President Barack Obama will submit a $3.8 trillion budget proposal for fiscal 2011 to Congress today. One might hope that given last year's $1.4 trillion budget deficit was an all-time high and the President promised a spending "freeze" in last week's State of the Union, this budget might signal a change in direction from the White House. No such luck. President Obama's new budget is full of billions of dollars in new spending for failed government programs, higher taxes on American families and businesses, and deficit spending for as far as the eye can see.
At the very least, the budget document President Obama is submitting today exposes his spending "freeze" promise for the fraud that it is. As outlined last week, the administration would halt spending increases for only a $447 billion sliver of our total budget, with a total of $15 billion to be saved. That is less than half a percent off of last year's spending. Worse, this isn't even an across-the-board spending freeze; it is an aggregate one. So "spending cuts" in parts of the budget are immediately channeled to others. ...
Given the best case scenario, the most the White House hopes to save from this supposed spending "freeze" is $15 billion. And that is easily dwarfed by just the $100 billion President Obama wants for his Economic Stimulus II plan. Then there are the tax hikes, including higher taxes on families earning more than $250,000 and a brand new tax on financial institutions to pay for the failed automobile union bailout.
And what is the end result of all of President Obama's new taxes and spending? A record national debt.
But don't worry - you'll only be paying for this record debt for a short time; the bulk of the burden will fall on your kids and grandkids. And what about the future? Obama is promising this will save us a trillion dollars over the next ten years, right? Not so fast, my friends:
According to the White House Office of Management and Budget, the United States will post a $1.556 trillion deficit in fiscal 2010, which the Obama administration claims will be reduced to $1.267 trillion in fiscal 2011, thanks to their budget. Given this administration's budget forecasting record, however, expect that final deficit number to go up. The Obama administration now forecasts $5.08 trillion in debt over the next five years; that is 35% more debt than they forecast just 12 months ago.
Yep, their forecast is off by over $2 trillion! If you're visual like me, here you go.
And, once again, let's stop complaining about 'inheriting' this debt problem, Mr. President:
And remember, Barack Obama voted for the spending and budgets while he was in the Senate, so he can't complain about 'Bush's spending' without pointing the finger at himself.
Rep. Paul Ryan, the ranking Republican on the Committee on the Budget, has a good review of the giant budget, including this graph, which shows clearly what is happening with the deficit.
This kind of reckless spending is dangerous, and cannot possibly take place without some serious ramifications. Let's hope they're not catastrophic!
Scott Hodge of the Tax Foundation responds to the budget this way:
"This budget should put a stake in the heart of Keynesian economics once and for all. If government spending was the engine for economic growth, the U.S. would now be the economic wonder of the world and the president would not be tying our fortunes to a grab bag of targeted tax credits to 'create jobs.'"
"The biggest problem facing the ability of the U.S. economy to compete in the global economy is our high corporate tax rate," Hodge argues, "now second highest among industrialized countries to Japan. Rather than lower the rate, the president is proposing $209 billion in tax increases on U.S. companies trying to compete abroad. Not only is the U.S. corporate tax rate out of step with the rest of the world, but the administration is out of step with the realities of global business today."
The GOP, on the other hand, has a real plan that would lead to genuine fiscal sustainability and responsibility:
There you go, Mr. President. Now, what are you going to do about it?
During his State of the Union Address, Obama said that if "anyone from either party has a better approach that will bring down premiums, bring down the deficit, cover the uninsured, strengthen Medicare for seniors, and stop insurance company abuses, let me know." Earlier that day, Representative Paul Ryan (R-WI) introduced his Roadmap for America's Future Act of 2010, which provides all of the above.
The Congressional Budget Office's (CBO) analysis of Rep. Ryan's legislation proves the plan would accomplish President Obama's goals by reforming entitlements, reining in government spending, and setting the country on a long-term path to economic prosperity.
CBO found that the Roadmap would reduce Medicare and Medicaid spending, slightly increase Social Security spending, and lower tax revenues. Overall, these changes would reduce federal budget deficits and the federal debt. Federal outlays would decrease from 26 percent of Gross Domestic Product in 2009 to 19 percent in 2020 and eventually 14 percent in 2080. After 2030, federal revenues would be maintained at 19 percent of GDP. By 2080 the budget would experience a surplus of approximately 5 percent.
There's my two cents.