Thread: Economics Obamanomics
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Old 02-16-2011, 08:03 AM   #25
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By Peter Ferrara on 2.16.11 @ 6:09AM

President Obama's budget released on Monday proposes to spend $3.73 trillion for 2012. He can't say Bush made him do that. That proposed spending is an undeniable fact that reveals who he is, which he successfully hid from 53% of voters in 2008.

Campaigning in 2008 he promised voters that his plan involved a "net spending cut." That net spending cut translated into $836 billion in increased spending this year from 2008, according to President Obama's own budget documents. That is a federal spending increase of nearly 30% since 2008. Either President Obama does not know what "net spending cut" means in English, or he bamboozled a lot of people in 2008.

Almost makes you want to take to the streets to demand resignations and honest elections. But that couldn't happen here. For one thing, you need a free and independent press to have true democratic elections.

Fool Me Once, Shame on You…

But President Obama keeps on trickin'. In his budget message and in his State of the Union, Obama celebrated what he calls a domestic spending freeze. Actually, the freeze applies only to non-security, domestic discretionary spending, which is 12% of the budget. He wants to freeze these programs now after he increased them by over 80% in his first two years. As Investor's Business Daily said yesterday, "Freezing spending at this elevated level is little more than numbers legerdemain, a kind of three-card Monte played on sucker taxpayers."

That freeze involves a total spending cut in 2012 of $6 billion in 2012 from where spending would have been, out of a total proposed federal budget for the year of $3,729 billion. That is a cut of 0.16%, which is actually not worth even talking about. Put it in the context of your family budget. Suppose you had take home pay of $3,000 per month, and you were regularly falling short of enough to pay the mortgage. So you decide to get serious about controlling your spending. Your proportional equivalent of Obama's discretionary spending cut out of your own family budget would be $4.83.

In contrast to Obama's $6 billion cut for 2012, the House Republicans Monday committed to $100 billion in cuts from Obama's budget for 2011. The Republican cuts for 2012 and beyond will come in Paul Ryan's House Republican budget due in April. Moreover, House Republicans already voted to approve trillions in future spending cuts, as scored by CBO, in approving the repeal of Obamacare. This is a fair comparison between the parties today on the budget and spending.

Indeed, as the Wall Street Journal reported yesterday, the total spending cuts in Obama's budget for the next three years come in at $20 billion, out of total spending for those years of over $11 trillion ($11,000 billion). As the Journal observed, "Hosni Mubarak was more in touch with reality last Thursday night."

The budget deficit for this year, President Obama's third year in office, is now $1.645 trillion ($1,645 billion), as projected in Obama's own budget documents. This is the highest in world history, let alone U.S. history. That is due to federal spending this year equal to 25.3% of GDP, a quarter of our entire economy. That compares to federal spending of 20.7% of GDP in 2008, and 19.6% in 2007, the last budget year of the former Republican majority Congress.

President Obama's budget projects that this deficit will be cut in half by 2013. But in last year's budget, Obama projected that this year's deficit would be $1.227 trillion, more than $400 billion less than Obama says it will be today. On the basis of his impossible 2013 projection, President Obama is already running around the country expecting applause for his claim that he has made good on his campaign promise to reduce the deficit in half by the end of his first term, while his actual deficit for this year of $1.645 trillion is again the highest in world history! The deficit for 2008, by the way, was $458 billion.

Apart from defense spending cuts, President Obama's budget claims $1.1 trillion in deficit reductions over 10 years. But $700 billion of that is due to tax increases, discussed further below. Another $1.26 trillion is phantom savings supposedly resulting from reductions in costs from "Overseas Contingency Operations." But were we really planning before this budget to spend $136 billion in 2021 in Iraq and Afghanistan? Or $882 billion from 2015 to 2021, over a trillion counting supposed debt service savings? Actually no, so these phantom "budget savings" are actually just another phony budget trick.

Even with these tax increases and phantom budget savings, the national debt held by the public will soar to $19 trillion by 2021, more than triple that national debt total of $5.8 trillion in 2008, again according to President Obama's own budget documents. Indeed, the national debt held by the public will have more than doubled from 2008 by next year, under President Obama's budget. This means President Obama will have accumulated in just one term more national debt than all previous Presidents combined, from George Washington to President Bush.

But that is not the whole picture. Gross federal debt includes the debt held by the Social Security and Medicare trust funds, real debt that will have to be paid to continue to pay promised Social Security and Medicare benefits. That Gross Federal Debt is projected to total $26.346 trillion by 2021, which would be 106% of GDP that year, more than our entire economy that year.

This is why Andrew Sullivan wrote in the Atlantic yesterday, in a piece entitled, "Obama to the Next Generation: Screw You, Suckers":

To all those under 30 who worked so hard to get this man elected, know this: He just screwed you over. He thinks you are fools. Either the U.S. will go into default because of Obama's cowardice, or you will be paying far far more for far far less because this President has no courage when it counts. He let you down. On the critical issue of America's fiscal crisis, he represents no hope and no change. Just the same old Washington politics he promised to end.


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