Posted by: Debby Durkee | March 10, 2010

Running up the nation’s debt.

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Running up the nation’s debt.

Two posts deal with the recent Congressional Budget Office’s report on President Obama’s 2011 budget. Neither paints a rosy scenario for our economic future under this Congress and president. Funny, this hasn’t gotten a lot of press, has it? This isn’t pretty, and those in charge  aren’t listening.

Spend, borrow, tax.

James C. Capretta over at National Review Online has found (as we all can guess) that Obama has greatly expanded the entitlement (welfare) state with his proposed health care plan and has added another entitlement: Pell grants for college. As Obama continues to blame Bush for handing him a mess (which he did) – he doesn’t do anything to improve upon the mess he was handed, he only adds to it.

…The problem is that President Obama is a world-class spender. He wants to pile massive new commitments on top of a bloated and unreformed government. He is willing to raise taxes to pay for some of his wish list, but far from all of it. For the rest, he plans to run up the nation’s debt with reckless abandon. Snip –

The biggest problem in the federal budget is runaway entitlement spending. And so what would the Obama budget do? Increase entitlement spending, of course. By $1.9 trillion over ten years, according to CBO. In 2020, federal entitlement spending would reach $3.3 trillion, up from $2.1 trillion in 2009.

The administration has been touting a supposed three-year spending “freeze” as evidence of its determination to cut the budget back. But only a very small portion of the budget would be frozen, and only after the administration had spent two years stuffing in more funding. CBO expects that discretionary spending under the Obama budget, excluding war funds and Pell Grants (which would become an entitlement), will increase by $0.5 trillion over ten years.

Two years ago, CBO expected total federal spending to reach $4.3 trillion in 2018. Now, if the president’s budget plan were adopted, CBO projects spending would exceed $5.0 trillion in 2018.

Between 2010 and 2030, the population age 65 and older is expected to rise from 41 million to 71 million people. CBO projects spending on Social Security, Medicare, and Medicaid in 2030 will reach 14.4 percent of GDP, up from 9.8 percent today. That will be like adding a whole new Social Security program to the budget without any additional revenue to pay for it.

The federal government is drowning in unaffordable entitlement commitments. President Obama’s response is to spend, entitle, and borrow even more, while he can. And then, with an even bigger government locked into the “baseline,” he plans to pivot and use the prospect of a debt crisis he made much more probable to push for a massive tax increase.

Unfortunately for the president, the public is already onto this game. And they want no part of it.

They think we’re stupid when they’re the stupid ones. We’re not compassionate if we don’t want Obamacare. Yes, we are. Compassionate enough to know you don’t take the whole ship down to save a drowning man. Read it all here: http://corner.nationalreview.com/post/?q=Mjc5ZTIxMjlkYTg1Y2VmNzA0ZjQwMmM5YTQyNDJjMTY=

Higher debt and deficits than Obama projects.

Peter Ferrara over at The American Spectator has also reported on the CBO findings and sees nothing but higher debt and deficits. He also has a reminder for President Obama on the deficit.

Just for the record, the deficit for President Bush’s last year in office, 2008, was $459 billion. The deficit for the last budget adopted by a Republican-controlled Congress, for fiscal 2007, was $161 billion. The deficit this year according to Obama’s budget is $1.6 trillion. The question for President Obama, who was glad to take the office but not the responsibility, is not what he inherited, but what he did with what he inherited. And what he and Congressional Democrats did was turn a fiscal deficit into a fiscal and economic catastrophe for America.  Snip –

Ferrara then goes into the president’s plan to deal with all of his spending increases by raising taxes, which is usually counterproductive, but of course Obama wants what’s fair, in his mind. More detail at the link, but here’s just a taste of what’s in store.

The President’s health proposal would also increase the HI payroll tax rate by 0.9 percentage points on upper income earners. Together with the above changes, that would effectively raise the top tax rate by 24.3%, and the second rate by 21%.

President Obama proposes as well to increase the capital gains tax rate by 33% to start. But his health care takeover bill would also extend the 2.9% Medicare payroll tax to capital gains, for a total capital gains tax rate increase of 53%. The same 53% rate increase would apply to corporate dividends, an income source for many retirees.

Moreover, the President would restore the death tax at a rate of 45%, another layer of taxation on capital income. He would also slam business with another $425 billion in tax increases, including the $90 billion bank tax, nearly $40 billion on oil, gas and coal producers, $122 billion to essentially double tax the foreign earnings of American companies, plus all the tax increases on business in the health takeover bill. And we have not even considered yet the cap and trade tax President Obama also supports, which would involve another $1 trillion to $2 trillion in increased taxes.

None of this is going to raise the revenue projected. Increasing tax rates reduces incentives for productive activity because producers are allowed to keep less of what they produce. So they produce less, and the tax rate increase raises less revenue than expected as a result. Double taxing the overseas earnings of American companies will result in less overseas earnings to tax, with some American companies transforming into foreign companies as a result, taking their earnings with them. Taxing businesses by $3,000 per uninsured worker will mean fewer jobs, and lower worker earnings to tax…

We won’t be able to get rid of these crooks, liars and thieves until November, and the Crook-in chief in 2012. Where will we be as a country in the intervening years? And, how will we dig ourselves out of this hole? Please read all of Ferrara here:  http://spectator.org/archives/2010/03/10/the-devil-is-in-the-deficits

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Responses

  1. Yes, it’s a scary scenario, especially for us retirees. We’ve already seen our “nest egg” decrease by about half, now to have anything we take out or sell to live on, be decreased by another half or more is frightening. Even if we do have anything left to leave to our children and grandchildren, they want another half of that! We don’t have another “new country” we can colonize we have to take this one back and make it the great country we all love. May God continue to bless us!

  2. This president won’t be happy until we’re all destitute and like the third world country he’s trying to drag us down to. How can anyone not see this? Why do the media and the normal liberals not scream to high heaven about this? Do they not see it; do they see it and hope they’re wrong; do they see it and think they won’t be affected by it? Or do they just hide their head in the sand hoping it will all work out just fine because the “smart” guys are in charge?

  3. Or is it that they feel the same way as the DC “elite”…this country deserves to be taken down? This country deserves to have no more than those third world countries have. They (the media) are part of that “elite” crowd and it’s not them that deserves the hardship, just those greedy producers, investors, stock holders. They are the real villains of this country. Whatever the reason, it doesn’t really matter, what matters is that we show them they are wrong and we won’t put up with it!


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