Free Markets, Free People

Change means more taxes, more spending

It’s hard to imagine that government could grow as much as it did during the Bush Administration, but Barack Obama seems determined to top his predecessor:

During his presidential campaign, President Barack Obama promised the American people a “net spending cut.” Instead, he signed a “stimulus” bill that spends $800 billion, and he has proposed a budget that would:

  • Increase spending by $1 trillion over the next decade
  • Include an additional $250 billion placeholder for another financial bailout
  • Likely lead to a 12 percent increase in discretion­ary spending
  • Permanently expand the federal government by nearly 3 percent of gross domestic product (GDP) over pre-recession levels
  • Raise taxes on all Americans by $1.4 trillion over the next decade
  • Raise taxes for 3.2 million taxpayers by an average of $300,000 over the next decade
  • Call for a pay-as-you-go (PAYGO) law despite offering a budget that would violate it by $3.4 trillion
  • Assume a rosy economic scenario that few econo­mists anticipate
  • Leave permanent deficits averaging $600 billion even after the economy recovers; and
  • Double the publicly held national debt to over $15 trillion ($12.5 trillion after inflation).

H/T: Club for Growth

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21 Responses to Change means more taxes, more spending

  • Yea but he’s gonna save 540 million by forcing private insurance companies to reimburse the VA for treatment of service related injuries.  That’s like a whole tenth of 1 percent of the defense budget.  Can’t you see he’s a financial genius?

  • First, tax and spend is at least better than borrow and spend.

    But I for one believe he must cut the budget as he’s promised or we’ll face inflation.   People won’t like the cuts, but that’s part of being in a crisis — you have to make some difficult calls.  I hope he’s serious about cutting unnecessary programs and taking a real hard look at what works and doesn’t work.

    • Funny thing about trying to cut “what doesn’t work” though: there’s always someone who thinks it works beautifully!  It’s a problem inherent in government.  The limited government as laid out by the founders covered the real necessities: basic infrastructure, defense, and a justice system.  Once you go beyond that, it’s just a special interest expenditure that benefits a minority while costing the majority.  

      It’s like the universal pre-K program from a couple posts back.  Despite the fact that a working private program exists and suits everyone’s needs just fine, and that a subsidized version exists to help those who can’t afford it, and that several studies have shown it to ultimately be a non-factor, Obama wants to set up universal preK.  Where does that fit in with “keep what works and cut out what doesn’t”?  Fannie Mae and Freddie Mac turned out to be overgrown clusterf*cks that didn’t work.  What do you think are the chances he wants to scale those back to levels that did “work”?

      Empty rhetoric coming from an empty suit.

    • “I believe he must cut the budget or….” 

      So do we Sparky, the difference is we know he’s not going to, and you think that, sometime between today and next thursday, he’s going to pull a random magic economy rabbit out of his ass and all the problems will be banished, and the US will vote Democrat for the next 100 years.  

      For an allegedly smart guy you’re not very bright.   Take a look to your left sparky, that’s a freight train bearing down on your tricycle.

      • Well, while you are fine at throwing out silly insults, I disagree with you that the budget isn’t going to be cut.  It has to be, and the President knows it.  This year will be a bad one for the deficit, but starting with the next budget I believe we’ll see serious cuts.  You can disagree with that, and then support your position by insulting me — I guess that’s the way a lot of people do political debate these days.    I suspect you’ll be surprised (though I’m doubting you’ll admit you were wrong if and when it happens).

        • And what year is it that you expect the budget to be cut in?      That won’t be this year and I’m not sure what year you think this will happen in.  Which part of deficits till we die didn’t you hear him say?  Which part of government expansion to beat all expansion have you missed?  And all you have is “don’t insult me” and “debate me”.   And I’m supposed to debate you about things he’s going to do that you imagine, or hope, or fantasize which contradict things he’s SAID he’s going to do?  Course he contradicts himself from any given Monday by any given Thursday of the same week so why should I be surprised that you think he can literally have his cake and eat it too?

          Dang right I’ll toss out insults (fairly mild, and no longer a defense for you as far as I’m concerned).
          When and IF he cuts the budget I guarantee you I will admit I was wrong.  When I’m wrong I can admit it, since my entire self is not bound up in being ‘right’ all the time.  
           This is more than I can say for you since I’ve watched you evade, avoid and invent nearly every time you’ve been proven wrong on an issue.  Saying you’re open and honest and being open and honest about when you blow it are two different things.  You’re very much like the Prez in this regard.  That’s meant as an insult, just in case you might take it as a compliment in some way.

          • Obama has said he’d cut the deficit, and I believe he will have to.  You make a lot of allegations about what you claim he has said; frankly, I don’t believe you.   You also are making false claims about me, I’ve always admitted when I’ve been wrong.  Everyone talking politics is wrong some times, it’s no big deal.   But hey, you can make things up and attack people if it helps you feel better about yourself.  It doesn’t do anything to prove your position, and that’s all that I’m concerned about — facts, interpretations, and how they are defended.  The rest is noise and obfuscation.

          • “I don’t believe you” – dude, you’re off your meds, right?   Deficits for years to come, his own words, not mine.  Fobbing off a mega spending bill as the business of the ‘last’ administration, uh-huh.  Are you sure  you’re okay?  You listening to the same President of the United States I’m listening to?  The same guys who’s master plan consists of letting some other future administration fix it all.

            These guys don’t have a clue about how the real world works, they’re like novice pilots overcompensating for the aircraft not responding as fast as they expect to their actions.   Spend, stimulate, this isn’t a DATE, it’s a country.

            Besides his buddies in Congress are in no way going to stop the spending binge, and being as he’s an empty shirt, he’s not going to stop them (because, in a lot of ways he agrees with them, even on days when he claims he doesn’t). 

  • Funny, I thought we needed a big Keynesian boost, but then almost immediately we raise taxes to cover the cost? Not very effective, if you ask me.

    • We cannot have a big Keynesian boost when we’re already over $10 trillion in debt.  That risks not only making the hole deeper, but inflation (and if we’re not careful, hyperinflation).   This is especially dangerous given that the Europeans are not so keen to increase spending by increasing debt, and this may help the Euro relative to the dollar over the longer term.   Obama’s plan can only work if he uses funds to invest in the economy (which is needed — and states need relief from unfunded mandates) while cutting programs that aren’t needed or don’t work well.  In other words, he spending more should only be very early and short term, he has to spend smartly.  If the debt grows even half as much in the next seven years as it did on Bush’s watch we’re facing long term structural economic weakness.   I don’t think people have come to grips with how bad the 90s and 00s were for our economic viability.

      • “I don’t think people have to come to grips with how bad the 90’s…” 
        Yes, Gawd knows THAT was all George Bush there, that was all Republicans who did that.  The Democrats just aren’t on the scene when things are being steered into the crapper in your version of the history are they. 

        • I’ve been pretty vocal that I don’t see this through a partisan lens, the Democrats share blame, and Clinton benefited from being part of an unsustainable bubble economy.   My point, in fact, is that any side who wants to demonize only the other side is misguided.  This was a bipartisan problem and in fact a result of a cultural problem of consumerism and a society that wanted “something for nothing.”   The cure isn’t only governmental, but will also require a culture shift.

          • The cure is NOT government, the cure is almost NEVER government.

            Clinton benefited?  A couple of days ago you were claiming he left us a surplus that Bush squandered.  Where did that alleged surplus come from?  It came from the bubble society you’re claiming is the problem (course it never really existed except in their minds, and was accepted, for some unknown reason by people like you as being real.  They should have paid you based on that surplus and you would have found out real fast how unreal it was).
            And you don’t pay attention much if you think I’m in love with the Republican side of the house, you do that a lot here, with a lot of people here.  The Republicans are only slightly less likely to take me to socialist hell than the Democrats.  The difference is the Republicans want to walk, the Democrats like to sprint, and for the last 50 days they’ve been approaching a world record sprinting speed.
            So let’s not talk about me demonizing one side.  If I could figure out a way to throw them ALL out, I would, but I can only vote in one state.  I’m conservative to moderate, NOT a Republican.  If there was a sane alternative, I’d TAKE it.

  • Change that to Obama’s plan cannot work, and I’m with you. 

    Is the toxic asset situation resolved?  Is credit flowing freely again?  Are consumers spending for automobiles and other large ticket items?  We’re demonizing AIG for bonuses, while ignoring the fact that Congress didn’t put restrictions on the bailout money, and much of it went to European banks.  Can Congress do worse?

    I believe we are in trouble.  I’ve lost a huge percentage of my retirement savings, and I don’t really have a lot of time to make up for the shortfall.  At least I have a job, so far.   The market is a long way from getting back to where it was before wonder boy at Treasury took over.   

    This economy is on a bobsled ride with a blind driver.   It’ll stop, eventually.  Below where it started.  If we’re lucky, we’ll survive the trip.

  • Where did I say that  Clinton left a surplus that Bush squandered?   If I said that, and didn’t make clear that Clinton’s surplus was due in large part to the imbalances of the bubble, you’ll have a spot right here where I’ll admit a post was wrong and I’ll correct it. 

    I simply note tax and spend is superior to borrow and spend, and that I believe spending does need to be decreased and the budget restructured.  We’ll obviously disagree on spending priorities (I think government does need to act with private sector actors to fix the health care sector, I think military spending can be cut dramatically), and I’m more willing to see higher taxes than you are.  But within that framework we can agree on economic fundamentals: if we consume more than we produce, we’re out of balance, if we run consistent budget deficits, we’re setting our economy up for disaster, and we can’t run consistent current accounts deficits without a crisis.

  • I’ve always admitted when I’ve been wrong. 

    *guffaw* Good one, Scott.  I’ll remember this the next time I prove you wrong and you refuse to admit it.

  • I simply note tax and spend is superior to borrow and spend

    Actually, it’s not.  If, by holding off taxes, the economy can grow enough to absorb the spending, “borrow and spend” is better by far.

    Right now, we’re looking at a deficit of $1,750,000,000,000.  I haven’t heard any plans to raise taxes that far.

    • If the economy grows enough to absorb the spending then it ultimately will not be borrow and spend.

      Alas, in the eighties debt doubled from 30% of GDP to 60% of GDP, even as the economy received a jolt from dramatically dropping oil prices and the end of a recession (which did more to boost revenues than tax cuts).   So the eighties was borrow and spend.  Moreover, the eighties set up the current crisis by starting large current accounts deficit, an ever growing public debt, and private moves away from savings towards debt.   What we are now experiencing is a rebalancing after nearly thirty years of bipartisan mismanagement of the economy.  Choices made in the early eighties set up where we are now.

  • If the economy grows enough to absorb the spending then it ultimately will not be borrow and spend.

    No, it would still be borrow and spend.  You borrow now to spend now, the increase in revenues from a growing economy pays for it later.  “Paying for it over time” is pretty much the definition of borrowing.

    Choices made in the early eighties set up where we are now.

    And so the solution is to quadruple the annual deficit?  The solution is to raise government spending so high that we all had better pray the economy grows at a steady 7% clip for the next decade?

    Who knew?

    • I notice Steverino you leave out the point about the eighties and how borrow and spend was the watchword of the Reagan administration, whose policies started us into this mess.  The solution is not to massive increase the deficit.   Note that Bush increased the debt level by over 100% during his time in office, from about $5 trillion to $11 trillion.  Obama’s first budget will put that over $12 trillion.  I believe he has to hold the line there, or limit debt growth and ultimately cut the budget deficit so that we avoid inflation.  That may involve some tax increases as well as spending cuts.  But that’s what you have to deal with when you have high debt — the trick is to do it in a way that allows the economy to start growing and regaining productive capacity.   The good news is that the illusion of easy prosperity has finally been dispensed with, and we’ll get back to economic basics.  

      And Grocky, you can call names, but it would be nice if you could actually substantiate your attacks.  Nah, calling names is easier, isn’t it?   And oh so mature!

  • I think we need to institute the Scott Erb “lying through his teeth” award, give it monthly to the most egregious liar in the comments here.

    Sorry, make that second-most, or Erb would win every time.