- Begin Excerpt
- The Obama administration is trumpeting their efforts
to cut the massive $3.7 trillion budget by a measly $100 billion this next
year and cutting a claimed $1 trillion over the next decade. However such
a claim spread over ten years is the cruelest form of fiscal deceit. In
the first place, no budget stays in place for more than a year, so any
projections spread over a decade are simply meaningless--meant only to
exaggerate the appearance of the cut. Second, budget creators know that
virtually no one is counting or checking to see if a budget promise made
ten years ago is still on track. If that weren't bad enough, the income
and taxing assumptions upon which this budget is based are deceptive, inaccurate
and politically impossible to achieve.
- As the Washington Times lamented, "Mr. Obama's 2011 budget will
see the biggest one-year jump in debt in history, or nearly $2 trillion
in a single year. And the administration says it will reach $15.476 trillion
by Sept. 30, the end of the fiscal year, [amounting to] 102.6 percent of
gross domestic product (GDP) -- the first time since World War II that
dubious figure has been reached." Even these numbers don't count all
the other unfunded obligations of the US government, estimated conservatively
to exceed $50 trillion.
- "The president's budget said debt as a percentage
of GDP will top out at 106 percent in 2013, but only if the economy
booms". Indeed, the president based this topping out on unrealistic
growth estimates for the next ten years. Almost everyone agrees that growth
will be flat for the next two years, and if there is the perception of
growth, it will only be a result of monetary inflation and government deficit
spending finally making its way into the regular economy.
- Every administration continues to decry the state of
the Social Security trust fund and yet every year they continue to take
all the money and apply it to the general fund. $350B a year would go a
long way towards making the SS system solvent.
- Attorney and blogger Michael T. Snyder says
"Barack Obama's budget is a total joke. President Obama's proposes
a minor $100B in government cuts to mask the projections that the gross
federal debt will top $15 trillion this year, officially equaling
the size of the entire U.S. economy, and will jump to nearly $21 trillion
in five years' time."
- How can there be a $1 trillion in deficit savings over
the next decade if the debt will rise $6 trillion in the next five years?
That figure, extended to 10 years, would amount to $12 trillion of additional
debt. So how does Obama figure to cut the deficit by $1 trillion over the
next decade if the debt will increase by $12T? In reality, he is only slowing
the growth of debt from $13T to $12T. That's where the $1T in savings comes
from. It isn't a reduction at all, but merely a slowing of growth, which
I can guarantee you will never materialize. It's simply an optimistic accounting
- "Obama's budget assumes that the U.S. will experience
economic growth of over 5 percent for most of the coming decade
[and that inflation will stay below 2%. It is already over 6%, but the
government fudges the data to make inflation appear lower]. That is so
far-fetched that 'optimistic' is not the right word for it. It also assumes
that U.S. government income (primarily made up of taxes on all of us) will
more than double over the next ten years. For 2011, the budget projects
that the U.S. government will take in a total of 2.1 trillion dollars,
and for2021 the budget projects that the U.S. government will take in a
total of 4.9 trillion dollars. For the Obama administration to assume
that the federal government will be able to drain an extra 2.8 trillion
dollars per year out of the American people by the year 2021 is ridiculous
- "Obama's budget cuts only amount to about $100 billion
a year--- very, very modest spending cuts that he knows have
no chance of getting through Congress [Snyder is correct, and Republicans
will have very little chance of enacting another $100B in cuts they are
proposing. Every group whose ox is getting gored by the budget is lining
up to cry foul and demand that cuts be made elsewhere. Cuts across the
board are also not the proper way to proceed. Whole programs that are improper
ought to be cut, but even the Republicans don't have the political courage
to do that. The longer these welfare benefit programs and subsidies stay
in place the large the constituency grows to support them and demand continued
- "Considering the fact that Obama's budget is projecting
a $1.6T budget deficit this year alone, $100B is not a whole lot of cutting.
Barack Obama's budget for 2012 does not even attempt to make any cuts to
entitlement programs such as Social Security and Medicare [whose total
cost in 2011 will exceed $2.2 trillion]... The truth is that Barack Obama
should be proposing spending cuts that are at least ten times as large
if he was actually serious about addressing our budget woes.
- "But at least Obama is not proposing an increase
in spending. Oh wait, he actually is. In fact, under Obama's budget, U.S.
government spending will soar from 3.8 trillion dollars this year to 5.6
trillion dollars in 2021. But the mainstream media is solely focusing on
the budget cuts that Obama is proposing. Apparently they are trying to
cast him as some sort of 'fiscal conservative.' Try not to laugh."
- Of the cuts Obama is proposing this year, almost half
of all government agencies will have their funding decreased from 2010
levels, trimming $33B by scaling back or shutting down 200 minor federal
programs. But even this is cynical because Obama knows fellow Democrats
in Congress will never go along with many of these cuts.
- "But even with the Obama administration's crooked
numbers, the federal deficit still never drops below 600 billion dollars
over the next decade and a total of 7.2 trillion dollars is still added
to the national debt over the next decade. If economic growth ends up being
much lower, or if the U.S. government is not able to get twice as much
money out of the American people by the end of the decade then the projections
would look much, much different. The Obama budget assumes that there will
be significant tax increases starting in the year 2013.
- A recent article on CNBC summarized some of the tax increases
that the Obama budget calls for. "The plan unveiled Monday includes tax
increases for oil, gas and coal producers, investment managers and
U.S.-based multinational corporations. The plan would allow Bush-era tax
cuts to expire at the end of 2012 for individuals making more than $200,000
and married couples making more than $250,000. Wealthy taxpayers would
have their itemized deductions limited, including deductions for mortgage
interest, charitable contributions and state and local taxes.
- "Meanwhile, the U.S. government continues to accumulate
staggering amounts of debt. In fact, Obama's budget admits that we will
witness the biggest one year debt increase in history this year.
In 2011, the gross federal debt with surpass 15 trillion dollars. In fact,
it is being projected by some analysts that this will be the year when
the debt finally becomes larger than the size of the entire U.S. economy...
- "But Obama insists that he is taking this debt problem
very seriously. Obama insists that he is committed to making 'deep' cuts..
The truth is that the federal debt problem cannot be solved without addressing
our out of control entitlement programs. [But] Social Security and Medicare
are political sacred cows. Obama is not going to do anything at this point
that would cost him millions of votes in 2012 [and neither will the Republicans].
- "So Barack Obama ignored most of the $4 trillion
in budget cuts recommended by the White House-appointed Deficit Commission,
kind of makes you wonder why Obama ever appointed a 'Deficit Commission'
in the first place [it's called political grandstanding].
- "One area that Obama does attempt to cut in his
new budget is military spending. Obama's budget for 2012 sets military
spending at 5 percent below what the Pentagon requested for 2011. In fact,
Obama's defense budget would slash military spending by $78 billion over
the next five years. His budget also assumes that we are not going to get
involved in any more wars, which is not necessarily a safe assumption.
- "So will these military spending cuts actually get
through Congress? Not likely. The Republicans control the House of Representatives,
and they are not likely to take too kindly to large cuts to the defense
budget.... As a recent article on CNN explained, Barack Obama's budget
plan must navigate a vast array of congressional committees in the coming
months and by the time it emerges it is likely to be radically changed
from its current form....
- "Before it gets back to Obama's desk for a signature,
the spending blueprint will go through no less than 40 congressional committees,
24 subcommittees, countless hearings and a number of floor votes in the
House and Senate. As our Congress critters have demonstrated over and over
and over, they love to spend our money on some of the most wasteful things
imaginable. For example, a total of $3 million has already been granted
to researchers at the University of California at Irvine so that they can
play video games such as World of Warcraft.
- "In the end, if something is not done about all
this debt it will destroy the entire U.S. financial system. But our politicians
just keep putting it off and putting it off. Eventually we will reap what
we have sown. Debt is a very cruel master, and nobody can run from it forever
- not even the U.S. government."
- But they can postpone the day of reckoning until federal
tax receipts are totally absorbed by the interest on the debt--estimated
to happen around 2025. Incredibly, the Obama budget confirms this--the
interest on the national debt will quadruple in the next decade, it says.
This means that the day of reckoning may even be accelerating.
- However, Snyder and almost all other analysts fail to
realize that the government has another big ace up their sleeve--war, and
they intend to use it to excuse their default before the day of technical
default arises. Another world war where the US is attacked and its financial
centers destroyed would give them the very excuse they need to wipe away
the debt and declare. "It's not our fault, we have to start over."
- End Excerpt
- Commentary And Insights On A Troubled World. Copyright
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as Joel Skousen's World Affairs Brief
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