this budget are health care and energy. I'll examine health care in a different post, but I do want to focus a bit on energy, the lifeblood of the American economy. The news isn't good.
In one of the budget's most ambitious proposals, the president plans to cap the emissions of greenhouse gases, forcing polluters to purchase permits for emissions that would be slowly brought down to 14% below 2005 levels by 2020 and 83% below 2005 levels by 2050. The sale of those permits, beginning in 2012, would reap $646 billion through 2019.Cap-and-trade energy policy could be enough to potentially destroy the American economy all by itself; when you combine it with all the other madness in this budget, it's a virtual guarantee. For more on the dangers of cap-and-trade see these links:
Potential Costs to America From Cap-and-Trade
The Obamessiah's Energy Plan: More And Less
The True Cost Of Green Legislation
Effect of the Lieberman-Warner Global Warming Legislation on States
By the way, this is the very same cap-and-trade system that recently collapsed in Europe. Obviously, then, why wouldn't we want to give it a try here? This one program alone is projected to cost a loss of as many as 4 million jobs and between $444 billion and $1.3 trillion dollars over the next two decades. That's why it failed so utterly in Europe. It'll fail here, too. And it's all to combat a hoax.
This entire budget is nothing more than a deliberate attempt to destroy the foundations of America - capitalism. It will heap mountains of debt onto future generations, institute monolithic control of every possible facet of American life in the hands of the federal government, and penalize the very same independence, initiative, and success that has made America what it is today. House Minority Leader John Boehner put it this way:
"First it was the stimulus, then the omnibus and now the budget," Boehner said during a speech to the Conservative Political Action Conference. "It's all a down payment on a new American socialist experiment."So, we must ask: what political ramifications are at play here?
"The spending barrage is just beginning," he added.
It's hard to say. While there will undoubtedly be plenty of people who will follow Obama blindly off a cliff, I think there are many more people who are about to get supremely pissed off at the vast overreach of government that is about to take place. Up until now, they've only paid attention to the sound bites - the 'tax cuts for 95% of Americans' crap that are outright lies. Once their taxes skyrocket, their freedoms get curtailed, and their way of life is ruined because of Obama's suggestion that we all sacrifice for the common good, they'll wake up. I think this paragraph at Powerline makes a great point:
Michael Barone has written that Obama was elected in November on the strength of a "top and bottom coalition." He carried high-income and low-income voters, while John McCain won a majority of middle-income voters. As the inevitable effects of Obama's policies become visible--higher taxes, inflation, prolonged weakness in the economy, depressed stock market--the "top" part of his coalition will begin to erode. That process likely began today.The question is - will there be too many on the bottom to overcome in bringing back some sanity in 2010? The actual rich have the option of cashing in their chips and leaving, moving to an island and sipping pina coladas in blissful ignorance. But what about the rest of us who don't have that option? We've got to deal with it somehow.
We need to tie the economic tsunami that is bearing down on us undeniably to Barack Obama.
By being armed with the facts and equipped with the confidence to share them, we need to boldly speak out on what truly caused this mess. Sure, the Republicans played their part over the past few years, and we all share some blame for re-electing the same worthless politicians over and over...but there's a distinct difference, and let there be no mistake about who sent us over the cliff. I read a terrific illustration of this once (I can't recall where it was) that said it was one thing to be driving 80mph in a 70mph speed zone, but it's entirely different to be racing along at 150mph on that same stretch of highway. It's laughable for the Democrats to complain about what the Republicans have done at this point in time, and we need to make sure we can point that out.
Here's the biggest challenge we face in Obama. Remember Orwell's concept of doublethink? Obama embodies it:
Even as he expands government, Obama forswears any interest in expanding government and says he’s scaling back: “Everyone will have to sacrifice some worthy priorities for which there are no dollars, and that includes me.” Really? The only programs he said he’d cut were ineffective education programs, useless weapons systems, and subsidies to agribusiness, and his budget increases discretionary spending by 12 percent next year. To paraphrase Bob Dole, where’s the austerity?And his followers have wholly bought into it. It's going to be darn near impossible to persuade them of the truth. That's why the focus needs to be on all those other people who aren't drenched in Kool-Aid, who are very intelligent but so far uninformed (thank you, mainstream media). Just look at the numbers - about 130 million people voted in the last election, and there are over 300 million in this country; that means there are 170 million or so who didn't vote, and could very well be part of that silent public who needs the truth. It is critical to pierce the veil of ignorance that has been cast over this country, and to show everyone what is really going on, who caused it, and why.
Obama the writer-president prides himself on a facility with words that has fueled his political rise. He clearly respects words, including their power to manipulate and mislead. “A good catchword,” Oliver Wendell Holmes said, “can obscure analysis for 50 years.” To pass a vast program changing the relationship of American government to its citizens, Obama only needs to obscure analysis for about a year.
This brings us back once again to the core reason Obama is deliberately destroying the American economy - he doesn't want to fix the economy, at least not yet. He does, however, truly want to re-make America. He's a socialist, and he believes that capitalism is unfair and so our system of civilization should be changed into something he thinks is more 'fair'. Once he achieves that, he'll worry about the economy and the other problems we face. Until then, he's going to grab for power and entrench his own bureaucracy as deeply as possible. So, if he wreaks enough havoc and causes enough destruction on the American economy, he's hoping there will be enough desperate people who will grasp his lofty rhetoric (without bothering to see his horrific policies) and willingly follow him into his version of a socialist paradise where the government controls everything...for the good of the people, of course.
There's my two cents.
Sources:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aY8vuevw1NKs
http://michellemalkin.com/2009/02/26/spendzilla-fun-facts-about-obamas-budget-busting-budget/
http://hotair.com/archives/2009/02/26/obamas-new-budget-25000-per-taxpayer/
http://www.powerlineblog.com/archives/2009/02/022931.php
http://www.americanthinker.com/2009/02/obamas_busted_budget.html
http://gatewaypundit.blogspot.com/2009/02/senator-judd-gregg-us-is-facing.html
http://hotair.com/archives/2009/02/27/the-obama-plan-massive-tax-hikes/
http://www.politico.com/news/stories/0209/19403.html
http://hughhewitt.townhall.com/blog/g/5f19e514-b8db-4c14-a5f2-a8c8cf823fb5
http://corner.nationalreview.com/post/?q=MTNlZGI3OTI0NjJkNjk4OTVjNzc3ZGNjYTQxNmMyMWY=
http://online.wsj.com/article/SB123564748462081261.html
http://gatewaypundit.blogspot.com/2009/02/obama-introduces-cap-trade-costing.html
http://minx.cc/?post=283503
http://gatewaypundit.blogspot.com/2009/02/economist-peter-morici-slams-obamas.html
http://article.nationalreview.com/?q=ZjY0OGQxNmMxZDgzMGRiOGEwNDY4N2E5MmFlZDUyNTY=&w=MA==
http://minx.cc/?post=283328
http://www.boston.com/news/nation/washington/articles/2009/02/23/a_warning_for_obama_on_deficits/
http://minx.cc/?post=283279
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