Once again, who will pay for it?

Obama's Deficit Charade
Terence Jeffrey
Wednesday, February 25, 2009

President Obama posed as a fiscal conservative Monday when he hosted a "fiscal responsibility summit."

Close inspection reveals that what he is actually proposing, however, is a massive increase in government debt -- thus raising the already unsustainable burden of government that is certain to fall on our children unless the welfare state is somehow curtailed.

In the first seven fiscal years overseen by the high-spending President Bush, the annual federal budget deficits were truly obscene. Yet, they never exceeded $500 billion.

In fiscal 2002 through 2008, according to the historical tables published by the Office of Management and Budget last fall, the annual deficits were $157.7 billion, $377.5 billion, $412.7 billion, $318.3 billion, $248.1 billion, $162 billion and $410 billion. (The Congressional Budget Office has since calculated that the fiscal 2008 deficit actually ended up being $454.8 billion.)

President Obama said Monday that his "administration has inherited a $1.3 trillion deficit" for fiscal 2009.

The extraordinary size of that deficit is due, of course, to what one would have hoped were passing circumstances and one-time policies: a recession, a $700 billion bailout of the banking industry and that part of the $787 billion "stimulus" President Obama signed last week that will actually be spent in this fiscal year.

"And that's why today I'm pledging to cut the deficit we inherited in half by the end of my first term in office," President Obama said at his summit.

But what does that mean? The administration says President Obama's promise to "cut the deficit we inherited in half" means he will reduce it from $1.3 trillion in fiscal 2009 to $533 billion in fiscal 2013.

This $533 billion deficit -- that President Obama vows will be the lowest annual deficit he runs in any of the next four years -- is larger than any deficit the profligate President Bush ran before this recessionary year.

In fact, President Obama's planned $533 billion deficit for fiscal 2013 is more than twice as large as the $248.1 billion deficit Bush ran in 2006 and more than three times as large as the $162 billion deficit Bush ran in 2007.

In other words, President Obama is planning to permanently increase the scale of government borrowing -- even before we are hit by the fiscal tidal wave that will come when the bulk of the baby boom generation retires and begins collecting Social Security and Medicare benefits.

The truth is this: Our federal government has been wading ever deeper into red ink for a full half-century, and President Obama is now planning to wade deeper and faster than any president who has gone before him.

According to the Bureau of the Public Debt, the overall federal debt has increased every single year for the past 50 years. The last time it declined from one year to the next was from 1956 to 1957.

Overall federal debt increased even in each year from 1998 to 2001, when the OMB was calculating annual federal surpluses. This seeming contradiction, budget experts tell me, results from the fact that when they calculate the annual surplus or deficit they do not account for the interest the government pays itself on paper for the money it has borrowed out of the Social Security, Medicare and other entitlement trust funds to pay for current expenditures in other government programs.

The interest paid on the money the government has borrowed from Social Security and Medicare taxes to fund other things does not require the government to dole out real cash today. It will require the government to dole out real cash tomorrow, however, when the number of retired people receiving Social Security and Medicare benefits balloons compared to the number of younger working people paying taxes to support those programs.

Every dollar President Obama borrows and spends, like every dollar President Bush borrowed and spent, adds to the permanent burden of government laid on the backs of our children.

Last year, then-Comptroller General David Walker reported that every American household would have to put up $455,000 to cover the $53 trillion gap that already exits between the entitlement benefits promised to living Americans and the tax revenue currently expected to pay for those entitlements.

On top of this, President Obama has just promised to add more than $2 trillion to the national debt over the next four years.

To expand on a metaphor I used in a previous column, America is heading down the blind alley of big government toward the brick wall of national bankruptcy -- and President Obama is now putting his foot on the accelerator. What's next: Liberals will use the coming crash as an argument for even more big government, quite possibly in the form of socialized medicine that seeks to control government spending by rationing the health care of all Americans. 

The State of the Union

As I listen to the President's State of the Union, I am struck by the ease with which he communicates his ideas. He effectively speaks to the world as he sees it and the steps that must be taken to meet our nation's challenges. My problem is that I disagree with his remedies, as I believe they often are either a) ineffective or b) create unacceptable unintended consequences.

Those who hold views contrary to the President's must learn how to effectively communicate why their solutions are better or why the path outlined by the president is faulty.

Below are concepts that came up tonight that need rebuttal in a clear, concise way Americans can easily understand:

1) Why outsourcing isn't always bad, and letting low cost producers produce the items they create most efficiently makes everyone better off (i.e. car batteries in Korea)
2) Why the government should not try to centrally plan industries according to a grand strategy disconnected from what consumers want (US Auto Manufacturing)
3) Why the federal government shouldn't be paying for local police officers just to protect jobs
4) Where does the $800 billion for the recent stimulus package come from? Is it fair to call it an $800 billion bill when borrowing costs are likely to add billions more?  Why do we not include these borrowing costs in our calculations and public statements?
5) Explain how the Constitution specifically makes education the purview of the states and not the federal government; also how allowing states to control education creates 50 different petri dishes that allow new ideas to be tested and explored
6) Explain that cutting the deficit in half means you still spent more than you earn - as unacceptable a situation to government as it is for households
7) Why the phrase "ship our jobs overseas" is misguided (see #1)
8) How it is impossible to lower taxes for 95% of Americans when 40% of Americans pay zero taxes - also, explore the impact of what is essentially a welfare check to these 40%

9)  Explain why true "stimulus" would come from a simple reduction in payroll taxes - allowing consumers to inject $$ in all areas of the economy simultaneously

10)  Why it is now disingenous to suggest you will "end" the war in Iraq when it is already won

11)  Why it is irresponsible to suggest you will close Guantanemo Bay when you do not have a viable alternative

12)  Why it is misleading to say "America does not Torture" when you allow rendition to continue (the practice of allowing other countries with less stringent interrogation restrictions to "question" our captives)

13)  Why Charles Schumer is wrong and the American people care or should care about earmarks and wasteful pork projects

14)  Why any State of the Union must speak about our military engagements in a time of war

15)  Explain how it is mathmatically impossible to bailout the banks, spend $800 billion (plus interest) to stimulate the economy, Nationalized Healthcare, increase education, refinance mortages, lower taxes for 55% of Americans (95-40% in #8), give welfare checks to 40% of Americans, and cut the deficit in half using only the savings from reduced Iraq operations and eliminating the Bush Tax Cuts for the wealthiest 2% of taxpayers.  Seriously, how can anyone think that is possible?  Just writing that list pissed me off.... 

$1,000,000 for 2,000 years gets you what?

Patriotic Duty

Be a Patriot: Pay Up!
David Harsanyi
Friday, February 20, 2009

Given that most of you will be paying your neighbors' mortgages soon, it only seems prudent that we start thinking in bolder terms. And by "thinking in bolder terms," I mean thinking about me.

Why, for instance, should I be on the hook to pay those grating high-interest credit cards I signed up for? Or those detestable car payments? My cable bill's sorta steep, too.

For you folks who are less than ecstatic about straightening out my fiscal affairs, well, I have two things to say: 1) Don't be selfish. 2) Forget everything you ever have heard about the American Revolution. Taxes, extreme government spending and wealth redistribution are patriotic. And you're going to see so much patriotism your kids will be pigtailed uber-nationalists by the time they hit kindergarten.

This week, Barack Obama heroically signed away $787,000,000,000 for so-called stimulus. He reportedly praised a Republican supporter for her patriotism in supporting the bill -- which, by logical extension, means that those who voted "no" are unpatriotic toads.

Your president loves his country so much that he would sacrifice up to $275,000,000,000 of your money to keep the housing bubble bubbling, with almost no legislation or debate required. Obama claims his new mortgage bailout would give a second chance to those "homeowners who have played by the rules (and) have been making their payments on time."

Who knew that playing by the rules comes with a government warranty? After all, I may play by the rules and engage in bizarrely self-destructive behavior. You may not. You may have played by the rules -- invested in the stock market, a home, a business, a career -- and found yourself stuck with a financial dud.

But as every 2-year-old knows, consequences are the incentive to avoid risky behavior. So why are we rewarding failure and attempting to abolish consequences? Many of the homeowners government is bailing out took the unnecessarily chancy loans that helped fuel the financial jam we're in.

More than 90 percent of Americans, though, pay their mortgages on time, follow the rules and, for the most part, live in homes they can afford. You don't deserve help. Though luckily, you will be subsidizing those who acted recklessly. Remember: country first. And if you happen to be a renter who pinched and scraped in hopes of one day owning a home responsibly, you are out of luck, too. Just consider it your patriotic duty.

The more irresponsibly you behave, in fact, the more government works for you. This week, the federal government doubled its commitment to Fannie Mae and Freddie Mac, promising to reimburse the companies up to $400,000,000,000 for the losses they sustained from their investments in mortgage loans.

Yes, the same Freddie and Fannie -- once implicitly guaranteed by government and now explicitly run by government -- that helped, through social engineering, to push us into recession. It is vital, apparently, that we keep them afloat.

The only business plan that is more staggeringly counterproductive came from the auto industry, which is back for another bite.

In last year's second quarter, GM lost about $118,000 a minute. So naturally, GM would like another $16,600,000,000 so it can fire 47,000 people. Makes sense. Because you decide not to spend your money on a GMC Acadia, the government will make you pay for one anyway.

After meting out nearly $1 trillion of government expansion in the stimulus -- including the canard of "tax relief," which, in effect, was only more wealth spreadin' -- how can Washington say no to anyone?

Obama has told us the American dream must be saved. So far, his remedy entails government rewarding bad behavior, encouraging dependency, subsidizing failure and penalizing success and prosperity.

It's the new patriotism. So don't complain. 

More information about the Stimulus Package

The Top Six Problems With the Stimulus
John Hawkins
Tuesday, February 10, 2009

1) First of all, it's very debatable whether stimulus bills work at all. As Walter Williams has pointed out,

"In stimulus package language, if Congress taxes to hand out money, one person is stimulated at the expense of another, who pays the tax and is unstimulated. A visual representation of the stimulus package is: Imagine you see a person at work taking buckets of water from the deep end of a swimming pool and dumping them into the shallow end in an attempt to make it deeper. You would deem him stupid. That scenario is equivalent to what Congress and the new President proposes for the economy." -- Walter Williams

2) According to the Wall Street Journal, there is very little actual "stimulus" in the stimulus bill,

"In selling the plan, President Obama has said this bill will make 'dramatic investments to revive our flagging economy.' Well, you be the judge. Some $30 billion, or less than 5% of the spending in the bill, is for fixing bridges or other highway projects. There's another $40 billion for broadband and electric grid development, airports and clean water projects that are arguably worthwhile priorities.

Add the roughly $20 billion for business tax cuts, and by our estimate only $90 billion out of $825 billion, or about 12 cents of every $1, is for something that can plausibly be considered a growth stimulus."

3) Even if you set aside #1 and #2, a significant percentage of the spending in the stimulus bill doesn't occur for two years.

"Although the argument for quickly passing the $800-billion-plus stimulus bill now before Congress is that pumping money into the economy immediately will spur economic growth and create jobs, almost half of the new spending—as opposed to tax cuts—being proposed in the bill would not be spent until at least two years from now, according to an analysis published by the Congressional Budget Office."

How is spending that's not going to occur for two years supposed to stimulate the economy today and prevent those 500 million lost jobs per month that Nancy Pelosi told us about? If Barack Obama really believes what he says and thinks that, "A failure to act, and act now, will turn crisis into a catastrophe," then why isn't the spending frontloaded into this bill?

4) Even the "non-partisan" Congressional Budget Office, which many Republicans consider to be tilted to the left, is saying that this bill is worse than doing nothing over the long-haul.

President Obama's economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.

CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.

CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.

How much sense does it make to push through a bill designed to "stimulate" our economy when we know that it will actually reduce economic growth?

5) Despite the initial claims that this bill would be "targeted, timely, and temporary," the Democrats have moved quite a few regular budget items into the stimulus package. Republican Senator Jeff Sessions says this was done in order to avoid the normal budgeting process and that the new baseline for these programs will be the amount that they were allocated in the last budget plus the amount the programs receive in the stimulus package.

In other words, the stimulus package seems likely to add hundreds of billions of dollars, every year going forward, to the budget deficit. No wonder Barack Obama is predicting that America will run "trillion-dollar deficits for years to come" under his "leadership."

6) The sheer cyclopean size of this stimulus package, which comes up to roughly 1.2 trillion dollars when you add in the interest over 10 years, is difficult for most people to comprehend. How big is it? As Mitch McConnell said,

"If you started spending the day that Jesus was born and you spent a million dollars every single day, you still wouldn't have spent a trillion dollars."

Still having trouble wrapping your mind around it? Think of it like this: in today's dollars, the stimulus bill will cost more than the war in Korea and the war in Iraq -- combined! It will cost about the same amount as FDR's New Deal AND the war in Vietnam combined! It'll cost far more than the Marshall Plan, the Louisiana Purchase, and putting a man on the moon -- combined!

Those were momentous events in our history. Going to the moon, rebuilding Europe, fighting wars -- meanwhile, ten years from now, we'll have very little to show from this stimulus plan other than a considerably larger national debt and slower economic growth. In other words, all hyperbole aside, this may very well be the single least effective, most wasteful, most costly piece of legislation in all of recorded human history.

Write to your Senator/Representative

If you would like to write to your local Senator/Representative, you can find that information at the address below.  Feel free to use my wording as a template if you wish - this is a copy of the message I sent to my legislators.

http://www.usa.gov/Contact/Elected.shtml

Dear Senator ________,

I am writing to ask you to reconsider your support of the current stimulus bill. As an American under the age of 30, I am very concerned about the future ramifications of the current rate of spending proposed by our government. Given the amount of money being spent, I believe it is the important job of the House and Senate to ensure that all proposed programs have an immediate impact and are directly related to building infrastructure, saving taxpayer dollars, or creating jobs.

Many of the proposed programs contained in the bill you approved are nothing more than attempts to enact political and social changes in the midst of the current economic crises. These issues are clearly not stimulus-related and should be handled separately from any stimulus bill.  The current economic situation should not used as oportunistic excuse to give money to causes that do not directly result in immediate economic recovery.  While it is true that any spending could be termed "stimulus", I do not believe it is the government's place to determine which favored causes or industries should receive such funds, especially if they do not contribute to long-term economic recovery.  

Rather than having the government act as a central planner, rewarding a few chosen industries or companies, the stimulus plan currently under consideration should return tax dollars to those who paid those taxes, allowing consumers to spend that returned money as they see fit and, therefore, stimulating every part of the economy. In order to be effective, such a tax stimulus cannot be a one-time rebate, but must be a long-term tax break to raise consumer confidence and result in spending rather than saving.

Thank you for your service to our state. 
 

The Stimulus Package

• 

• OPINION
• FEBRUARY 3, 2009, 11:40 P.M. ET

The Stimulus Package Is More Debt We Don't Need

Can Obama really defend this 'line by line'?

By TOM COBURN

As the Senate considers a massive $1.1 trillion stimulus bill, it is vital that the American people ask hard questions of their elected officials. When they do, it will become very clear that the bill will not only fail to stimulate the economy, but could seriously delay economic recovery.

As a nation, we got into this mess by spending and investing money that didn't exist. We won't get out of it by doing more of the same.

Yet this is precisely what this bill proposes we do. Less than 10% of the bill could be considered true stimulus, if one assumes tax credits and infrastructure spending will jolt the economy. The other 90% of the bill represents one of the most egregious acts of generational theft in our nation's history, with taxpayer money going to special-interest earmarks, an ill-conceived bailout to states, and permanent spending increases that expand government's reach in areas like health care and education.

The bill's selling point is that three million jobs will be created or saved by this package. What's alarming is that each job will cost $286,000 to create or save. Moreover, one in five will be a government job.

One of the more egregious provisions in the Senate bill is a $166 billion bailout plan for the states that rewards bad budgeting at the state level. Simply sending cash to states without asking for appropriate sacrifices is grossly irresponsible. States will no longer have the incentive to live within their means, because they'll assume the federal government will be there to bail them out.

Instead of a bailout, Congress could offer states an emergency loan that could be repaid at a low interest rate. This approach apparently wasn't considered because the members who wrote the bill aren't simply interested in saving jobs -- they want to push their agenda along the way.

A key example is health care. The Senate bill doubles the amount of the Medicaid bailout requested by governors and lays the groundwork for government-run health care, which invariably leads to rationing. This ideological overreach has led even some Democrats, like Nebraska's Ben Nelson, to express concern that various "sacred cows" in the package are hurting the bill's overall goals.

The bill is also loaded with old-fashioned pork, despite President Barack Obama's insistence that members of Congress refrain from adding earmarks. In fact, the bill contains the most expensive earmark in history: $2 billion for the FutureGen near-zero emission power plant in Matoon, Ill.

Other nonstimulative pork provisions include $88 million for a new polar icebreaker for the Coast Guard, $600 million to buy hybrid vehicles for federal employees, and $850 million for Amtrak.

What is not in the bill is as troubling as what is. The package does nothing to clear the toxic assets and bad mortgages that helped trigger the credit crisis. It also contains very little meaningful tax relief to make small businesses and American companies more competitive. Instead, the tax provisions of the stimulus are essentially a modest cash handout that repeats the failed policy of George W. Bush's rebate-check stimulus.

Finally, the bill's sponsors have made zero effort to pay for this new spending by eliminating programs that aren't working. Mr. Obama's pledge to go through the budget line-by-line has made no impression on the bill's authors, nor has the plight of millions of Americans faced with tough spending choices.

Dozens of independent watchdog groups, think tanks and elected officials on both sides of the aisle have spent decades identifying areas of the budget that can be cut. Yet Congress remains focused on finding "shovel ready" projects when at least $300 billion in wasteful programs are "scissor ready" today.

One of the lessons I've learned from the practice of medicine is the danger of treating symptoms rather than the disease. Doing so makes the disease worse and causes the symptoms to come back with a vengeance. It's time for government to quit masking the symptoms and deal with this crisis at its source: toxic assets in the mortgage market and a federal government that continues to pollute our economy with pork and failed interventionist policies.

Dr. Coburn is a Republican senator from Oklahoma.