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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 …

Can America Afford Obama's Vision?

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!.

An analysis by the ‘Congressional Oversight Panel’, which is headed by the Harvard Law Professor Elizabeth Warren suggests that tax payers have already been cheated out of $78 billion and that figure may only be the tip of the iceberg.

The report maintains that the Treasury received bank assets worth about $176 billion in exchange for capital purchases of $254 billion under the ‘Troubled Asset Relief Program’ – commonly known as TARP and the oversight committee blamed what it calls TARP’s “one-size-fits-all investment policy” for the shortfall.

“The use of standardized documents probably contributed to Treasury’s ability to obtain speed of execution and wide participation, but it meant Treasury could not address differences in credit quality among various capital infusion recipients”.

Neel Kashkari, who is now in charge of TARP told a ‘Mortgage Bankers Association’ conference in Washington on December 5th, that the government isn’t “looking for a return tomorrow. We are looking to try to stabilize the financial system, get credit flowing again, and over time, we believe that the taxpayers will be protected and have a return on their investment”.

The original designer of TARP, Henry Paulson also went on record as saying, “This is an investment, not an expenditure and there is no reason to expect this program will cost taxpayers anything”.

But certainly not everybody sees it the way that Kashkari and Paulson do.

Representative Alan Grayson, who is a Florida Democrat on the ‘House Financial Services Committee’ had this to say, “The loss estimate is conservative and it could turn out that those assets in the end are worthless. These are massive handouts to favored institutions to try to make up with taxpayer money the mistakes they made with investor money”.

Representative Scott Garrett who is a New Jersey Republican on the same commission said, “From day one, it’s been apparent that Treasury’s interest leaned more favorably toward that of the bank’s, with taxpayers as simply an afterthought and unfortunately, the actions of the Treasury ultimately resulted in negative, albeit foreseeable by some, consequences for the banks, and questionable benefit for the taxpayer”.

Gregory Miller, who is the chief economist at ‘SunTrust Banks Inc.’ in Atlanta said, “TARP hasn’t succeeded in clearing bad assets from banks’ balance sheets, which would allow the companies to lend money and get the economy going again. It hasn’t cleaned up the asset side of bank balance sheets and it hasn’t helped bank uncertainty about bank balance sheets at all and uncertainty has now overwhelmed economic decision making”.

Well if the above didn’t send a shiver down your spine or cause blood to rush to your head then it might be time to take this on board. TARP, which will be a recipient of a part of the more than $9 trillion that the government just pledged has guaranteed a further $350 billion to banks up to now with another $350 billion to be added over the coming months.