Free Markets, Free People

spending

Budget Voodoo

Barack Obama is about to submit his first budget to Congress.

Finally, because we’re also suffering from a deficit of trust, I am committed to restoring a sense of honesty and accountability to our budget.  – President Barack Obama to a joint session of Congress, Feb 24, 2009

That’s the promise.  The reality, as the Washington Post observes, isn’t quite in keeping with the promise:

President Obama’s spending plan is built on the assumption that lawmakers can resolve some hugely contentious issues — and it relies on a few well-worn budget tricks.

The tricks?  The usual stuff – calling something what it isn’t and inflating future spending numbers to make the future real numbers appear to be “savings”.  For instance:

And though Obama told Congress on Tuesday that his budget team has “already identified $2 trillion in savings” to help tame record budget deficits, about half of those “savings” are actually tax increases, administration officials said. A big chunk of the rest of the savings comes from measuring Obama’s plans against an unrealistic scenario in which the Iraq war continues to suck up $170 billion a year forever.

The tax increases, of course, include an increase in taxes on the top 2%.  And further savings are based on pretending that the Bush administration planned on spending $170 billion (seems like a small number when compared to the numbers being thrown around these days, doesn’t it?) beyond 2011 when it planned on pulling the bulk of the troops out of the country.

“It’s a hollow number,” said Sen. Judd Gregg (R-N.H.), the senior Republican on the Senate Budget Committee, who recently withdrew as Obama’s nominee to head the Commerce Department. “You’re not getting savings if you’re assuming spending that isn’t actually going to occur.”

What accounts for the other major source of income?

 But to pay for it, the president counts on a big infusion of cash from a politically controversial cap-and-trade system, which would force companies to buy allowances to exceed pollution limits. 

The promise that energy costs are going to skyrocket seems one promise he’s bent on keeping.  That of course will require more spending to offset the consequences (but don’t figure on being in on the subsidy, you probably won’t qualify).  And then there’s the redistributionist “spread the wealth” bonus to be realized from cap-and-trade:

Obama also wants to use the money to cover the cost of extending his signature Making Work Pay tax credit, worth up to $800 a year for working families. That credit, which will cost $66 billion next year, was enacted in the stimulus package, but is set to expire at the end of 2010.

Cover the cost is a way of saying, making the program permanent.

Then there’s the deficit promise.  Obama has set a goal of cutting the deficit in half by the end of his first term.   As observers say, there’s absolutely nothing difficult about reaching that goal:

This year’s budget deficit is bloated by spending on the stimulus package and various financial-sector bailouts, expenses unlikely to be repeated in future years. The nonpartisan Congressional Budget Office recently predicted that the deficit could be halved by 2013 merely by winding down the war in Iraq and allowing some of the tax cuts enacted during the Bush administration to expire in 2011, as Obama has proposed. That alone would cut the deficit to $715 billion, according to the CBO.

Notice that final number, folks.  That’s “half” of the deficit.  In other words he’s going to be running a deficit north of $700 billion dollars and trying to convince you how well he’s done.  In fact, all he’ll have done is add several trillions to the debt with several trillions more to come if reelected.

The era of big deficit financed government isn’t just back, it’s back on steroids sitting in a rocket sled pointed at economic  hell.

~McQ

Healthcare: A 634 Billion Dollar “Downpayment?”

The Washington Post tells us:

President Obama is proposing to begin a vast expansion of the U.S. health-care system by creating a $634 billion reserve fund over the next decade, launching an overhaul that most experts project will ultimately cost at least $1 trillion.

I put those words in bold so you would understand that even the WaPo considers his plan to be “a vast expansion”.

Now, a question for you – when is the last time you remember “experts” who projected anything to do with the cost of a government program coming anywhere close to the ultimate cost? Or overestimating the cost?

So what can we really expect the true “ultimate” cost to be? Well if history is any guide somewhere around 2 to 3 times what they’re “projecting.”

And how will he pay for this?  Why the same way Medicare has – by shifting costs to patients with private insurance and letting them pick up the slack:

Obama aims to make a “very substantial down payment” toward universal coverage by trimming tax breaks for the wealthy[tax increases – ed.] and squeezing payments to insurers, hospitals, doctors and drug manufacturers, a senior administration official said yesterday.

 BOHICA

Of course, understand that when the cost of your private health insurance benefit goes up because of all the “squeezing” (i.e. cost shifting) going on, your company will either cut benefits, raise your insurance premium or both.  And you shouldn’t at all be surprised that if given the option of dropping health care insurance for a government run system or continuing to pay through the nose for a private one, your company takes the first option.  That is also part of this plan, although unstated.

~McQ

Schumer – Take It Or Leave It

Sen. Chuck Schumer has decided he, not the Constitution, should be final arbiter as to whether states take the stimulus money or not:

“No one would dispute that these governors should be given the choice as to whether to accept the funds or not. But it should not be multiple choice.”

So he sent a letter to the OMB Director, Peter Orszag in which he said:

As you know, Section 1607(a) of the economic recovery legislation provides that the Governor of each state must certify a request for stimulus funds before any money can flow. No language in this provision, however, permits the governor to selectively adopt some components of the bill while rejecting others. To allow such picking and choosing would, in effect, empower the governors with a line-item veto authority that President Obama himself did not possess at the time he signed the legislation.

Well, Chuckie, no language in there says they must accept it all either. And, btw, many governors do enjoy line item vetoes.

And then there’s that pesky 10th amendment.

~McQ

9,000 earmarks in omnibus spending bill

“I can find no warrant for such an appropriation in the Constitution; and I do not believe that the power and duty of the General Government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit. A prevalent tendency to disregard the limited mission of this power and duty should, I think, be steadily resisted, to the end that the lesson should be constantly enforced that, though the people support the Government, the Government should not support the people.” – Grover Cleveland

An omnibus spending bill introduced today in Congress is stuffed with 9,000 earmarks:

“We need earmark reform,” Obama said in September during a presidential debate in Oxford, Miss. “And when I’m president, I will go line by line to make sure that we are not spending money unwisely.”

President Obama should prepare to carve out a lot of free time and keep the coffee hot next week as Congress prepares to unveil a $410 billion omnibus spending bill that’s riddled with thousands of earmarks, despite his calls for restraint and efforts on Capitol Hill to curtail the practice.

The bill will contain about 9,000 earmarks totaling $5 billion, congressional officials say. Many of the earmarks – loosely defined as local projects inserted by members of Congress – were inserted last year as the spending bills worked their way through various committees.

In case you’re wondering, the highest number of earmarks in a single year is 13,997 (2005) at a cost of $27.3 billion. Though the number of earmarks dropped to 9,963 in 2006, the cost surpassed the previous year at $29 billion.

Obama has pledged to “slash earmarks to no greater than 1994 levels and ensure all spending decisions are open to the public.” This spending bill isn’t a great start on that promise.

You can read the FY 2009 Omnibus Appropriations Act here.

H/T: Club for Growth