After listening to various arguments about President Obama’s Budget, I decided to spend some time and actually read it. If you take it at face value, it’s actually quite an impressive document. However, if you use a modicum of thought and skepticism, it becomes apparent that all is not as it appears, to put it kindly. The budget document is available at http://www.whitehouse.gov/omb/ and is entitled “A New Era of Responsibility - Renewing America’s Promise.”
Below are excerpts from the budget, followed by my comments.
Budget:
“For decades, too many on Wall Street threw caution to the wind, chased profits with blind optimism and little regard for serious risks—and with even less regard for the public good.”
Comment:
This is true. However, what is absent is Congress’ apparent lack of regard for the public good. Congress writes the laws under which Wall Street operates. Congress rewarded over $300 billion in lobbying by repealing Glass-Steagall during the Clinton Administration, allowing behemoth insurance companies like AIG to cross over into other industries and take risks that ultimately led to its collapse. It is Congress who also urged Freddie Mac and Fannie Mae to make loans to individuals with questionable credit. Congress is quick to (and rightfully so) demonize certain Wall Street CEOs, but to date I have not seen one elected official accept any blame for the financial collapse. This is one reason why less than 20% of U.S. voters think Congress is doing a good Job.
Budget:
“Over the past eight years, policy was made behind closed doors. In many cases, unprecedented levels of secrecy have been invoked to block public scrutiny. In such an environment, the well connected and those who are able to hire high-priced lobbyists were able to carve out huge loopholes in our tax code”
Comment:
Absolutely right. However, it has been a bi-partisan fleecing. The comment above appears to imply (the past 8 years = Bush administration), that the problem is rooted in practices belonging and limited to the prior administration, which is simply a subtle way to bash George W. Bush and deflect attention away from the real issue. The main goal of much of the money that flows through Washington is influence. Companies and other organizations spend billions of dollars every year to gain access to lawmakers on both sides of the aisle in Congress in an attempt to influence their thinking. In 2008, $3.24 Billion was spent lobbying Congress.
50 industries accounted for over $1 billion of this amount. In fact, as Senator, Barack Obama received the most money of any member of Congress from these industries in 2008. His receipts were more than the next 5 highest-collecting members of Congress combined. He also received more Fannie Mae and Freddie Mac Campaign contributions while he was in Congress with the exception of Christopher Dodd. You will not find this in the Budget or President’s message. These figures are available at OpenSecrets.org - Center for Responsive Politics.
Budget:
“The Budget also begins to restore a basic sense of fairness to the tax code, eliminating incentives for companies that ship jobs overseas and giving a generous package of tax cuts to 95 percent of working families.”
Comment:
Fairness in the tax code? Tax cuts to 95 percent of working families? Last year, 32% of all tax returns filed were from people who paid no federal income tax at all. Another 8% were considered non-filers because their income was below that required to file a return. That’s 40% who pay NOTHING (source - the Tax Foundation) – these people would not be getting a tax cut, they would be getting a welfare payment funded by those who have earned the money. This number will only go up under the Obama tax plan. Let’s call it what it is, and thank the producers for their generosity. On the issue of corporate incentives, companies ship jobs overseas because corporate taxes in the U.S. are among the highest in the industrialized world at 35%, second only to Japan.
Budget:
“According to the Internal Revenue Service, the Nation’s top 400 taxpayers made more than $263 million on average in 2006, but paid income taxes at the lowest rate in the 15 years in which these data have been reported. In constant dollars, the average income of the top 400 taxpayers nearly quadrupled since 1992.”
Comment:
This needs to be put into context. First of all, they have hand selected the top 400 taxpayers out of approximately 140 million individual income tax returns. These are the business elite who are leaders in their fields, run profitable companies, create and provide millions of high-paying jobs, and drive the economy. Without these individuals creating jobs and paying taxes in the U.S., we would have a vastly different country. Also, since the super-rich do not need to rely on salary and wages, the majority of their income is in the form of long-term capital gains, which is taxed at 15%. This is why their effective tax rate is so low. You will not find these facts in the Budget or President’s message.
Budget:
“In fact, the top 1 percent took home more than 22 percent of total national income, up from 10 percent in 1980”
Comment:
True, but what has been omitted is the fact that the same top 1 percent earners also pay 40% of all taxes collected. 1 of every 100 taxpayers pays $40 out of every $100 in taxes. How is this fair? You will not find this fact in the Budget or President’s message.
This section of the budget also includes a chart (on page 11) entitled ‘Top One Percent of Earners Have Been Increasing Their Share’ by well known French economists Thomas Piketty and Emmanuel Saez. Was Piketty and Saez’ data chosen because we do not have enough qualified economists in the U.S. capable of producing a chart? No, perhaps there’s a much more powerful reason. The Wall Street Journal reported: “Thomas Piketty and Emmanuel Saez, French economists, are rock stars of the intellectual left. Their specialty is ‘earnings inequality’ and ‘wealth concentration’. Piketty-Saez is a moral argument for raising taxes on the rich.”
Budget:
"There's nothing wrong with making money, but there is something wrong when we allow the playing field to be tilted so far in the favor of so few”
“It's a legacy of irresponsibility, and it is our duty to change it."
Comment:
What is meant by “change?” Does this mean re-distribute? This type of language is divisive and irresponsible. Top producers have earned what they have, contribute the most to charity, the most to community, and pay most of the taxes collected. Demonizing these people will not help anyone. What it will accomplish is to drive high wage earners into re-locating out of the country along with their tax dollars; or otherwise incent them to work less since more of their income will be taxable.
Budget:
“Give the public five days to review all nonemergency bills before they are signed into law.”
Comment:
Obama signed the Lily Ledbetter Fair Pay Act, the SCHIP/cigarette tax hike, and the spending bill all with less than the five-day waiting period promised.
Budget:
“The Administration will continue to work with the Congress to provide greater transparency and accountability of earmarks, and to ensure that the American people are made well aware of how and where Federal money is spent.”
Comment:
Greater transparency? Even lawmakers in Congress do not know how taxpayer money is being spent. Not one member of Congress read the spending bill before they voted on it.
Budget:
“Over the past eight years, fiscal recklessness replaced fiscal responsibility.”
“In light of this inheritance of irresponsibility, the Administration in its first weeks has taken the initial steps to restore fiscal discipline by requesting and signing into law an economic recovery bill that is free of all earmarks.”
Comment:
This is the height of hypocrisy. Here are the facts. Bush expanded the federal budget by $700 billion through 2008, for which he was chastised. Obama would add another $1 trillion to this.
Bush became the first President to spend 3 percent of GDP on federal anti-poverty programs. Obama has already increased this spending by 20 percent.
Under Bush, there was a $2.5 trillion increase in the public debt through 2008.
Obama’s budget would add $4.9 trillion in public debt from the beginning of 2010 through 2016.
Overall, President Obama’s budget would add twice as much debt as President Bush over the same number of years. Yet it was Bush who was chastised and ridiculed by the left; the same people who are now defending unprecedented spending by Obama.
In fact, our 44th president has proposed running up a greater deficit than the previous 43 presidents combined.
And, there are over 9,000 earmarks in the 2009 $410 billion omnibus spending bill.
Budget:
“One of the other big drains on family budgets and on the performance of the economy as a whole has been the increasing costs of health care. Yet the evidence suggests that substantial reductions in costs could be achieved without sacrificing the quality of health care delivered.”
Comment:
True. What Congress and the President should, but will very likely not do, is implement the Texas model of tort reform which has been an overwhelming success. There, medical malpractice awards have been capped and frivolous lawsuits against doctors greatly decreased. The result? Over 7,000 new doctors have moved to Texas in 3 years. Doctors and hospitals have been able to cut costs and care for patients. Charity care has increased. Money previously spent defending bogus lawsuits and paying huge insurance premiums is now helping to care for the poor.
This would not cost the taxpayers a dime. Who would suffer? The 535 members of Congress and the Lawyer lobby. This has not taken place at the Federal level because Congress has no incentive to implement reform or to change anything. From 1998 - 2008, total contributions to Congress from Lawyers and Law Firms exceeded $800 Million. (Source OpenSecrets.org - Center for Responsive Politics). This was the most of any industry during this time.
Budget:
“Aim for Universality. The plan must put the United States on a clear path to cover all Americans.”
Comment:
The problem is Obama wants to nationalize healthcare by creating an enormous healthcare bureaucracy by socializing medicine with taxpayer money. This has been tried in the U.K and Canada and these systems are far inferior to the system of care we have in the U.S., even with our high costs. When has the government improved the efficiency of anything?
Budget:
“Every time an uninsured person walks into an emergency room because there is nowhere else to turn, a hidden tax is imposed on other citizens as premiums go up.”
Comment:
True, but what is not explained is the fact that of the estimated 47 million uninsured, a large percentage of these are illegal aliens living in the United States. This places a huge burden on the entire healthcare system, on all taxpayers, and ultimately raises everyone’s insurance rates. Yet, these are the very people to which liberal lawmakers want to grant citizenship status, since they would represent a huge base of registered voters.
Budget:
“In the Budget, the United States will continue to build on its commitment to save lives through increasing investments in global health programs, including in areas such as maternal and child health, family planning and other core health programs”
Comment:
Commitment to save lives? Obama announced that he was reviewing the regulation protecting medical workers who choose not to perform certain procedures like abortion, if they morally object to it. Repealing the regulation would essentially force doctors to perform abortions.
In addition, Obama signed an executive order reversing the Mexico City Policy. This prevented the U.S. government from providing funding for family planning services or groups that offered abortion-related services in other countries. It prohibited those who receive U.S. foreign aid from promoting abortion. Reversing this rule allows U.S. taxpayer dollars to be used by groups offering abortion-related services abroad, and does not restrict recipients of U.S. foreign aid from promoting abortion.
Budget:
“Put the united States on a Path to double foreign Assistance.”
Comment:
This President is proposing unprecedented spending and deficits. We still have no adequate plan to fund the retirement of 75 million baby boomers. The U.S. owes over 5 trillion to foreign governments. We’re helping other countries (who don’t like us very much) to get rich by buying hundreds of billions of dollars per year worth of foreign oil because lawmakers refuse to pass legislation allowing us to drill for and sell our own oil and natural gas. We have a $70 billion per month trade deficit. People have been operating under the assumption the U.S. is a wealthy nation. What we are is analogous to an organization which must continue to generate massive and ever-increasing revenue to fund its massive and ever-increasing debt load. What’s the end game? How can we even consider aiding foreign countries when we’re in need of assistance?
Those who stand to lose the most in this spending free-for-all are those not yet old enough to vote. Obama plans to add an additional $48,000 per household to their debt. Is this the type of "change" America voted for?
Budget:
“Our problems are rooted in past mistakes, not our capacity for future greatness.”
Comment:
Mr. President, our greatness is rooted in solving future problems, not in our capacity to find past mistakes.
If you’re an American citizen and well informed, you have cause for concern.
If you’re an American citizen and not concerned, you’re not well informed.
Wednesday, April 22, 2009
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