Obama’s Deficit Reduction Plan Is a License to Increase Spending

Right From the Start

President Barack Obama introduced his plan to reduce the deficit by $3 Trillion over the next ten years.  Mr. Obama declared that “it isn’t class warfare – it’s math.”  If I didn’t know better I would swear that Mr. Obama was a product of the Portland Public Schools – he’s failing math too.

 

Here’s the real math.  Of the $3 Trillion dollars, one-half or $1.5 Trillion comes from tax increases, $1 Trillion comes from eliminating our presence in Iraq and Afghanistan, and $580 Billion comes from reductions in Medicaid and Medicare.  If it were that simple even a community organizer could tackle the deficit.

 

But there are some real problems with Mr. Obama’s plan and he is hoping that engaging in the class war rhetoric of “taxing millionaires and billionaires” will distract people from the realities of his plan.  So let’s do the numbers.

 

First of all this isn’t a reduction of $3 Trillion.  Mr. Obama has already set forth his plan to increase spending on his Stimulus II plan by $447 Billion for his new jobs plan – a plan, which like its $1 Trillion predecessor, will neither create nor save any significant number of jobs.  Thus the $3 Trillion cut is really a $2.5 Trillion deficit reduction plan.  Still, if it were true, it would be a significant plan.  Unfortunately it isn’t true.

 

Of the $2.5 Trillion, $1.5 Trillion is a tax increase – not a reduction in spending.  History has taught us that the only way to recover from a deficit is to reduce spending or grow the economy at a rate greater than spending increases.  That same history has taught us that if you give the federal government more money in the form of tax increases, the government spends it.  If Mr. Obama were actually serious about his proposed tax increase being used specifically to reduce the deficit he would agree to cap spending and isolate the $1.5Trillion dollars to retire the debt – basically retire the bonds sold toChina. 

 

One Trillion dollars of Mr. Obama’s plan comes from assuming that the conflicts inIraqandAfghanistanwould continue at current levels for the next ten years.  Mr. Obama has already set a timetable for withdrawing from those conflicts that makes that assumption void.  Only in Mr. Obama’s world of economics – and perhaps the Portland Public Schools – can you claim a savings from something that you were never going to do.

 

That leaves us with the $580 Billion in reductions in Medicare and Medicaid.  To understand the absurdity of this proposal you have to view it along side Mr. Obama’s proposed tax increases.  Mr. Obama’s proposed tax increases begin almost immediately.  The reductions in Medicare and Medicaid occur out in the future – well past the 2012 election and closer to the expiration of a second term if Mr. Obama were so lucky.  This is a trick that Mr. Obama used to sell Obamacare as “revenue neutral” – there are slightly over $500 Billion in Medicare reductions in Obamacare which do not occur until after the 2012 elections and then only if Congress approves – an approval that history suggests in unlikely.  Trading current tax increases for the promise of future spending reductions is a scam that Americans are well on to and that is why it is never going to pass either house of Congress.

 

But Mr. Obama cannot even be straight about the $1.5 Trillion in tax increases.  He continues to posture this as a tax on millionaires and billionaires when he knows damn well the bulk of it falls primarily on small business people – the very people who created jobs, who create opportunity and who provide the path out for those in poverty. 

 

Mr. Obama has enlisted the support of Warren Buffet who dutifully tells the world that he pays taxes at a marginal rate less than his secretary.  Bullshit!  Mr. Obama knows it and so does Mr. Buffet.  The money that Mr. Buffet receives in the form of stock dividends and capital gains is money upon which the corporate income taxes have already been paid.  The actual analogy is that Mr. Buffet pays a fifteen percent surcharge on income – the actual corporate tax rate plus another fifteen percent for dividend payments.  But then again if you have amassed a fortune in excess of $40 Billion dollars you probably don’t notice – in terms of your life style – what you paid in taxes.  Also if you gifted tens of billions of dollars to Bill Gates charitable foundation you are probably receiving charitable deductions on your income taxes that exceed any taxes you might pay anyway.  (You will notice that Mr. Buffet neither took advantage of the federal law that permits you to pay more income taxes than is required, nor gave any of his billions to the federal government to assist in reducing the national debt – and for good reason.  Mr. Buffet is no fool; he knows that the federal government is the most inefficient and wasteful entity ever created and he damn well wants his hard earned money spent in a manner that is likely to actually benefit those in need.) 

 

Mr. Obama would have been better served to have spent his time with Mr. Buffet learning about what actually creates economic growth than convincing him to shill for another hare brained Keynesian economic scam.  Thank God that neither the House nor the Senate want to have anything to do with Mr. Obama’s proposals.

 

 

Post to Twitter Post to Facebook Post to LinkedIn Post to Reddit

Posted by at 06:03 | Posted in Economy, Federal Budget, Uncategorized | 33 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Rupert in Springfield

    Can we all just agree Mr. Obama isn’t that great on math? I mean come on, he expects us to believe under Obamacare $500B in Medicare cuts will actually happen, and then if his dopey plan passes another $580B in cuts to Medicare?

    The actual occurrence of over $1T in Medicare cuts would be an event of such proporation it would rank alongside Moses parting the Red Sea or the appearance of The Monolith in Kubricks 2001. In other words, it aint gonna happen.

    Can we please just dismiss Mr Obamas rhetoric and get on with more serious business of the day? The only number bigger than one trillion is the number of times we have been down this road. Democrats promise vast spending increases in the future if we have tax increases now. We get the tax increases, the cuts never happen.

    Been there, done that. I mean this trick is so old and boring it really is an insult to the national intelligence that Obama, apparently, thinks its new.

    Throw the guy a ball and some jacks to play with. The adults need to talk. 

  • Rupert in Springfield

    Can we all just agree Mr. Obama isn’t that great on math? I mean come on, he expects us to believe under Obamacare $500B in Medicare cuts will actually happen, and then if his dopey plan passes another $580B in cuts to Medicare?

    The actual occurrence of over $1T in Medicare cuts would be an event of such proporation it would rank alongside Moses parting the Red Sea or the appearance of The Monolith in Kubricks 2001. In other words, it aint gonna happen.

    Can we please just dismiss Mr Obamas rhetoric and get on with more serious business of the day? The only number bigger than one trillion is the number of times we have been down this road. Democrats promise vast spending increases in the future if we have tax increases now. We get the tax increases, the cuts never happen.

    Been there, done that. I mean this trick is so old and boring it really is an insult to the national intelligence that Obama, apparently, thinks its new.

    Throw the guy a ball and some jacks to play with. The adults need to talk. 

  • Rupert in Springfield

    Can we all just agree Mr. Obama isn’t that great on math? I mean come on, he expects us to believe under Obamacare $500B in Medicare cuts will actually happen, and then if his dopey plan passes another $580B in cuts to Medicare?

    The actual occurrence of over $1T in Medicare cuts would be an event of such proporation it would rank alongside Moses parting the Red Sea or the appearance of The Monolith in Kubricks 2001. In other words, it aint gonna happen.

    Can we please just dismiss Mr Obamas rhetoric and get on with more serious business of the day? The only number bigger than one trillion is the number of times we have been down this road. Democrats promise vast spending increases in the future if we have tax increases now. We get the tax increases, the cuts never happen.

    Been there, done that. I mean this trick is so old and boring it really is an insult to the national intelligence that Obama, apparently, thinks its new.

    Throw the guy a ball and some jacks to play with. The adults need to talk. 

  • Professor

    First of all, it is not a plan. It is a campaign speech for the far left redistributionists.
    Second, it will not ever see the light of day.
    Third, it is a joke.

    • Rupert in Springfield

      Yep, you got it. Obama has no interest in his plan passing and frankly I think would be the most astonished person on the planet if it did go anywhere.

  • Bob Clark

    Bama is full of contradictions, creating a sess pool of economic uncertainty causing the private sector to think mostly of preserving capital rather than investing it.  Here’s one big contradiction raised as an issue by even Bill Clinton and also a former FDIC chairman (Issac):  After spending hundreds of billions of dollars helping to stabilize the U.S financial system, Bama now lets his federal housing agencies (Fannie and Freddie MAC) sue banks for some $200 billion for the loans they bought from the banks (Fannie and Freddic MAC after going out of their way to expand their businesses by dropping lending standards now plead they didn’t know what they were doing).  This suit significantly endangers the stability of the U.S financial system once more, and at a time when the economy is already on the edge of dropping back into recession.

    Other contradictions:  Bama acted initially like he wanted to fight the accumulating pile of federal debt and deficit spending by appointing a commission to study and make recommendations (Simpson-Bowles); But then when the “moderate” recommendations of this commission came in, he pretty much ignores them.  One other:  This is not the time to raise taxes Bama said only earlier this year; and here we are in even softer economic times when longterm investment should be encouraged, and he proposes getting after rich cat investors. 

    As for Buffet:  I think he may have been helped by Bama in his recent multi billion dollar high yield investment in Bank of America  (Buffet met with the prez just before getting the Bank of America deal).  Buffet is now paying him back with an upcoming fund raiser in New York.  Buffet is not too proud as to turn down an opportunity at crony capitalism.  He likes the limelight too, playing his folksie role. 

    • Rupert in Springfield

      Some things in life are always funny and can pick you up when you are feeling down. Watching the You Tube video of O’Reilly losing it on Inside Edition is one of them.

      Another would be the absurdity of the government suing banks for loans the government itself was effectively underwriting.

      It’s idiotic, its absurd, and the one sign of hope on the horizon is the fact that only the absolute looney nuclear core of Obama-ites are still defending this nonsense.

  • valley person

    Half of the “spending” for the proposed jobs plan is in the form of tax cuts? Does Larry and the rest of you oppose these?

    The proposed tax increases in Obama’s proposal don’t kick in until 2013. That is “almost immediately”? I don;t think so.

    The future reductions in Medicare come in the form of gradual adjustments, as opposed to direct cuts. That is why they play out over years. Just like all the other cuts previously proposed by Republicans.  

    99% of “Small business” people don’t make enough net to qualify for Obama’s proposed tax increase. If they did they would not be “small” business people.

    I think Mr Buffet has a working calculator. He knows how much he earns, and he knows how much he pays in taxes.

    • Anonymous

      Well, wrong again. This is politics   2012 style pure and simple.

      The earnings floor for small businesses is $6MM a year (accoridng to the SBA) and up. In other words, we’re talking about half a months earnings before Obozo’s tax increase kicks in. So, your statement that $250K makes them not small businesses is pure fantasy.As far as tax cuts are concerned, you haven’t been paying attention. We oppose tax increases but what we want cut is spending. At any rate, tax cuts do not equal a savings as Obozo claims and half of his so-called savings is in the form of tax cuts.The proposed increases in Obozo’s taxes kick-in before the accounting tricks start to effect Medicare…yes the accounting tricks…that’s what they are. Gradual adjustments my ass.VP, you’re so demonstrably wrong on this one…go hang your head in shame….and quit drinking the Obozo Kool-Aid.

      • valley person

        The SBA uses gross business sales. Personal income taxes are levied on the net that the owner pockets, not the gross.  If the net is 7% of gross sales, the potential income to the owner(s) amounts to $420,000. That is within the modest increase proposed above $250K if the Bush tax cuts expire on schedule, but well below the proposed millionaire tax. 

        But in any case, only 2% of people reporting small business income fall into tax brackets above $250K a year. I said 99% don’t make enough. I should have said 98%. My bad.

        If you oppose tax increases, then you support Obama’s proposal to extend the cut in the FICA tax for working people. That is about 1/4 of his proposal. And if you support tax cuts on businesses, then you support his tax cut proposal for them, which is another 1/4. 

        His tax increases begin in 2013. His Medicare cuts begin in 2017 and are fully phased in by 2021. And no, they are not mere accounting tricks. They include increases in premiums and co-payments for certain beneficiaries.

        Can I lift my head now?

        • Anonymous

          Figures lie and liars figure. The numbers are the numbers regardless of how you turn them. This is basic Obozo math…you know the kind they teach in the public schools.

          • the real valley person

            You do realize you just completely contradicted yourself in your first 2 sentences. 

          • Anonymous

            Not even. You’d better read it again…and then if you don’t get it…read it again. Rinse and repeat.

    • Prof

      Why is he fighting and refusing to pay his back taxes of 1 billion then??

  • I am not sure how Obama passed 8th grade math but a community organizer does not need to learn math?

  • Pingback: Blue Coaster33()

  • Pingback: alkaline water()

  • Pingback: tvpackages.net()

  • Pingback: parking()

  • Pingback: laan nu og her()

  • Pingback: alkaline water machine()

  • Pingback: parking()

  • Pingback: 5 star electrical()

  • Pingback: plumbing questions answers()

  • Pingback: bottled alkaline water()

  • Pingback: pay per day loans plan()

  • Pingback: house blue()

  • Pingback: useful link()

  • Pingback: water ionizer plans()

  • Pingback: alkaline water()

  • Pingback: water ionizer loans()

  • Pingback: water ionizer()

  • Pingback: link()

Stay Tuned...

Stay up to date with the latest political news and commentary from Oregon Catalyst through daily email updates:

Prefer another subscription option? Subscribe to our RSS Feed, become a fan on Facebook, or follow us on Twitter.

Twitter Facebook

No Thanks (close this box)