Free Markets, Free People

Obama’s speech on deficit reduction–we can have our cake and eat it too (and the rich will fund it)

I’ll skip right to the bottom line – Obama’s speech yesterday was an uninspiring restatement of the classic liberal tax and spend ideology that essentially says government is good and big government is better.

Once again to give his “4 trillion in deficit reduction” context “the chart” is offered:

original deficit


4 trillion still leaves trillions in deficit spending over the next 10 plus years.   And notice the trend as we head toward ‘19.  That’s right – the impact of ObamaCare.  I don’t remember a word about that particular program being on the table.  4 trillion in deficit reduction doesn’t answer the mail as far as I’m concerned because it means we continue to do more deficit spending and roll up more staggering debt.  Had he talked about 4 trillion in debt reduction I might have taken him more seriously.

Essentially Obama said the same thing every other big government liberal has said for the decades it has taken us to get in this shape – let us raise taxes to pay for this mess we’ve gotten ourselves into and we promise to make it better. Trust us.

How many times must we hear this before we finally wake up to the fact that it isn’t going to happen that way?  Raising the taxes on the rich isn’t going to curb spending.  Only curbing spending does that.  And while I saw a whole bunch of hand waiving about that in the speech, I’ve seen that in countless other speeches by politicians who claim the same.

Obama’s speech also was an attack on the GOP plan, and an establishment of the “granny will be eating cat food if they get their way” narrative again.  Only the left can be compassionate in the proper way.  The right?  It hates you and wants to kill you.

He even went as far as to call the recent plan by Paul Ryan “unserious”.  Obama additionally was completely disingenuous at one point, pretending that the only thing that Republicans were interested in cutting was spending in the “12% discretionary spending” side of things.   Of course, as I’ve been telling you, these CRs only address that sector of spending, the rest – entitlements – running on automatic until each are addressed separately. 

Obama wants us to believe we can afford everything at about the same level as we have it now if we’ll just tax the rich and “eliminate waste”.  Of course his tax the rich plan would add about $32 billion in revenue a year to projected budgets and deficits in the trillions.  If you’ve never been a fan of fuzzy math, then don’t take a deep look at Obama’s numbers.

Obama wants to you to believe that we can afford everything.  That’s utter nonsense, but what it does is a) establish the ideological basis for the size of government and b) claim that size of government we have now is necessary. 

For instance:

A 70% cut to clean energy.  A 25% cut in education.  A 30% cut in transportation.  Cuts in college Pell Grants that will grow to more than $1,000 per year.  That’s what they’re proposing.  These aren’t the kind of cuts you make when you’re trying to get rid of some waste or find extra savings in the budget.  These aren’t the kind of cuts that Republicans and Democrats on the Fiscal Commission proposed.  These are the kind of cuts that tell us we can’t afford the America we believe in.  And they paint a vision of our future that’s deeply pessimistic.

Deeply pessimistic or startlingly realistic?  I see it as the latter.  Let’s just take one issue he mentions above.  Education.  A “Constitutional” role of government?  Not that I know of.  And, here’s the reality:


What you see charted there is utter failure.  But the cost?  Through the roof.  We can’t afford a “return on investment” like that – yet Obama is ready to tax the rich and throw even more money down the federal education rat hole.  Want to cut the deficit?  Cut the Department of Education and leave the schools to the states and local communities.  We. Can’t. Afford.  It.  And obviously big brother hasn’t a clue.

Obama mentions tax reform.  But not as you or I would understand it.   When most speak of tax reform they’re talking about lowering the rates and broadening the base.  That’s not at all what Obama is talking about.  Tim Carney analyzes that:

For Obama, there are no rate cuts — in fact, there are rate increases. But more revealing, the only "loopholes" he wants to kill are those with which he disagrees.

Obama has created dozens of tax credits and tax deductions aimed at shaping the economy in his image. Obama’s supposedly "serious" talk about the deficit never proposed to eliminate his own tax credits. He also never touches other tax credits that reward the behaviors he likes, even at the expense of the economy and tax revenue — like the ethanol-blending credit.

Obama clearly sees the tax code not simply as a way to collect revenue, but as a way to modify behavior. The only "loophole closing" he has proposed in recent months is even more discriminatory than the loophole itself: Obama doesn’t want to end the "production tax credit" that applies to coal mining, manufacturing, forestry, and oil and gas drilling — he just wants to kick oil companies out of the club that benefits from this tax credit.

He certainly isn’t proposing an end to tax credits for wind and solar energy or electric cars. These are the "investments" that will help us "win the future."

Maintaining and expanding such favoritism in the tax code — and he’s certain to insist on new and extended tax credits next year — is the opposite of "reform." But using words to mean something they’ve never meant before is standard fare for this administration.

On that score, Obama deliberately conflated spending and tax breaks Wednesday. He called for us to "reduce spending in the tax code."

While "spending in the tax code" might sound odd, it actually exists. For instance, the "Investment Tax Credit" for renewable energy is available to corporations even if they owe no taxes, and is often paid in the form of a check from the U.S. Treasury to those companies that are doing what Obama wants them to do. The Earned Income Tax Credit is the poor-man’s version of this — a welfare payment from the Internal Revenue Service.

But Obama wasn’t talking about eliminating these "tax expenditures." When he spoke of lowering "spending in the tax code," it was in the context of his desire to raise rates for upper-income Americans. Under Bill Clinton, the top tax rate was 39.6 percent, but today it’s 35 percent. That extra 4.6 percent of income that a successful American gets to keep — to Obama that counts as "spending" by the government.

The only way to understand the continued attack on the rich by this administration is found in Carney’s last line – “Obama … counts that as “spending” by the government”.   It’s a premise as old as autocratic rulers everywhere – everything belongs to the sovereign (king, state, dictator) and you’re allowed to keep what the sovereign allows you to keep by his or her grace and benevolence.

Taxes should fill a single function – provide the revenue necessary to fund a Constitutional government.  What it shouldn’t be is a method of granting favors or “modify behavior”.  But that’s precisely what ours has become.  Obama is fine with that.

That brings me to the throw away line of the entire speech:

More than citizens of any other country, we are rugged individualists, a self-reliant people with a healthy skepticism of too much government.

Not if this guy and the left have anything to do with it.  In fact Obama spends the entire speech telling us why we’re not self-reliant and need government to save us from ourselves and help us throughout our lives.

It is the usual double-talk combined with classic liberal ideology that says government should play a major role in all our lives and we must make the sacrifices necessary (and collectively) to enable the vision the anointed have set out for us.

Anything else is, well, “un-American”.



Tweet about this on TwitterShare on FacebookShare on Google+Share on TumblrShare on StumbleUponShare on RedditPin on PinterestEmail this to someone

23 Responses to Obama’s speech on deficit reduction–we can have our cake and eat it too (and the rich will fund it)

  • In light of the revelation (to some people, I suppose) that the budget “deal” and the “cuts” won through the alleged tenacity of Boehner and the alleged poor horse-trading skills of The Dear Golfer are little more than smoke, mirrors, and Enron-style accounting tricks, I have to ask:

    Why should we bother any more?

    In other words, I suggest that we’re headed off the cliff, there’s nothing to be done about it, and the only thing to do is plan what we might do if we are still alive at the bottom.

    I’m guessing that USA v2.0 is going to look a lot like Venezuela or Zimbabwe.  Any other predictions?

    • Giving up is always an option, though not one I admire. As a nation we have faced many terrible challenges — the Great Depression, WWII, and the Cold War in the past century.

      I take heart in the rapid mobilization of the Tea Party and the historic turnabout in the 2010 election. Obama and the left still have their tricks but the tide has turned against them. There’s a good chance that this New New Left of Obama & Co. will be utterly rejected in the coming years, as their rotten fruits become apparent to more and more Americans. I foresee a large generational backlash coming from the young as they realize that they are the ones picking up the check for all the Obama nonsense.

    • I don’t think it is wrist-slitting time, doc.

      Should taxes be raised to eat into huge federal deficits? Among the public, 62 percent say they favor cutting government services to sop up the red ink. Just 29 percent say raise taxes.–Gallup

      Americans are getting it.  Unemployment claims are up again sharply and “unexpectedly”.  People who don’t understand economics still FEEL economics on a fundamental level, and they know we are in trouble.
      The Revolution was a lot more dark and desperate…OFTEN…than what we’ve seen.  Hopefully, we will never see such times, but it is good to recall that it was out of such times we came.

      • RagspierrePeople who don’t understand economics still FEEL economics on a fundamental level, and they know we are in trouble.

        Sorry to be such a gloomy gus, but do they?  Or is it more, “Well, WE may be in trouble, but I had still better bloody well get MY check!”?

        About 52% of our people were stupid enough to vote for this idiot in the first place.  The rest of us voted for a slightly lesser idiot who would have done much the same thing (overspend), only not so much, so fast.  This does not bode well for the country.

        And let’s look at microcosms of our country: the several states.  In debt up to their eyeballs, yet still held hostage to special interests groups like unions, the elderly, minorities, etc. who INSIST on continuing to get their golden eggs even though it OBVOUSLY means killing the goose.  We’ve seen the same thing in major corporations: bankrupt or gone offshore because their management and / or unions INSISTED on “getting theirs” even though it was obvious to any dispassionate observer that this meant bankruptcy.  And we’ve got squads of politicians and “reporters” who are perfectly happy to tell us that the goose is in fine shape, nothing to worry about, plenty of money where that came from, you’re a racist / bigot / h8er if you say different, etc., etc.

        To borrow from “Men in Black”,  a person is smart.  People are dumb, panicky, dangerous, PROFLIGATE animals.

        huxleyI take heart in the rapid mobilization of the Tea Party and the historic turnabout in the 2010 election. Obama and the left still have their tricks but the tide has turned against them. There’s a good chance that this New New Left of Obama & Co. will be utterly rejected in the coming years, as their rotten fruits become apparent to more and more Americans. I foresee a large generational backlash coming from the young as they realize that they are the ones picking up the check for all the Obama nonsense.

        Possibly, but I worry that even if the Tea Party “wins”, it will be too little, too late.  Let’s recall that about half the country doesn’t pay much (if anything) in the way of federal income tax; most of the rest don’t realize how badly they are being screwed because of withholding.  What fraction (especially of older generations who tend to vote very reliably) are accustomed to / outright rely on handouts from Uncle Sugar and will NEVER vote to shut down the gravy train?  In short, for every Tea Partier who “gets it”, there is probably AT LEAST one other person who either doesn’t care or outright wants to keep going.

        Consider also the present national debate: it’s about REDUCING the deficit, not eliminating it much less reducing the DEBT.

        People DON’T get it.  I worry that we’ll be Zimbabwe by the time they do.

        • Actually, doc, all economic theory says…and substantiates…the people are rational, while individuals are often not.
          The work force is at the lowest levels since 1983, and we are headed for VERY high energy prices and general inflation.  These are things EVERYBODY notices…rich, poor, whatever…if for different reasons.
          But, I do concede to being an optimist…

        • docjim505: Some people get it. Quite a lot actually. And the older folks you mention consistently vote more conservatively than younger.

          We are still a rich powerful country with substantial reserves greater than any other coutnry. In fact most of our problem is that we have the luxury of so many choices — even doing nothing — and it’s easy to put off the hard decisions.

          Much depends on cultural shifts. Compare America at the decade marks of 1940, 1950, 1960, etc. Who would have thought the same country could change so much each ten years? I believe that Obama represents the high water mark for the New Left and its associated nonsense. I’m not sure what will take its place, but much of it will be a swing away from that and, I hope, to more constructive policies.

          • huxleyWe are still a rich powerful country with substantial reserves greater than any other coutnry. In fact most of our problem is that we have the luxury of so many choices — even doing nothing — and it’s easy to put off the hard decisions.

            That’s the real shame of it: we ARE a great country.  But there have been other countries rich in resources that have killed themselves, which is what we seem hell bent on doing.


            I feel ashamed at my pessimism, but when I look at our “elites” in politics and the media, it makes me weep.  How stupid are we that we leave these yahoos in charge of anything other than cleaning bed pans?

    • What? Over? Did you say “over”? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no!

  • I’m thinking more like Brazil before some recent changes – you had perhaps 10% at the top with money for just about anything and a very large group of various levels of “have-nots”.
    Neither plan (Ryan’s or Obama’s) will change that much. Ryan’s has some good ideas but not a chance to pass much of it unless the GOP has either a veto-proof majority and/or 60+ Senate seats and/or the WH.

    • There might come a time in the world economy where it will be impossible not to have growing income inequality, and that will not even be a bad thing.
      Right now, if you are paid a nice middle-class salary or have a localized business, you have an upper limit to your potential income. A plumber, even who becomes a contractor, can only expand so much.
      On the other side of the equation, as products become sold to the entire globe, one good idea, hit song, etc. suddenly becomes such a deluge of wealth that it will over-shadow anything a regional plumbing contractor could make.
      Take Harry Potter, for example. The staggering amount of money that produced for the author must severely skew the numbers.
      I also think for some people, a certain level of income is okay, and they prefer leisure after that. In the past, that income level would have required more work, thus you will see some spread of inequality just due to that.

      • Discussing income ‘inequality’ at all is part of the slippery slope.    That implies there’s some scale that needs to balance at all.
        Then they start wandering into ‘fair’.  Is it ‘fair’ that an NFL quarterback makes $x million a year and a school teacher, educator of our future generations, or a nurse, caregiver to our sick and infirm, or a fireman, rescuer of trapped people only makes $y?
        “is that FAIR?   No!  there should be a balance because there’s inequality there!”
        But why should there be a balance?  Who says?  Who mandates it?  Where is it written?  Who’s job is it administer?   So why are they talking about ‘income inequality’ at all?   People make what they make, based on talent, abilities, and choices – Not a darn one of those things is the business of the government, and the outcomes are none of the government’s business either.
        We’ve forced institutionalized generosity and given it a government mandate, and now we’ve raised several generations who no longer recognize it as generosity and think it’s their due for breathing.

    There are a LOT of people who saw this as outrageous.
    Paul Ryan definitely has his Irish up over being treated as a prop in a campaign ad, and he learned a valuable lesson: Obama is not a president, he’s a Collectivist thug in a good suit.

    • I liked Paul Ryan’s characterization of Obama as a “pyromaniac in a field of strawmen” personally.

      • Yeah, I saw that too, and thought it WONDERFULLY apt.  I’ve said many times The Straw Man is Obama’s favorite person…besides himself.  Along with TOTUS, he never leaves home without him.

  • It’s my opinion that in the not too distant future nearly every social democracy is going to have to abandon most of their most precious ideals when they finally face the fact that it just isn’t a viable form of government. It was somewhat viable as populations moved from country to city, from farms to industry, from world war to peace and the USA drove the rebuilding and financing of those economies. But now, none of them are solvent and all are fossilized and the USA is doing its level best to ensure that the boat will sink sooner rather than later. Obama seems hell-bent on ensuring that the USA joins that social democratic club and even becoming the future leader of high taxes, profligate waste and economic destruction… ironically just as all the others are proving that austerity, relaxed taxes and a hint of realism are the only way to avoid a total catastrophe. Even the Arab unrest has a hint of this as their subsidized food, fuel and so on has suddenly started rising in price. Is Obama really a Marxist idealist, or is he just too dumb to look around the world and see what is happening and really thinks that so long as the Republicans are kept at bay then everything will sort itself out?

    • It only appeared they were viable, because of the wealth generating power of market capitalism, doc.
      They NEVER really were, and their demise has been predicted since giddy-up.  It is a testament to the strength of the poor old put-upon capitalist cow that she’s sustained them all this time.

      • Yes I failed to make the distinction… clearly not viable as an on-going concern, but viable enough for a few decades to have the populace believe the advertizing. Mostly they were small countries with some advantage that kept the cash rolling in to feed their political fantasies. Sweden avoided the war and was beginning its industrial boom just as the rest of Europe needed rebuilding. New Zealand fed Britain until they were pushed under the bus. Norway struck oil. etc etc.

    • I think you could keep a relatively decent social safety net, but to do so, you will have to make sure your government is small, taxes are low, regulations are light, and you have to apply the market where you can, i.e. vouchers. Or if taxes are higher, they must truly deliver excellent services. CA has high taxes and bad schools. That doesn’t work.
      The problem is that the progressives don’t just want payments to poor people, they want a whole litany of other things, too. They still think they can have the whole pie.

  • I don’t think the man has a plan, I think he’s detached or delusional enough to believe that reality works around him, and if he says that next week the sun will rise in the west, then by God, expect that next week it will rise in the west, no work necessary, the sun will conform to his view.
    When the world works that way, you don’t ever really need a detailed plan, because any time something doesn’t work out to your expectations you proclaim a new order, and the new order will appear, leaving you time for yet another planned family vacation and a couple solid rounds of golf.  In the meantime, let everyone know (say ‘let me be clear’ a lot, and if that doesn’t work, say ‘let me be PERFECTLY clear’) that it’s going to take some work (on your part, not his) and you cheap skinflint grandmother and crippled child murdering bastards on the right better just get used to the idea that you’re not going to be allowed to murder grandma and the kid on his watch, which seems to last somewhere on the order of at least the next 12 years.
    The good news is, it will be difficult for us to ever find such a poor President for at least another 200 years.

    • “We didn’t expect it from the commander in chief,” said Ryan, who attended the speech at George Washington University at Obama’s invitation. “When the commander in chief brings himself down to level of the partisan mosh pit that we have been in, that we are in, it makes it more difficult to bring that kind of leadership.”

  • In 2010 ALL INCOME TAX REVENUE was $1.4 trillion.  If they doubled the amount each person paid this year then they would not even cover the deficit FOR THIS YEAR.

    Taxes are not too low.

    Spending is TOO HIGH.

    It does not make sense to charge for ribeye steaks at the grocery store if you hcant afford a way to cook it, or a house to live in 

  • My local newspaper (I forget if they endorsed Obama, but probably) summarizes the Obama speech with the headline ..
    … great headline for the day before taxes are due
    also amazing how all the nuance is just stripped away.

  • “These are the kind of cuts that tell us we can’t afford the America we believe in. ” Finallly The Dear Golfer says something intelligent although he obviously does not understand what he just said. I cannot afford the lifestyle that I believe in either so I don’t max out my credit cards and borrow against the equity in my property. The Dear Golfer believes in an America where all of his supporters drive Bentleys, own lots of property free and clear, and take monthly vacations on yachts. This is all paid for by the people who do not vote for him. Hey TDG you are correct, we cannot afford that!