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Posts Tagged ‘deficits’

Obama's vision splits small businesses | Entrepreneurial

blogs.reuters.com1/25/12

What do small businesses make of Obama's State of the Union address and promises for job growth and tax reform?

polecat news and views: Obama's Vision for a Spartan America

donpolson.blogspot.com2/4/12

Obama's Vision for a Spartan America. BY JONAH GOLDBERG. President Obama's State of the Union address was disgusting. The president began with a moving tribute to the armed forces and their accomplishments. But as …

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President Obama’s vision of what America ought to look like in the future, would hugely raise government spending on health care, energy and education, and taxpayers would have to foot the bill for a larger, more intrusive government.

His $3.6 trillion debt proposal isn’t simply a bunch of numbers and tables however, but it’s the basis of his underlying philosophy. He believes that throwing staggering amounts of money at schools, hospitals and environmentally friendly industries, will also lay the foundation for the next economic boom.

Do his figures add up?

The Budget Office forecast is for a 10-year cumulative deficit of $9.3 trillion which is $2.3 trillion higher than the administration’s estimate, and it predicts that the government would spend an average of 23.7% of its GDP yearly, while only receiving 18.4% of GDP in revenue during the same period.

What would that mean?

It would mean yearly federal deficits averaging 5.3% of GDP and a budget gap of about $1.2 trillion by the year 2019.

What does Obama have to say on the subject?

"We cannot and will not sustain deficits like these without end."

It is not surprising then, that many Conservatives who envision a totally different society are in growing opposition to Obama’s plans. They mostly envisage prosperous and thrifty two-parent families who pay for their own health and auto insurance, and an economy in which a middle-class family’s tax burden is so low that there is money left over to save for education and retirement.

The Republicans are not the only ones that are showing mounting concern however, and Senator Kent Conrad, who is chairman of the Senate Budget Committee, recently expressed his skepticism about making the president’s "Making Work Pay" tax break, a permanent one.

Obama’s proposed tax plan would phase out at family incomes of $190,000 or more and carry a 10-year cost of $537 billion, and he has also requested an additional minimum of $234 billion in individual, and $100 billion in business-breaks on top of the initial one.

Obama’s highly ambitious agenda, which includes healthcare expansion, new spending on clean energy and education, and a cap-and-trade system (a cap and trade system is a market-based approach to controlling pollution that allows corporations or national governments to trade emissions allowances under an overall cap, or limit, on those emissions. to combat global warming) has also caused many others to express their concerns too.

U.S. Representative Richard Neal, Democrat of Massachusetts, who is a longtime member of the House Ways and Means Committee said, "I think the reality is going to settle in that we are going to have to pull back on something".

James Horney, who is the director of federal fiscal policy at the Center on Budget and Policy Priorities said, "Over the longer term, the federal government is going to need more revenue than Obama is proposing and anybody who has looked at the problem and doesn’t have ideological blinders on reaches that conclusion".

Will taxes have to go up if Obama’s plans are passed?

Robert Reischauer, former director of the Congressional Budget Office says, "The unvarnished truth is that as we move forward over the next five to 10 years, we are going to have to raise taxes across the board or significantly cut back programs which affect the middle class and the lower class", and Bob Bixby, who is executive director of the Concord Coalition said, "One of the mistakes Obama is making is saying nobody under $250,000 is going to be affected. The deficit is just too big, and you can’t get it all from families earning more than $250,000. Taxes are going to have to go up at some point!.

Congressional Budget Office figures that were released by AP on Friday, March 20th forecast deficits averaging around $1 trillion a year over the next decade, which is $2.3 trillion more than the White House had predicted.

The even worse news in the report, is its implication that if Obama’s policies are fully implemented, that deficits will never go below 4% of the size of the economy during the next ten years, which a whole slew of economists have already stated would be “unsustainable”.

The CBO (Congressional Budget Office), which is non-partisan, concluded that Obama’s proposed policies would cause government spending to dramatically increase above historic levels, even after many of his costly programs that are intended to end the recession had ended.

Meanwhile some Democratic budget leaders are putting their finishing touches on different versions of Obama’s spending plan which they hope to bring to a vote in the House and Senate in the next two weeks, and Sen. Kent Conrad (D-N.D.), who is the chairman of the Senate Budget Committee said he had already made, “lots of adjustments that will slice billions from Obama’s spending proposals, generating smaller deficits”, and added, “We’re requiring more things to be paid for and to have tough spending discipline. It’s just got to be done”.

John M. Spratt Jr. (D-S.C.) who is the House Budget Committee Chairman said, “We will follow President Obama’s lead and produce a budget that cuts the deficit in half over the next four years but still invests in areas critical to our future such as energy, education and health care”.

There are however, many Democrats that were already uncomfortable with Obama’s proposed budget that will now have an even greater problem backing it since it would inevitably lead to having to raise and not lower taxes, and they’re more than likely to curb an Obama request for a 9% increase in non-defense agency budgets.

Reacting to the news on Friday, Obama said, “What we will not cut are investments that will lead to real growth and prosperity over the long term. That’s why our budget makes a historic commitment to comprehensive health care reform. That’s why it enhances America’s competitiveness by reducing our dependence on foreign oil and building a clean energy economy”.

Sen. Judd Gregg (N.H.) who is the senior Republican on the Senate Budget Committee said, “One would hope these numbers would wake somebody up. This clearly creates a scenario where the country’s going to go bankrupt. It’s almost that simple”.

In a conference call with reporters, White House budget director Peter R. Orszag defended the president’s agenda, maintaining that the forecast of bigger deficits and mounting debt is largely because of the CBO’s view that the recession will be more severe, and the recovery more tepid than the White House expects. Orszag, who was a CBO director before he joined the Obama administration, argued that “long-term budget estimates are notoriously uncertain”.

Republicans remain adamant that Obama’s budget plan taxes, spends and borrows too much, and they’ve been highly critical of his $787 billion economic stimulus measure, and also of a recent $410 billion omnibus spending bill.