Yes, another in a long line of spending bills which has a purported purpose it won’t accomplish. What it will accomplish is an increase in the debt.
None other than Nancy Pelosi is troubled by the fact that it appears the proposed “jobs” bill being rushed through Congress doesn’t create, uh, jobs.
The White House session with congressional leaders was supposed to be a step toward bipartisanship, with a focus on jobs. But Pelosi made it clear that there’s disagreement, even among Democrats.
White House economic advisers Christina Romer and Larry Summers defended the administration’s proposal to give employers a $5,000 credit for each new worker they hire as well as help with Social Security taxes.
Pelosi countered that no one she’s consulted believes that the plan will actually lead to the creation of new jobs, sources said.
“She questioned the efficacy of it,” one Democratic aide said.
For once, Pelosi is right – any jobs created will be at the margins. In fact, the centerpiece of the “jobs” bill is – wait for it – and extension of unemployment benefits.
And, of course, you remember the big “we’re concerned about the deficit” announcement not long ago where Congressional Democrats again said they were instituting PAYGO (a means of forcing Congress to pay for new spending by cutting the budget elsewhere or raising taxes) as a means of controlling it? Yeah, except for this boondoggle. Here’s from the last page of the draft bill:
(a) IN GENERAL.–One-half of the amounts in each of titles V and VI are designated as an emergency requirement pursuant to section 4(g) of the Statutory Pay-As-You-Go Act of 2010, and designated as an emergency requirement pursuant to section 403(a) of S. Con. Res. 13 (111th Congress), the concurrent resolution on the budget for fiscal year 2010.
In case you’re wondering what titles V and VI are, Jamie Dupree fills us in:
Title V of the jobs bill deals with expiring tax credits and tax breaks known as “tax extenders” – which Congress constantly renews every year or two, always resisting talk of making them permanent.
Those provisions are said to be worth about $33 billion, so one half of that would go to the deficit.
Title VI of the draft bill centers around extended jobless benefits and extra health (COBRA) provisions for the unemployed. That’s another big chunk of money.
The estimated total for the bill is $104 billion with little if anything in it which will actually create jobs.
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Has anyone ever considered the fact that so much debt and borrowing is a national security problem?
“From 1789 through 2008, the U.S. government borrowed a total of $5.8 trillion. In 2009, the federal budget deficit exceeded $1.4 trillion. The administration now expects the 2010 deficit to break that record, topping $1.6 trillion. And in 2011, it would only fall to about $1.3 trillion. Thus, in just three years, the debt will have jumped an astonishing $4.2 trillion.” – James Capretta, a Fellow at the Ethics and Public Policy Center
Those to whom we own money – especially as much as we do – hold some pretty powerful leverage. The Chinese military has been stomping around all week urging their government to use it. They want China to sell some US bonds to deliver a little “economic punch” to get our attention, apparently.
“Bush made me do it” won’t work when piling up this much debt. The GOP’s ready-made economic and national security issue is found within the quote. That assumes they don’t just placidly go along with the mammoth increase in the debt. And that’s never a safe assumption.
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When the NY Times entitles anything, especially an editorial, starting with “The Truth About …”, you should be immediately suspicious. As Arnold Kling says, that normally means “The liberal elite narrative about …”. And it’s editorial, “The Truth About The Deficit” is no exception. The first part of the editorial is spent on a selective history lesson which makes all of our troubles, as you might imagine, something brought on by the GOP’s focus on tax cuts for the wealthy. Nevermind that they were across the board marginal cuts – this narrative won’t die.
The entire bit of revisionist history (with the normal “blame Bush” tautology) is aimed at justifying this paragraph:
Americans should be anxious, for reasons including the huge deficit. But the cold economic truth is this: At a time of high unemployment and fragile growth, the last thing the government should do is to slash spending. That will only drive the economy into deeper trouble.
What the NYT and the Krugman’s of the world believe is government spending can be substituted for private spending and have the same result – economic growth. And that economic growth, spurred by this spending, will create jobs. But if you think about it, unless the government is buying goods and services produced by the private sector, that’s most likely not going to happen, is it? Temporary jobs located in “infrastructure improvement,” unemployment benefit extensions and jobs “programs” don’t create jobs. Private sector growth does. And when government is borrowing .40 cents for every dollar it spends, it starts to dry up the private credit market. That means if there is a desire to expand, the credit isn’t as readily available as it would be if the 800 pound credit hog weren’t in the market.
Then there’s this:
To truly tame deficits will require serious health care reform …
To which Kling replies:
In Washington, serious health care reform means “fixing” private health insurance. But our deficits are caused not by problems in private health insurance. They are caused by the structure of Medicare and Medicaid. That is where we need reform. But the Times and other liberal mouthpieces need to create a narrative that makes it sound as though unsound government programs are the fault of the private sector.
Spot on. This has been the most irritating part of the “health care reform” issue. It is the public programs – which neither party will touch – that are breaking the bank, yet we continually hear politicians on the left talk about “greedy [private] insurance companies” as the sole reason health care costs or so high. In fact, without private health care insurance to pay the difference, Medicare and Medicaid would have foundered long ago. But the point is the deficit problem is not one caused by private insurance. It has no effect on public debt. That is caused by the mismanagement of the government programs. And other than a passing wave at “stopping waste, fraud and abuse” – the promise of every politician since the inception of those programs, and accomplished by none of them – this “reform” package ignores the real problem while attacking the private market.
But back to the primary point of the NYT’s attempt to persuade you that deficit spending – massive deficit spending – is a good thing:
Here is an unpopular but undeniable fact of life: When private sector demand is weak, the federal government must serve as the spender of last resort. Otherwise, collapsing demand sets in motion a negative, self-reinforcing spiral in which lack of demand — for goods, services and new employees — leads to ever deepening economic weakness.
And here’s the undeniable economic truth about the snake oil they’re peddling:
The narrative is that we are suffering from a shortfall in demand. The reality is that the private sector has decided that workers should be hired on the basis of profits, rather than on the basis of debt. The government may choose to make a different decision, of course, but that will not necessarily strengthen our economy.
One of the many economists not at all in agreement – despite President Obama’s claim to the contrary – with the prescription that deficit spending is not only good, but necessary. And while they can blame the situation on anyone they choose, the decisions being made to run up this massive debt based on some pretty flaky economic logic are theirs and theirs alone.
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But don’t be concerned, because, you know, they have everything under control in Washington:
The US debt is on track to hit a congressionally proposed debt ceiling of 14.3 trillion dollars by the end of February, the Treasury said Wednesday, a day ahead of a key vote to raise it to that level.
“Based on current projections, Treasury expects to reach the debt ceiling as early as the end of February. However, the government’s cash flows are volatile, making it difficult to forecast a precise date,” the Treasury said in a statement.
This isn’t the old debt ceiling of $12.374 trillion. Nope, this is the new one that the Senate approved (and still awaits House approval) that adds $1.9 trillion to the ceiling. By the end of February they’ll apparently have spent another $2 trillion or so. In case you’re wondering, that proposed debt ceiling finally puts our total debt at 100+% of our GDP. We finally owe more than we make.
And yes, both political parties have added to this – but none like the present one.
Guess what – with the “jobs bill” in the wings, they’re going to want to raise that ceiling again since we’re borrowing $0.42 cents for every dollar spent by government.
And they wonder why there are tea parties and the natives seem restless, angry and “ungovernable”.
UPDATE: Apparently AFP got the story wrong. AP says:
The Treasury Department said Wednesday it expects to hit the government’s debt ceiling by the end of February, putting pressure on Congress to raise the limit from its current level of $12.4 trillion.
Still not good at all, but not at all what the AFP claimed. So to quote SNL’s Emily Litella – “nevermind” -well, until they finally do spend to the new limit which most likely won’t be that far in the future (see upcoming “jobs bill” or “health care reform” if they manage to sneak that through – your choice).
HT: Doug Mataconis for the heads up.
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Progressives like to talk about “progressive taxes”. It’s code language for screw the rich. That’s precisely what President Obama is proposing in his budget proposal. Now to be clear, none of this is new or a surprise – he said this is what he planned on doing all along. However that doesn’t make it “progressive” or sustainable. His budget proposal includes plans to:
—Raise the top two income tax rates for individuals, from 33 percent and 35 percent, to 36 percent and 39.6 percent, respectively. Unless Congress intervenes, those rates will rise next Jan. 1 when Bush’s tax cuts expire. That government would reap $365 billion over the next decade.
—Limit the itemized tax deductions high earners can claim for charitable donations, mortgage interest and state and local taxes, raising about $210 billion for the next decade.
—Increase the top capital gains tax rate from 15 percent to 20 percent for families making more than $250,000 a year and individuals making more than $200,000. The proposal would raise about $105 billion.
Of course we’re back to the old “static” analysis model here. These numbers hold if none of those effected do anything to protect their earnings and assets (or the market doesn’t research and find loopholes which allow such protection of assets) over the next decade.
So the chance of this revenue stream remaining intact and at the level suggested here is highly unlikely if you know anything about human nature and how markets work. Look at the UK for instance where the same sort of nonsense is happening:
Mike Warburton, senior tax adviser at Grant Thornton, one of Britain’s biggest accounting firms, said that clients were pursuing four main ways to avoid paying half their salary in tax: bumping up this year’s pay; storing up pay in their firm to be drawn down at a later date; leaving the country; or choosing to pay it to charity rather than the taxman.
“People are taking obvious avoidance measures because they are not prepared to pay 50 per cent tax,” Mr Warburton said.
It is unlikely they’ll be any more “prepared” to do so here than there.
Also unlikely are cuts in spending which are really what are needed. Once Congress sees this revenue stream established, even for a year – heck, even hypothetically – they’re likely to spend what is promised in the outlying years and use it in their PAYGO justifications.
Then there’s the aspect of his proposals which use the tax code to punish businesses or encourage them to not do business here at the level at which they are now engaged:
—Change the way profits made by investment fund managers are taxed, raising an additional $24 billion over the next decade.
—Impose a “financial crisis responsibility fee” on large financial institutions, raising $90 billion over the next decade.
—Restrict the ability of international companies to defer taxes on profits made overseas, raising about $26 billion over the next decade.
—Impose a total of about $39 billion in tax increases on oil, gas and coal companies over the next decade.
The tax on oil, gas and coal will simply raise the price at the retail level for all consumers, giving lie to the Obama promise that taxes won’t go up “one dime” for 95% of Americans. Additionally, the tax on the energy companies, passed on to consumers, will affect the poor much more than others. There are other ways to extract that pound of flesh than through income taxes and the administration knows that only too well, whether or not Obama supporters want to admit it or not.
And both he and they will have difficulty making that claim at all if this remains in the budget:
According to a report by The Hill President Barack Obama is seeking to end a middle-class tax break he once said would be permanent.
The $3.8 trillion budget request rolled out by the White House on Monday would renew the Making Work Pay tax credit for fiscal 2011, but then would have it sunset
Yes, that’s right, instead of making that middle class tax cut permanent as he promised, he’s proposing it “sunset” (i.e. go away) after FY 2011 (just before the 2012 election and the tax prep season so it won’t effect voters till after the election).
All in all, taxes would increase $1.1 trillion (again, assuming no person or no business effected does anything to avoid these taxes) over a decade.
Yes, that’s a lot of money – but then we’re running a deficit this year of $1.6 trillion, of which 40 cents of every dollar spent is borrowed. So while $1.1 trillion seems enormous, it’s really a drop in the ocean when looking at the promised spending over the next decade.
So listen carefully to soothing promises of fiscal restraint and concern about the deficit (and debt) in the coming weeks as the administration and Congressional Democrats give lip service to PAYGO and spending restraint. Then review this chart. The chart is their plan. If you can find any spending restraint or real deficit or debt reduction in there, please point it out. This budget and the outlying budgets are a plan for fiscal ruin. We now, for the first time, owe more than our entire GDP is worth, and the Obama administration apparently plans to see if it can double that in the shortest time possible. Any doubts about where this is headed?
And: are you beginning to understand what the Tea Parties are about yet?
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The President, Democrats and some pundits have been trying to set the public up for this for a few weeks. They talk about how important deficit reduction is in the long term, but claim that when the economy is bad and unemployment is high that is not the time to be pursuing that goal. Paul Krugman, for one, has been saying it for months. And Obama made that claim in his State of the Union address. The entire reason behind the prep was to prepare the public for massive spending and budget deficit proposal – neither of which we can afford. In anticipation of this, Democrats quietly raised the debt ceiling $1.9 trillion last week:
President Barack Obama will propose on Monday a $3.8 trillion budget for fiscal 2011 that projects the deficit will shoot up to a record $1.6 trillion this year, but would push the red ink down to about $700 billion, or 4% of the gross domestic product, by 2013, according to congressional aides.
The deficit for the current fiscal year, which ends on Sept. 30, would eclipse last year’s $1.4 trillion deficit, in part due to new spending on a proposed jobs package. The president also wants $25 billion for cash-strapped state governments, mainly to offset their funding of the Medicaid health program for the poor.
Now of course, as any good Democrat knows, this is all George Bush’s fault. They are being forced to spend this money because Bush wrecked the economy.
With that now out of the way, some interesting things are to be found in the two paragraphs cited. One, deficit year two is larger than deficit year one. Why? Because the Obama administration and the Democratic Congress spent the previously budgeted money (40 cents of every dollar borrowed) on pet projects and nonsense which were not simulative at all. Now they’re faced with the same crisis that faced them at this time last year and they’re again coming up with the same solution – throw money at it. However this time the new “stimulus” will be disguised as a “jobs bill”.
Then take notice of the claim by “congressional aides” that the deficit will be “down” to a mere $700 billion by 2013. That’s based on the assumption, per the Wall Street Journal, that some spending cuts “that have previously been proposed without success” will be passed and work as promised. Anyone – what’s the track record on those sorts of assumptions?
Of course what’s interesting is that $700 billion will be less than half the deficit proposed in this year’s budget thereby allowing Obama to claim he fulfilled the promise of “cutting the deficit in half” by the end of his first (and hopefully only) term. Hey, he never said how high he’d run it to make that promise come true, did he?
Note too that there’s a bailout of the states included in this budget. Is that a precedent we want to set? And what does the bailout address? Government run health care. It is, as usual, costing more than anticipated. Why should anyone believe government’s control of more of that market will cost less?
President Obama is also pushing for a bi-partisan debt committee to be empanelled by Congress to address the debt.
A bipartisan 18-member debt commission would forward any deficit-reduction proposals they come up with to Congress after this year’s midterm elections. Issues it would face would include how to cut the deficit further in the short term and how to rein in long-term growth of entitlement programs, such as Medicare, Medicaid and Social Security. Commission members would have to come up with between $180 billion and $190 billion in cuts to meet the president’s target.
Congressional leaders have promised the president that they would submit the panel’s recommendations to an up-or-down vote in the lame-duck session of Congress, after the elections but before the newly elected House and Senate take office.
Although it is recognition of the critical problem to our national solvency the debt represents, it is also a political ploy to shift responsibility to Congress and require them to make all the unpopular cuts necessary to reduce that debt. Congress becomes the focus of the public’s ire if it cuts favored programs, not the President. It’s another attempt by Obama to shirk his leadership role and avoid blame for making tough choices. As usual, he’ll talk about it and he’ll pontificate, but he expects others to do the dirty work and suffer the political consequences of proposing and making spending cuts and ending programs. That’ll work out well, I’m sure.
Note too that even Congress isn’t at all enthusiastic about it – they would only do these cuts in lame-duck sessions after an election but before the new Congress is seated.
And I had to laugh at this:
White House officials say they are ready to make some tough choices to get the deficit under control. White House communications director Dan Pfeiffer wrote on the White House Web site this weekend that the president’s budget would propose to terminate or cut back more than 120 programs, saving about $20 billion in the fiscal year beginning in October.
Budget proposal: $3.8 trillion. Deficit: $1.6 trillion. “Tough choices”: $20 billion.
Programs which might – I want to stress that point, might – be terminated to achieve that huge $20 billion in savings?
The proposals include consolidating 38 education programs into 11, cutting the National Park Service’s Save America’s Treasures and Preserve America grant program, and eliminating the Advanced Earned Income Tax Credit, which allows low-wage workers to get tax-credit checks in advance but which is rife with abuse, White House officials say. The Brownfields Economic Development Initiative, which converts decayed former industrial sites to new uses, would be cut, and payments ended to states to restore abandoned mines, many of which have been long cleaned up.
Social Security? Medicare? Medicaid? You know, the big drains on the budget?
Nada. Can firmly kicked to the non-existent Congressional panel (and no, the health care reform debacle didn’t address Medicare or Medicaid reform in any meaningful way) to address. He can find the will to propose huge budgets and incredible levels of spending, but apparently he’s just not going to take the political risk of proposing real and substantial cuts to spending or ending wasteful and unnecessary programs.
So we are now well into the Obama era of trillion dollar deficits (all Bush’s fault, remember) with really no end in sight. Certainly the administration wants you to believe an end is in sight, but recall that all rests on their projections and assumptions. And we all have enough experience with government projections and assumptions to know what they’re really worth.
A bucket of warm spit, if that.
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Not a day after the President’s speech telling us how important deficit reduction is, Democrats in the Senate have successfully passed a bill which will raise the debt limit by 1.9 trillion. And it was passed because Senator-elect Scott Brown hasn’t yet been seated and Teddy Kennedy surrogate Paul Kirk, cast the deciding 60th vote.
Senate Democrats needed all the 60 votes at their disposal Thursday to muscle through legislation allowing the government to go $1.9 trillion deeper in debt.
Democratic leaders were able to prevail on the politically volatile 60-39 vote only because Republican Sen.-elect Scott Brown of Massachusetts has yet to be seated. Republicans had insisted on a 60-vote, super-majority threshhold to pass the measure. An earlier test vote succeeded on a 60-40 vote.
The measure would would put the government on track for a national debt of $14.3 trillion — about $45,000 for every American — and it served as a vivid reminder of the United States’ dire fiscal straits.
And that after all the happy talk about the serious need for deficit reduction and how committed the president and, one assumes, his party was to that goal. How serious is he? Remember this?
Now, I know that some in my own party will argue that we can’t address the deficit or freeze government spending when so many are still hurting. And I agree — which is why this freeze won’t take effect until next year when the economy is stronger. That’s how budgeting works. But understand –- understand if we don’t take meaningful steps to rein in our debt, it could damage our markets, increase the cost of borrowing, and jeopardize our recovery -– all of which would have an even worse effect on our job growth and family incomes.
The usual presidential double talk – deficit reduction is important, but I’ve decided it is more important to spend more money this year despite my claim we have to reduce the deficit. I’m sorry but that quote is word salad. We must address the deficit and freeze spending but we can’t address the deficit or freeze spending even though not doing so may “have an even worse effect on our job growth and family incomes?”
Oh, that effect won’t be until after next year’s freeze? Oh, ok – spend away.
Do you see how asinine this explanation is?
And, as expected, that 15 to 25 billion “freeze” is all he mentioned as his attempt to address the deficit – again, not at all the actions of someone serious about deficit or debt reduction. More smoke and mirrors with the final act being a claim he’ll veto any bill that tries to melt that freeze. Meantime he and the Dems are raising the debt ceiling by 1.9 trillion and we’re supposed to ignore that and buy into his piddling deficit reduction scheme which doesn’t even start until next year.
Don’t know about you, but this debt increase sounds like the perfect time to wield that veto pen to me. I mean if he’s actually serious about deficit and debt reduction as he claims.
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President Obama is about to do what the pundits love to describe as a “hard pivot”. What that really means is he’s going to try to change th subject enough to divert attention from his troubles and give the impression he’s doing something for the people that they actually want. The first part of the hard pivot was his attack on banking and Wall Street. Meeting with a modicum of populist success there and in the wake of the message from Massachusetts, he’s decided it is now time to focus on jobs, the middle class and, of all things, spending.
Well sort of. He’s going to address run-away spending fostered by a Democratic Congress (don’t forget – its been a Democratic Congress for the last 4 years that has increased spending by $900 billion over the last 3 years) by asking for a 3 year spending freeze. Wait. A 3 year spending freeze on non-security discretionary spending.
Make sure you understand that. Congress is quietly trying to raise the debt ceiling another 1.9 trillion dollars and Mr. Obama decides for a symbolism over substance move to address the deficit spending. The result?
The payoff in budget savings would be small relative to the deficit: The estimated $250 billion in savings over 10 years would be less than 3 percent of the roughly $9 trillion in additional deficits the government is expected to accumulate over that time.
Or put another way, we will “save” less over 10 years than we’re presently running up a month in deficit spending.
Don’t get me wrong here – any spending reduction is good news. But this spending cut – or spending freeze, because it isn’t really a cut – doesn’t at all address the problem of runaway deficit spending. It is another example of the smoke and mirrors for which this administration has become so famous. No one who is seriously concerned about the depth of our deficit spending habit is going to take this piddling $25 billion a year freeze on spending as a serious attempt to cut the deficit. This is a reaction to public concern over the debt. And while it may sound good to the uninformed in the State of the Union address, it is a trivial drop in the public spending bucket.
Obama likes to say that he doesn’t want to “kick the can down the road” when it comes to domestic issues. Well he’s not only kicking the can down the road when it comes to domestic deficit spending, he’s making it bigger too boot. While he’ll tout the “savings” on this end, the spending on the other end will increase dramatically. You are required to “suspend disbelief”, ignore the increased spending and pretend this is an earnest attempt to reign in the deficit.
If he wants to be seen as serious about this, he can cancel the rest of the stimulus, which had done next to nothing to help relieve joblessness. He can ask Congress to cancel the omnibus spending bill which was passed earlier this year and return the money that hasn’t been spent. And he can return what is left of the TARP money to the Treasury. And if he’s really interested in not kicking the can down the road, he can address the real drains on the budget – Medicare, Medicaid, and Social Security. But we all know that’s not going to happen – in fact, he and the Democrats are trying to grow two of those three programs as we speak.
So while this will be described by the adoring media as part of that “hard pivot” to address the public’s concerns, it’s really a bone (and a tiny one at that) thrown to try to buy off those who really don’t pay close attention and to give the impression he’s serious about the deficit and the debt. Don’t be fooled – he’s serious about neither, and that’s been obvious since he was the junior Senator from Illinois. Nothing has changed since he ascended to the presidency.
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Not content with fiscally enslaving your children, Congress plans on doing the same to your grandchildren:
In a bold but risky year-end strategy, Democrats are preparing to raise the federal debt ceiling by as much as $1.8 trillion before New Year’s rather than have to face the issue again prior to the 2010 elections.
“We’ve incurred this debt. We have to pay our bills,” House Majority Leader Steny Hoyer told POLITICO Wednesday. And the Maryland Democrat confirmed that the anticipated increase could be as high as $1.8 trillion — nearly twice what had been assumed in last spring’s budget resolution for the 2010 fiscal year.
The leadership is betting that it’s better for the party to take its lumps now rather than risk further votes over the coming year. But the enormity of the number could create its own dynamic, much as another debt ceiling fight in 1985 gave rise to the Gramm-Rudman deficit reduction act mandating across-the-board spending cuts nearly 25 years ago.
You have to love the lead sentence: “In bold but risky year-end strategy …”. “Bold”? It’s more like feeding an addiction. And it’s hardly “bold” in another sense. They’re going to hide it in a defense appropriation bill:
“This is a defining moment,” said Senate Budget Committee Chairman Kent Conrad (D-N.D.), one of the lead sponsors, and New Hampshire Sen. Judd Gregg, the panel’s ranking Republican, is already maneuvering to try to add the legislation as an amendment to any bill tapped to carry the debt increase.
As explained by Hoyer and other Democrats, that will almost certainly be a pending $636.4 billion Pentagon appropriations bill that includes $128.3 in contingency funds for military operations in Iraq and Afghanistan.
That’s not “bold”, that’s cowardly. But what it buys Democrats is cover. Adding it (and hiding it) in a defense appropriations bill guarantees “bi-partisan” passage or contingency funds for our two wars won’t become law. But the fact remains this is an old tried and true tactic of both sides in Congress.
Somehow spending like this needs to see the requirement to stand alone imposed on it. Make them do this sort out in the open and in the sunlight. Make them pass any debt increases where everyone can see it – and judge it on election day.
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Another out of control government spending milestone tries to slip by quietly:
It’s another record-high for the U.S. National Debt which today topped the $12-trillion mark. Divided evenly among the U.S. population, it amounts to$38,974.34 for every man, woman and child.
Technically, the debt hit the new high yesterday, but it was posted on the Treasury Department website just after 3:00 p.m. ET today. The exact calculation of the debt is a 16-digit tongue-twister and red-ink tsunami: $12,031,299,186,290.07
And the 12 trillion mark was reached 8 months after reaching the 11 trillion mark – with oceans of red ink ahead as far as the eye can see according to the budgets the Obama administration has projected.
But don’t worry, Sec. of Treasury Timothy “Turbo Tax” Geithner, hero of the AIG bailout, had said they plan on getting serious about the debt. Are you feeling more assured now?
James Pethokoukas thinks he’s picked up on how they plan on doing that – or at least the trial balloon they’ve launched concerning their idea to see how well it flies. He saw this is the Wall Street Journal.
But the chairman of the president’s Council of Economic Advisers admitted that health reform and a growing economy isn’t enough to bring down the deficit. She did mention one other place that revenue could come from: letting the Bush tax cuts expire.
You say, “that’s not news, they’ve always talked about letting the Bush tax cuts expire”. No. That’s not what they’ve always talked about. They’ve talked about letting them expire on the richest of Americans. But “95% of you won’t see your taxes go up by a single dime” – remember? Pethokoukas thinks the statement by CoEA Christina Romer is talking about all of the Bush era tax cuts:
Since Obama already wants to get rid of the income and capital gains tax cuts for wealthier Americans that expire at the end of 2010, clearly what Romer is referring to is the rest of the 2001 and 2003 Bush tax cuts. Letting all the 2001 cuts — rate reductions, child tax credit marriage penalty relief — expire would raise tax revenues by $2.5 trillion through 2019. (These CBO numbers assume no negative economic feedback impact from higher taxes.) And letting the 2003 tax cuts on capital gains and dividends expire would be tantamount to a $350 billion tax increase through 2019. And none of this includes possible plans for a VAT that could raise $400 billion a year more to close the huge projected gap — maybe 7 percentage points — between spending as a percentage of GDP and revenues as a percentage of GDP.
3 trillion in raised taxes? If they can manage to get away with it – you bet. And the previous no new taxes pledge for the 95%? It will be explained away as having been overcome by events – the financial meltdown, bailout, stimulus, etc. And again, you will be reminded that government, not you, has first claim on your property as they again raid your paychecks to the tune of a cool 3 trillion over 10 years.
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