Obama Budget Proposal and the U.S. Congress: Hey, Big Spender
Here we go again . . . more prattle and prevarication from our government. First, the good news about Mr. Obama’s budget proposal: he plans to attack the entitlement-reform issues as a compromise component to the more conservative U.S. Congress. The overall deficit reduction Obama proposes is $4.3 trillion when you add up the $1.8 trillion offer for the next ten years with the $2.5 trillion already established by Obama White House and U.S. Congress in the last two years. Obama is clearly sucking the GOP into the lion’s den by making public his proposal which he made to the House Speaker some months ago.
Here is the juicy part—the $1.8 trillion cuts would replace the sequester cuts already underway in our government largess. Where will Obama get the new money? He will tax the rich and attack the entitlement reforms for Social Security and Medicare. So, he reveals, with this plan, how much he does not worry about the elderly or the rich. He plans to reduce the overall federal deficit from 76 percent of GDP to 73 percent of GDP by 2023. Wow, Mr. President nice try! This is too slow when you compare it to Congressman Ryan’s plan that would bring the deficit down to 55 percent of GDP by 2023 and balance the budget…something Democrats and liberals cannot seem to do these days.
The revelation is that all this discussion seems to be about spending, but what a difference between the two parties. Obama spends, about $3.78 trillion in 2014 and $46.8 trillion over the next ten years. House GOP proposals spend $3.53 trillion and $41.5 trillion over the next ten years. What a difference in spending visions? Tax revenues are closer wherein the two groups are only about $1 trillion apart. With sleight of hand techniques in budgeting the Obama administration is going after taxable income for the top 2 percent of earners by limiting deductions and capping this at 28 percent.
With respect to Social Security Obama agrees that age eligibility must change over time. He also links a newer idea of chained CPI to his proposal that saves, according to the White House, about $230 billion from Social Security. Obama dislikes the elderly so much that he politically willing to face the outcries for unfair benefit cuts to the elderly. Obama offers fewer benefits for the wealthy elderly over time too.
Most of the savings for health care is driven by savings in Medicare. Here he projects a savings of$360 billion for Medicare. None of his proposals offer sustainable paths for the future of Medicare or even budget deficits.
In his usual Keynesian economic way, Obama believes that jobs are driven by the public sector, not the private sector, so he offers new infrastructure plans paid for by the U.S. taxpayer as a means of creating new jobs. Bogus! It will only cost the government $ 50 billion in new money for roads, bridges, clean energy, and high-speed rail systems in his fantasy partnership with private capital groups. All of this could be managed by the states without federal intervention over the next ten years.
Further, Obama wants a new pre-school program paid for by a higher tobacco tax. If we truly want wider access to our pre-school and early education, then why not partner with the states seeking private foundation grants in support of this effort locally, not federally. Obama, once again, demonstrates his love for federalizing everything, thus driving up costs overtime especially when the money from tobacco taxes runs out, right?
President Obama simply cannot make the hard choices about spending that the U.S. Congress will have to help him make. If neither party can get it completed this round, “we the people” of the U.S. will have to help all of them decide that big government spending is over and will not be tolerated. If not, economic calamity for the next two decades will be the outcome of the poor leadership we see in Washington, D.C.