Tag Archives: Budget

Commentary

Does Obama have a plan to solve the debt crisis?

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A popular column by Mark Steyn on National Review.

Excerpt:

In government, being merely a quarter-century obsolete would be a major achievement. The ruling party in Washington is wedded to the principle that an 80-year-old social program is inviolable: That’s like Blockbuster insisting in 2011 that there’s no problem with its business model for rentals of silent movies with live orchestral accompaniment. To be sure, there are some problems parking the musicians’ bus in residential streets, but nothing that can’t be worked out.

But “political reality” operates to different rules from humdrum real reality. Thus, the “debt ceiling” debate is regarded by most Democrats and a fair few Republicans as some sort of ghastly social faux pas by boorish conservatives: Why, everyone knows ye olde debt-limit vote is merely a bit of traditional ceremonial, like the Lord Chancellor walking backwards with the Cap of Maintenance and Black Rod shouting “Hats off, strangers!” at Britain’s Opening of Parliament. You hit the debt ceiling, you jack it up a couple trillion, and life goes on — or so it did until these GOP yahoos came along and decided to treat the vote as if it actually meant something.

Obama has done his best to pretend to take them seriously. He claimed to have a $4 trillion deficit-reduction plan. The court eunuchs of the press corps were impressed, and went off to file pieces hailing the president as “the grown-up in the room.” There is, in fact, no plan. No plan at all. No plan whatsoever, either for a deficit reduction of $4 trillion or $4.73. As is the way in Washington, merely announcing that he had a plan absolved him of the need to have one. So the president’s staff got out the extra-wide teleprompter and wrote a really large number on it, and simply by reading out the really large number the president was deemed to have produced a serious blueprint for trillions of dollars in savings. For his next trick, he’ll walk out on to the stage of Carnegie Hall, announce that he’s going to play Haydn’s Cello Concerto No. 2, and, even though there’s no cello in sight and Obama immediately climbs back in his golf cart to head for the links, music critics will hail it as one of the most moving performances they’ve ever heard.

The only “plan” Barack Obama has put on paper is his February budget. Were there trillions and trillions of savings in that? Er, no. It increased spending and doubled the federal debt.

How about Harry Reid, the Senate majority leader? Has he got a plan? No. The Democrat Senate has shown no interest in producing a budget for two-and-a-half years. Unlike the president, Senator Reid can’t even be bothered pretending he’s interested in spending reductions. But he is interested in spending, and, if that’s your bag, boring things like budgets only get in the way.

It seems reasonable to conclude from the planlessness and budgetlessness of the Obama/Reid Democrats that their only plan is to carry on spending without limit. Otherwise, someone somewhere would surely have written something down on a piece of paper by now. But no, apparently the Department of Writing Down Plans is the only federal expense the president is willing to cut. You begin to see why the Europeans are a little miffed. They’re passing austerity budgets so austere they’ve spawned an instant anti-austerity movement rioting in the street — and yet they’re still getting downgraded by the ratings agencies. In Washington, by contrast, the ruling party of the Brokest Nation in History has no spending plan other than to plan to spend even more — and nobody’s downgrading them.

Charles Krauthammer proposes a short-term solution that will put the blame squarely on Obama in this article on National Review. I am expecting the Republicans to follow this plan – we should see it coming out this week,

Videos

Paul Ryan: cut current spending, cap future spending and balance the budget

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Grown-up Paul Ryan explains the Republican plan to cut current spending, cap future spending, and pass a balanced budget amendment to the Constitution.

So what does Barack Obama want?

“I don’t think he wants to cut spending, and I think he wants to raise taxes.”

News

The Gang of Six proposal: what’s in it and what do conservatives think of it?

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A good analysis from Dan Mitchell of the libertarian Cato Institute. (With links removed – you have to click through for the links he included)

Excerpt:

The Good

  • Unlike President Obama, the Gang of Six is not consumed by class-warfare resentment. The plan envisions that the top personal income tax rate will fall to no higher than 29 percent.
  • The corporate income tax rate will fall to no higher than 29 percent as well, something that is long overdue since the average corporate tax rate in Europe is now down to 23 percent.
  • The alternative minimum tax (which should be called the mandatory maximum tax) will be repealed.
  • The plan would repeal the CLASS Act, a provision of Obamacare for long-term-care insurance that will significantly expand the burden of federal spending once implemented.
  • The plan targets some inefficient and distorting tax preference such as the health care exclusion.

The Bad

  • The much-heralded spending caps do not apply to entitlement programs. This is like going to the doctor because you have cancer and getting treated for a sprained wrist.
  • A net tax increase of more than $1 trillion (I expect that number to be much higher when further details are divulged).
  • The plan targets some provisions of the tax code – such as IRAs and 401(k)s) – that are not preferences, but instead exist to mitigate against the double taxation of saving and investment.
  • There is no Medicare reform, just tinkering and adjustments to the current system.
  • There in no Medicaid reform, just tinkering and adjustments to the current system.

The Ugly

  • The entire package is based on dishonest Washington budget math. Spending increases under the plan, but the politicians claim to be cutting spending because the budget didn’t grow even faster.
  • Speaking of spending, why is there no information, anywhere in the summary document, showing how big government will be five years from now? Ten years from now? The perhaps-all-too-convenient absence of this critical information should set off alarm bells.
  • There’s a back-door scheme to change the consumer price index in such a way as to reduce expenditures (i.e., smaller cost-of-living-adjustments) and increase tax revenue (i.e., smaller adjustments in tax brackets and personal exemptions). The current CPI may be flawed, but it would be far better to give the Bureau of Labor Statistics further authority, if necessary, to make changes. A politically imposed change seems like nothing more than a ruse to impose a hidden tax hike.
  • A requirement that the internal revenue code maintain the existing bias against investors, entrepreneurs, small business owners, and other upper-income taxpayers. This “progressivity” mandate implies very bad things for the double taxation of dividends and capital gains.

I’m more of a Heritage Foundation guy, myself, but this post is really very good.

Now let’s see Paul Ryan’s evaluation of it, courtesy of Jennifer Rubin in the Washington Post.

Excerpt:

Meanwhile, the president has heaped praise on the Gang of Six plan, which envisions more than $1.2 trillion in tax hikes and more than $880 billion in defense cuts. (So much for Obama making “sure that we’re cutting it in a way that recognizes we’re still in the middle of a war, we’re winding down another war, and we’ve got a whole bunch of veterans that we’ve got to care for as they come home.”) As Rep. Paul Ryan (R-Wis.) points out, the president’s new favorite plan includes just about every bad idea advanced so far in the debt debate:

Heavy Reliance on Revenues. The plan claims to increase revenues by $1.2 trillion relative to a “plausible baseline.” It also claims to provide $1.5 trillion in tax relief relative to the CBO March baseline. The CBO baseline assumes the expiration of tax relief, resulting in a $3.5 trillion revenue increase. As a result, the plan appears to include a $2 trillion revenue increase relative to a current policy baseline. If the $800 billion in tax increases from the new health care law are included, the plan appears to increase revenues by $2.8 trillion, without addressing unsustainable health care spending that is driving our debt problems.

Elusive Spending Restraint. It is unclear how much the plan achieves in spending savings. Based on released documents, it appears to primarily rely on cuts in the defense budget through $886 billion in reductions from the President’s budget for “security programs.”

Lack of Entitlement Reform. The plan does not address the $1.4 trillion in spending expansions in the new health care law. The health care law increases eligibility for the Medicaid program by one-third and creates a brand new health care entitlement. It does not appear to include reforms to the Medicare program. While it appears to pursue Social Security reform, it could end up creating barriers to enactment of these reforms.

Well, at least we know what Obama stands for: huge tax hikes, ephemeral domestic spending cuts, savaging the defense budget, and zero entitlement reform. I imagine that will come up in ads for the Republican presidential nominee next year.

Sounds like it’s not a good deal for conservatives.