Budget Fuss

President Barack Obama at last presented his budget proposal on Wednesday, two months after the legally mandated deadline and late enough for the press to declare it “long-awaited,” and it proves an interesting document. It’s probably irrelevant, as none of Obama’s previous budget proposals have ever gained so much as single vote in Congress and this one looks likely to fare even worse, but it’s interesting nonetheless.
In its totality the budget proposal is typical of all of Obama’s past political efforts, with big tax hikes imposed mainly on the wealthy and some cuts taken from defense while increasing spending elsewhere, with no end to the massive amounts of the red ink in sight, but buried deep within are a few ideas that are pleasantly surprising, such as asking federal employees to contribute more to their pensions and health care as well as a sort of jargon-laden acknowledgement that some sort of entitlement reform is ultimately necessary. None of it comes close enough to fixing the nation’s soon-to-be-calamitous fiscal condition to win any the vote of any real Republican, but it’s more than enough than to infuriate the more noisome elements of Obama’s Democratic base, and sufficient for the president’s more ardent admirers in the press to deem it part of his “charm offense” and a move toward an admirably more pragmatic and less political approach.
Those pressmen are probably over-doing it a bit, as Obama is still insistent on tax hikes and deficit spending that are calculatedly unacceptable to the Republicans, and his tone when announcing the plan was still full of partisan punchiness. After hilariously arguing that his massive tax hikes are “a fiscally responsible blueprint for middle-class jobs and growth,” Obama went on to blame his opposition for the supposed catastrophes of the “sequester” budgets cuts that were originally suggested by his staff. He even kept a straight face as he claimed that the currently robust recovery will continue “as long as Washington doesn’t get in the way.” Any real Republican believes that Obama’s tax hikes and deficit spending on ever-expanding regulations are precisely what’s getting in the way of a recovery more robust than the current 0.4 percent growth rate, of course, but Obama clearly remains uninterested in such crazy talk.
Such rhetorical red meat won’t satisfy the true believers in Obama’s party, however, given the heresies he has laid out in the budget proposal. Asking government workers to pay toward their pensions and health care at something approaching the rate of a private sector employee made Wisconsin Gov. Scott Walker and New Jersey Gov. Chris Christie the left’s most vilified figures in public life, and any attempt to prevent the imminent demise of any entitlement program is somehow regarded as a blasphemy against Franklin Roosevelt. Even such “baby steps,” as the venerable right-wing National Review approvingly dubs it, are enough to create a rift within his party and opening for the Republicans.
Obama has merely proposed an accounting change in the way Social Security benefits are dispersed, dryly dubbed “chained CPI,” but as the ads are already saying on local talk radio that translates to Social Security which will inevitably prove unpopular not only with staunch leftists but also with many older and more-prone-to-vote Americans. Opportunistic Republicans can run on their outraged opposition to throwing the old folks out on the street in the next election cycle, neatly flipping a traditional Democratic theme, while more principled Republicans can run on Rep. Paul Ryan’s House-approved plan that maintains the status quo for the over-55 crowd while offering the next generations more free-market options as an appealing replacement to the entitlement systems, and in either case they could do well.
If Obama is being the shrewd politician that the press portrays, it is hard to see how his plan will benefit his party. Perhaps he’s reacting responsibly to the economic and fiscal realities that he confronts, in his own half-hearted and characteristically partisan and ideological way, but c’mon.

– Bud Norman

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Fiscal Health, Mental Health

At least one side of the great federal budget debate has clearly gone stark raving mad. It might be us, a possibility one should always acknowledge, but we’re pretty sure it’s the Democrats.
Back in the dark days of the Bush administration the Democrats would become downright apoplectic about the half-trillion dollar deficits that the Republicans were racking up, with Senator and presidential candidate Barack Obama going so far as to call it “irresponsible” and “unpatriotic,” but ever since they’ve been noticeably more insouciant about the trillion-dollar-plus deficits that have annually accrued. Lip service would still paid to notions of fiscal responsibility, always accompanied by a principled insistence on a “balanced” approach of mythical spending cuts and actual tax hikes, but without the same sense of urgency. There was reason to suspect that the Democrats believed the national debt wasn’t much of a problem at all, and wouldn’t be at almost any amount, but because they had simply dispensed with the budget process altogether it was never necessary for them to come right out and say so.
Democrats in the Senate have lately felt compelled to offer a detailed budget proposal for the first time in four years, however, and the document is jarringly candid even if the claims being made for it by the authors are not. The Democrats’ plan would never a balance any budget for the next 10 years, increase spending by 62 percent over that time, and add another $7 trillion to the national debt even as it raises taxes by $1.5 trillion. Those eye-popping numbers are almost certainly over-optimistic, too, as they are based on an assumption the nation’s gross domestic product will expand from 3.8 percent to 6.6 percent every year for a decade. Such robust growth exceeds the average performance of the American economy, and seems especially unlikely when another 62 percent of regulatory bureaucracy is added to the private sector and another $1.5 trillion is sucked out. Some Democratic Senators have been touting the budget’s spending cuts, which are mostly of the phony-baloney Washington accounting variety, but their own documents show they are fare outpaced by the added spending.
The president hasn’t yet submitted his budget proposal, being far too busy with international crises and golf to have met the legally-mandated February deadline, but that is of little matter considering that none of his previous budget proposals have yet to win a single vote in either chamber of Congress. Those past Obama budgets all included seas of red ink, and an interview with the ABC newsman George Stephanopolous the president signaled that the next one would do the same. Obama that “My goal is not to chase a balanced budget just for the sake of balance. My goal is how do we grow the economy, put people back to work, and if we do that we are going to be bringing in more revenue,” and the reliably friendly former Clinton staffer did not challenge the point. He might have noted that financial solvency is not something that is desired merely for its own sake, or asked how higher taxes and further government intrusion into the private sector is going to grow the economy and put people back to work, or why anyone should believe that the government wouldn’t spend beyond any additional revenue even if it did occur, but such questions never seem to occur to Democrats.
Obama warned that “We’re not gonna balance the budget in ten years” because the Republican plan to do so proposed Rep. Paul Ryan includes such horrors as medical vouchers for seniors and a tax hike on the middle class. The vouchers are only horrible because they offer citizens a choice, and the middle class tax hikes aren’t in the Ryan plan at all, but Obama nonetheless echoes the constant Democratic chorus that the Republican’s budget is a demented documented favored only by the most extreme right-wing radicals. To hear the Democrats and their media allies tell it, the Ryan would unleash such horrors on the poor and downtrodden that not even Charles Dickens could do them justice. Others are aghast that Ryan would even be so rude as to propose anything, given that he was on a losing presidential ticket and that the country clearly chose another decade or so massive borrowing.
Extreme right-wing radicals such as ourselves find Ryan’s budget a rather modest proposal, however, and are grousing for far sterner stuff. The plan includes such attractive features as a repeal of the budget-busting, job-killing bureaucratic nightmare that is Obamacare, but it also continues the recent Obama tax hike on the rich, takes ten years to reach a balance budget without making a debt in the existing debt, and despite its supposedly draconian cuts allows for 3 percent annual growth in federal spending. A more thorough downsizing of the federal behemoth would be much preferred, but at least the Ryan plan acknowledges the reality that the government needs remain financially solvent for than “it’s own sake.”
On the other hand, maybe a government can just borrow another trillion dollars every nine months for ever and ever. Perhaps governmental micro-management will produce an economic boom for the first time in history, and the Democratic politicians elected by a grateful public won’t spend all the money that comes in and then borrow even more. Maybe we should rack up some debt of our own, and not worry about avoiding bankruptcy merely for its own sake. It’s possible that we’re being crazy to try and stay in the black, but we doubt it.

– Bud Norman

In Quite a State

The state of the union, according to the president’s latest annual oration on the topic, is stronger. Presidents always say this sort thing in State of the Union addresses, regardless of the circumstances, so perhaps President Barack Obama can be forgiven for merely following form.
There isabundant evidence that the state of the union is not nearly so strong as it was when Obama gave his first address, however, and his arguments to the contrary were not convincing. He touted an end to a “decade of war” despite the growing dangers of the world, and boasted of a Fed-inflated stock market bubble. He argued that his massive new bureaucracies mean “consumers, patients, and homeowners enjoy stronger protections than ever,” presumably from those nasty corporations, but seemed unconcerned about what will protect them from the bureaucrats. He further claimed that “we have cleared away the rubble of crisis,” but left unmentioned that we have also piled up an additional $6 trillion or so of debt in the process.
Nothing else in the speech offered much hope that thing the country will soon be strengthened in any noticeable way. Obama threw in some boilerplate language about encouraging free enterprise and rewarding individual initiative, but he seemed to rush through it on his way to calls for higher taxes, more government spending in areas of the economy that have traditionally been left to private enterprise, and an unmistakably collectivist ethic. All of this was couched in the language of “revenues,” “investments,” and “helping folks,” of course, but the point was still clear. He also argued that the government should become “smarter,” a worthy goal, but still seemed smitten with the alternative energy “investments” that have thus far been an expensive diversion from the potential traditional energy boom. Obama’s opponent in the past election was provably smart about investing, though, and Obama managed to convince a majority of voters of that the poor overly-rich fellow should be reviled for it.
The speech also stressed the need to “forge reasonable compromise” to make “some basic decisions about our budget” to avoid the so-called “sequestration” cuts, lamenting the government’s tendency to “drift from one manufactured crisis to the next” without mentioning that the sequestration cuts were his idea. Nor did he mention that the government hasn’t had a budget at all during his time office due to his party’s control of the Senate. He was slightly bi-partisan in noting that “both parties have worked together to reduce the deficit by more than $2.5 trillion, meaning that they agreed to not go yet another $2.5 trillion in debt, but it was still understood as a warning to the Republicans they should cave early in the upcoming budget negotiations.
More talk of reasonable compromises followed, with Obama generously agreeing to “modest reforms” of the entitlement system so long as they are accompanied by yet another round of “revenue increases.” The multi-trillion dollar shortfalls in the entitlement programs require only slight tweaking, apparently, and so long as those darned rich people pay more Obama seems willing to go along.
Obama added some talk of illegal immigrants and guns, threw in a subtle allusion to homosexuality, and finished with the usual tear-jerking shtick about the little people out there. We were to stunned to follow it after the part about Obamacare driving down health care costs, though, and we assume it was much the same as in past speeches. This was the fifth Obama State of the Union address and there only three to go, unless he decides that those pesky term limits are of more consequences than the rest of the Constitution, so we do feel slightly strengthened by that.

– Bud Norman

That Confounding Obamanomics

Perhaps it’s because Barack Obama’s genius is so far beyond the comprehension of mere mortals, but even after four years of pondering we’re still having the hardest time understanding his economic theories,
We’ve never quite grasped, for instance, the part about how the economy crashed in 2008 and has never fully recovered because the income tax rates for the top 2 percent of earners were set a few points too low way back in the dark days of the Bush administration. So far as we can tell the president has never attempted to explain this counter-intuitive contention, and instead seems content with the knowing nods that it always gets from his avid admirers, but we’d love to hear him walk us through it some day. We thought the recession had something to with the government’s insistence that the banks make hundreds of billions of dollars in home mortgage loans to people who were never going to be able to pay the money back, but the president has never made any mention of that so there must not be anything to it.

Some people have explained on the president’s behalf that the too-low tax rates for the hated rich caused the deficit to rise, which somehow caused all those people to default on their mortgages, and they seem to truly believe this. When we note that federal revenues actually increased in the years after the tax rates were lowered, and continued to rise until all those bad loans brought the banks down, they always respond with an exasperated sigh that sounds quite convincing. We also note that the deficits have doubled since Obama took office, but apparently this is also Bush’s fault, and we’re assured that deficits are necessary to stimulate the economy.

It makes some tenuous sense, we suppose, that if the too-low tax rates caused the recession then upping them a few points would restore the nation’s economic health, but that leaves us wondering why the president is also insisting on another round of multi-billion dollar stimulus spending. According to one story the spending is needed to offset the economic drag of a tax hike, but if so it would seem much simpler to just skip the tax hike. Adding to the confusion, the proposed spending would add to the deficit that is said to have caused the economy to tank and remain tanked, but maybe it will only add to the good kind of bigger deficit that stimulates the economy.

All those trillions of dollars of deficit spending over the past four years don’t seem to have done much stimulating, not at first glance at the statistics measuring economic growth and job creation, yet the president’s many fans insist that without it everyone in the country would now be rubbing sticks together in caves and shooting each other over the last bushel of grain. There’s no way of proving this, economics being such a dismal science, but neither is there any way of disproving it so we’ll just do the fashionable thing and take the president’s word for it.
We’re also assured that no matter how many trillions of dollars of debt accrue there will none of the negative consequences that have followed in Greece, Spain, Argentina, or any of the other countries that have taken such a profligate path. Why this is so we’re not sure. Something to do with American exceptionalism, probably, although the president only believes in that to the same extent that the Greeks believe in Greek exceptionalism.
Oh well, there’s another four years to figure it all out. We’re sure that happy days will be here again by then, and the genius of it all will be clear.

– Bud Norman

Easing Into Darkness

The Arab spring has turned to a brutal fall, the president can’t quite decide if the Egyptian government that he helped bring into power is a friend or foe, and there seems to be a similar question in the president’s mind about Israel as it readies for a war with Iran. The folks down at the stock market are happy, though, because the economy’s so lousy that the Federal Reserve has decided to hand it a whole lot of newly-printed money.

Citing all the familiar economic doom and gloom, a statement from the Fed on Thursday announced that it will buy $40 billion of mortgage-backed securities every month for an indefinite period of time as part of a third round of “quantitative easing” that will wind up increasing the money supply by more than $3 trillion. Given that the Fed also signaled its intention to keep interest rates at their current historical lows for the foreseeable future, making bonds and other fixed-income investments a mug’s game, much of that money will quickly make its way to Wall Street.

This made for a big rally on the big boards, naturally enough, but it’s hard to see how it will do much for a real economic recovery on less fashionable roads. The first two rounds of quantitative easing clearly didn’t work, or there wouldn’t be any need for a third one, and there is no convincing theory to explain why this effort will be any more successful. There’s an old adage that the third time’s a charm, but we can find no scientific basis for this notion, and our thrice-married friends assure us that it’s bunk.

What’s troubling the economy is not a lack of pieces of paper printed with green pictures of federal buildings and former officials, as these are already in greater abundance than ever, but rather a lack of incentives for people to start moving them around. Until the tax codes, regulations, and prevailing political climate all signal that Americans can expect to keep most of what they earn, the Fed can roll out the dollars at a Weimar-era rate and the smart money will still be seeking a safe haven far offshore.

The Fed’s actions entail considerable risks, too. One of the reasons that people are sitting on their money is a reasonable expectation that the government’s about to go broke, and although Fed Chairman Ben Bernanke said in a Thursday news conference that his plan won’t affect the budget it is unlikely that it will induce any non-Tea Party politicians to cut back on their spending. Should the plan actually stimulate the economy, whatever goods and services are created will be chasing so much money that a ‘70s-style inflation rate might prove a best-case scenario. More dollars mean a weaker dollar, as well, and could even threaten the reserve currency status.

None of the negative effects will be immediately apparent, however, unless you’re a retiree who was suckered into bonds and other traditional retiree-age investments, and by the time the worst of it hits the election will be long past. Any short-term benefits that might occur will be more immediate, on the other hand, but surely it would be paranoid to think that politics had anything to do with it.

– Bud Norman

Budgetary Baloney

Sometimes the muse fails a writer. Some outrages are so outrageous, some absurdities so absurd, some lies so utterly false, that the precise analogy, the proper metaphor, or even the accurate words remain elusive. So it is with President Barack Obama’s boast last week that he’s a fiscal skinflint who has been heroically dealing with massive debts caused entirely by Republicans.

“This other side, I don’t how they’ve been bamboozling folks into thinking that they are the responsible, fiscally-disciplined party,” Obama said Wednesday during yet another fund-raiser, this time in Denver’s Hyatt Regency Hotel. “They run up these wild debts and then when we take over, we’ve got to clean it up.”

What word could one employ to describe such balderdash, such bushwa, such malarkey, such claptrap, such hooey? If not for our strict standards of decorum we could toss in a few choicer synonyms from the barnyard vernacular, but even those would not quite be le mot juste for this sort of mendacious nonsense. What can one possibly liken to such a rant, when even the most far-fetched analogy falls short of its extraordinary dishonesty, and even the most damning metaphor fails to express its utter mendacity, and even the most pointed joke cannot match its knee-slapping hilarity?

Obama’s bizarre claim apparently originated with an article at the Wall Street Journal’s MarketWatch site, where staff writer Rex Nutting asserted that the “Obama spending binge never happened,” and that government spending has risen during Obama’s administration at the slowest pace since the 1950s. The Obama campaign has been widely disseminating the article, the candidate himself smirkingly cited “real liberal outlets like The Wall Street Journal” as his corroborating evidence, and there is nowhere else on earth that the idea could have possibly been contrived.

Nutting’s article is pure accounting legerdemain, of course, as numerous commentators quickly noted. The smarter bloggers at Pajamas Media noticed it, as did the conservative think tankers at the Heritage Foundation, and even the president’s usually reliable allies at The Washington Post took time out from investigating Mitt Romney’s high school cruelties to give Obama’s Nutting-based claims three “Pinocchios” in a fact-checking column. More detailed explanations are clearly given in the linked articles, but the gist of it is that Nutting took a whole lot of spending that originated with Obama and moved it back to the Bush years, then used that record-setting baseline to measure the supposedly modest increases of Obama’s ensuing big spending years.

The Bush era was regrettably profligate, with an astounding $4 trillion in debt accrued during the eight years, but just three years of Obama have added another $5 trillion, government spending as a share of the national economy has risen to levels not seen since World War II, and in every budget the president has submitted he has asked for so much more spending that none one single member of Congress would vote for the proposal. Although congressional Republicans have too often been guilty of overspending, a situation now being slowly rectified by the party’s fed-up base in primary after primary, it should also be noted the biggest deficits of the Bush era occurred during his last two years, when anti-war sentiment and general Bush fatigue had caused a Democratic takeover of congress, and that Democratic control of both the legislative and executive branches resulted in new records.

Obama’s claim to fiscal probity is so wildly implausible, then, that many people might take it to be true. The ploy is a perfect example of how you can indeed fool some of the people some of the time, but it seems unlikely to fool enough of them for long enough to do Obama much good. Even the most sycophantic newspapers and broadcasters seem unwilling to go along with the ruse, and Obama likely won’t be able to resist getting back to his previous lines about how the stimulus saved the world, his many investments will pay off some in the future, and how he’s cut a sufficient number of government checks to be owed the loyalty of an electoral majority.

For Obama to continue to criticize his predecessor’s spendthrift ways is like, well, once again there seems to be no analogy at hand. At least the next time some politician makes a suitably outrageous claim, we’ll be able to say “That’s like Barack Obama claiming he’s a budget hawk.”

– Bud Norman

Running Up the Score on the Budget

There’s something strangely fascinating about the big blow-out scores that occasionally appear in the sports pages. We don’t mean the 30-point differences that frequently occur in basketball games or the 50-point margins that are a regular feature of the football schedule, but rather those cringe-inducing triple-digit shut-out drubbings that only happen once a season or so. Seeing such humiliating scores always cause us to wonder how they came about, and whether it was the winner’s exceptional skill or the loser’s extraordinary ineptitude that led to such a lopsided result.

No such speculation is necessary after Wednesday’s big blow-out at the Capitol, where President Barack Obama’s budget proposal went down to ignominious defeat by the staggering score of 0-99. That follows a 0-414 defeat in the House of Representatives last month, for a congressional season total of 0-513, and there’s no point wondering why. It can’t be the high quality of the competition, because no other budget plan has found congressional approval for the past three years, so the rather convincing score can only be attributed to the low quality of the president’s plan.

Obama’s most stubborn defenders will no doubt downplay the significance of vote, saying that the president only proposed a budget because of some archaic legal requirement and never really intended that it be enacted. As The New York Times helpfully explained when Obama introduced the budget proposal last February, it “amounts to an election-year bet that a plan for higher taxes on the rich and more spending on popular programs like infrastructure and manufacturing will trump concerns over the deficit,” and the true Obama believers will no doubt see nothing wrong with such political maneuvering. Still, they can’t possibly unembarrassed when even the likes of Al Franken, Barbara Boxer, Maxine Waters, and Bernie Sanders can’t be persuaded to cast a vote for the staggering debt that the Obama budget envisions.

Although the budget proposal and the Republicans’ insistence on a vote were both mere political gimmicks, the outcome is nonetheless worth noting. When Obama takes to the campaign trail to tell voters that some Republican proposal or another cuts funding for some sacrosanct program or another by a certain percentage, he’s talking about how the Republican proposal compares to his own budget plan. The Republican proposals will inevitably seem stingy by comparison, and Obama is apparently calculating that by the time the Republicans explain the budgetary reality voters will too bored and confused to appreciate that the president is actually proposing to bankrupt the country at a rate even the congressional Democrats cannot condone.

The trick might just work, as many American voters are quite easily bored and confused, but being able to point to a scoreboard flashing 0-513 could help the Republican efforts. We’ve seen teams that have lost basketball games by 30 points or so wind up cutting down the nets at the end of a season, but the teams that suffer the triple-digit losses usually don’t fare so well.

– Bud Norman

Dueling Budgets

That Rep. Paul Ryan sure is an awful, horrible, low-down, mean person, at least to hear President Barack Obama tell it.

Speaking before an adoring audience of editors and reporters at an Associated Press luncheon on Tuesday, Obama said that the Wisconsin congressman’s recently proposed budget plan was “thinly veiled social Darwinism.” He further stated that the Ryan plan is “so far to the right that it makes the Contract with America look like the New Deal.”

The latter charge was presumably meant as a disparagement, although it is unclear which of the two programs is being disparaged. The New Deal failed to lower the unemployment rate below 14.6 percent until World War II, and burdened future generations with such fiscal calamities as Fannie Mae, Freddie Mac, and Social Security, while the Contract with America included a welfare reform bill that is widely regarded as one of the more successful laws of the past generation, as well as tax cuts for small businesses such as the president now claims to champion. It also had some rather unexceptional reforms that were never passed into law, such as term limits and an independent audit of Congress, and some ideas that weren’t passed, such as a balanced budget amendment, that might have saved us from a number of current problems. Few Americans will remember anything that was included in the Contract with America way back in 1994, much less be able to name anything extremely right-wing in it, but Obama seems hopeful that many will vaguely recall the bad press it got from his adoring audience of editors and reporters.

The “thinly veiled social Darwinism” line is a more unambiguous insult. While Darwinism as a biological theory is so fashionable that to question any aspect of it marks one as a hopeless rube, Darwinism as a social theory is universally despised. Obama elaborated on the charge by claiming that the Ryan budget would “end Medicare as we know it,” deny mothers and children healthy food, dirty the water and air, and generally impose widespread misery on the populace. Hearing Obama describe the plan, one can imagine Ryan twirling his moustache and cackling a maniacal laugh as he ties the poor mothers and children to the train tracks, his murderous scheme thwarted only because the Amtrak subsidies have been slashed and no train is coming.

The Medicare trustees concede that the program as we know it will end with insolvency in 2024 anyway, so Ryan’s plan to replace it with a voucher system doesn’t seem very socially Darwinian, but the other charges do sound quite dreadful. Looking at the actual Ryan proposal, however, reveals that it would actually increase government spending, doesn’t actually balance the ledgers for decades, and that by 2022 the government’s budget as a share of gross domestic product would actually be higher than in the last two years of President Bill Clinton’s administration. Those years were the good old days, according to Democratic legend, and even Clinton’s most bitters foes don’t recall them as an era of starving mothers and children, dirty air and water, widespread misery, and survival of the fittest.

Ryan’s plan is undeniably stingy when compared with Obama’s budget proposal, however. The Obama plan is to rack up another $6.4 trillion in debt between 2013 and 2022, or nearly $11 trillion under the more realistic “alternative fiscal scenario,” and hope that it all works out in the end. Just for yucks the House actually voted on the proposal, and it failed by a rather lopsided vote of 0-414. When even Nancy Pelosi can’t bring herself to vote for such a budget, it might be considered, well, so extreme that it makes the New Deal look like the Contract with America.

– Bud Norman

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