Budget

Obama's Budget Is a Tax-and-Spend Travesty

The president wrongly believes government spending will grow the economy.

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Obama

President Obama recently released his last budget, laying out his priorities and proposals for FY2017 and the years to come. Not surprisingly, it's a tax-and-spend budget that not only does nothing to get us off the unsustainable financial path we're on, but also it claims that more taxes and spending will grow the economy.

According to Congressional Quarterly, the president's budget should be called the "Do Nothing Budget." It's a good name, if we consider that it doesn't do anything to address the explosion of the debt and the growth in spending for Medicare, Medicaid, Affordable Care Act subsidies, and Social Security.

Even though it's not going to happen, let's assume that the president gets his way on the tax, spend, and economic growth front. According to his baseline budget, debt held by the public will go from $14.7 trillion in 2017 to $21.3 trillion in 2026. Deficits will grow $503 billion in 2017, but they will be up to $793 billion in 2026. As a share of the economy (even though the president's GDP numbers are likely to be lower than stated in the document), the debt stabilizes at 75 percent. Yet, that's nothing to brag about since it remains the highest it's been in our nation's history with the exception of World War II.

And while the debt went back down after the war, I wouldn't count on that ever happening on our current spending trajectory. For one thing, the debt levels in the '40s were the product of significant increases in war spending and other factors, and thus they naturally went down after the war. Spending today is not projected to go down anytime soon. In fact, it's projected to explode. In other words, unless we get a major breakthrough in technology or a life-altering discovery (which could happen, of course), I wouldn't count on post-WWII growth levels.

The president's increase in debt and deficit is happening in spite of his dream of large revenue collections over the next decade—from $3,644 billion in 2017 (18.9 percent of GDP) to $5,669 billion in 2026 (20 percent of GDP). Historically, revenue as a share of the economy has averaged 17.4 percent and the government hasn't been able to maintain its tax collection above 19 percent for more than a couple of years at a time.

Under the current tax system, the president won't be able to collect that much revenue, but it's still worth looking at how he would like to overtax us. The budget would increase the cigarette tax and the tax on barrels of oil. It would increase the estate tax. It would slap an additional fee on financial institutions and implement a "Buffet tax." It would also raise taxes on some "wealthy business owners" to help delay—not fix—the projected insolvency of Medicare's hospital trust fund.

It would also reform the corporate income-tax system, with the condition that Uncle Sam will cash out and tax income earned abroad. His repatriation proposal would impose a one-time 14 percent tax on $2.1 trillion worth of tax-deferred offshore corporate profits.

All of these new taxes would pay for new spending like green infrastructure or universal pre-K. And indeed, spending will grow a significant amount over that 10-year window—from $4,147 billion in 2017 (21.5 percent of GDP) to $6,462 billion in 2026 (22.8 percent of GDP).

But please don't worry about the debt, deficit, spending, and taxes, because—according to the president's budget—the economy will continue to grow at current rate levels without any recessions. This, too, is unlikely, since the country tends to go into recession every five to six years.

Republicans in Congress have already announced that this budget was dead on arrival. Unfortunately, their own budget will likely keep the bloated spending limits agreed upon during the last spending spree of 2015 and only have the relative merit of driving us into the debt wall at a slower speed than the president's budget.

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  1. I love the idea of a “Buffet Tax”. I’ll put a lot of this tax on my plate and just a touch of this one. That penaltax I’m gonna pass on that. Gave me the runs last time.

    1. Especially if it’s “all you can eat” — sorry, I’m on a diet, can I take some of this home for tomorrow?

      1. No, the buffet is for the government – it’s all the leviathan can eat.

    2. When I read that first sentence, I thought you meant a WARREN Buffet tax, which I assumed would be an extra-high income tax placed on Warren Buffet and other people of extraordinary wealth who whine about how they think that rich people are evil bastards who don’t pay enough taxes.

      … Which would be an example of delicious poetic justice.

  2. His heart’s not in it. The luster has gone out; he’s eaten enough Lucy Charms to know that there are no new undiscovered charms in the box, and now he’s just going through the motions, idly hoping some new shiny toy will beckon in a year, because ya know, he’s gotten used to the limelight and he likes it.

    Idid worry, a little, in the waning days of Bush the Lesser, that he might be temptd to find some way to extend his term, some national emergency requiring martial law, who knew what? But it wouldn’t have been him, of course, but Cheney and the others pushing him forward. Still, as unlikely as it seemed, it also did seem remotely possible, because he did like being in power.

    I don’t have the same vibe about Obama. He wants the adoration and attention, but all without having to do any actual thinking. He’s one of the mentally laziest Presidents I can remember, someone who has plenty of brain power, but simply refuses to exercise it.

    All I can imagine him doing is relocating to Hawaii, lording it over the adoring locals and visiting dignitaries, playing golf and interfering with weddings and honeymoons wherever he can generate some attention, and never thinking again.

    1. I did worry, a little, in the waning days of Bush the Lesser, that he might be temptd to find some way to extend his term, some national emergency requiring martial law, who knew what?

      I never worried about that with Bush. I honestly don’t really worry about it with Obama, either, but I think he’s much more likely to try some extra-constitutional maneuver than Bush ever was.

    2. The shiny new toy might be SecGen of the UN. Face it, he can abuse the West all he wants, blame US oil consumption for all the bad weather around the world, rouse the ire of all the tin-pot Third World ambassadors, and they’ll spend their lives and our money agreeing on whose fault it all is, and since he cannot possibly save the world or actually, you know, influence anything, nobody can blame him for anything. He stays in the spotlight, doesn’t have to achieve anything, and makes pant-loads of money.

    3. All I can imagine him doing is relocating to Hawaii, lording it over the adoring locals and visiting dignitaries, playing golf and interfering with weddings and honeymoons wherever he can generate some attention, and never thinking again.

      Until President Shrillary nominates him for SCOTUS. Hell, Scalia’s seat might still be vacant if he doesn’t get it filled before his term’s up…

  3. A thought for today.

    50. A cucumber is bitter.?Throw it away.?There are briars in the road.?Turn aside from them.?This is enough. Do not add, And why were such things made in the world?

    1. I read that as “brains in the road”. It only struck me as mildly odd. I’ve been spending too much time here.

      1. Well, I mean, that doesn’t really change the point much, does it?

  4. A second thought.

    A political emergency brings out the corn-pone opinion in fine force in its two chief varieties — the pocketbook variety, which has its origin in self-interest, and the bigger variety, the sentimental variety — the one which can’t bear to be outside the pale; can’t bear to be in disfavor; can’t endure the averted face and the cold shoulder; wants to stand well with his friends, wants to be smiled upon, wants to be welcome, wants to hear the precious words, “He’s on the right track!” Uttered, perhaps by an ass, but still an ass of high degree, an ass whose approval is gold and diamonds to a smaller ass, and confers glory and honor and happiness, and membership in the herd.

    1. I don’t think it takes a political emergency for that to be true. Few people want to be the outsider or hold an unpopular opinion, emergency or not. Governments and their media toadies are often masters of exploiting this tendency. The media constantly goes on and on about how this or that opinion is unacceptable and outside the mainstream. The point of that is to convince people that accepting the government and media’s preferred position is the only way to not be an outsider.

    2. A reaction imbued with a sort of rustic flavor implies authenticity which is generally always in short supply.

      Humanity is so fucking uncomfortable with its own searing, but natural, imperfection that palpable mankind is forced to chip away its cornpone aspects the more it stands to lose, unless extreme circumstances demand otherwise and then the ‘down-to-earth’ skeleton is yanked out of the lonely shadows so this neglected gangly creature stunned by the dawn of honesty can momentarily hack the superficial public plastic off a leader or a star caught in an unseemly mishap.

      The cornpone affect probably incorporates some complex social math but on the dusty roads it performs admirably when fucking old boys roll up at 2 a.m. and need to get their goddamn baying coon dog out of my woods.

  5. “The president wrongly believes government spending will grow the economy.”

    Letters hate boredom. They will cut their own throats when confined to the fetid chamber of lethargic subtitles.

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  7. For the progressive socialist – the government is never big enough and there are never enough taxes and regulations.

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  9. Maybe ignorance is not the actual reason politicians keep insisting that the more money taxpayers stuff into D.C.’s millionaire pockets the more free and equal are all Americans.

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  11. Obama’s Budget Is a Tax-and-Spend Travesty

    Shocked face.

  12. I hate Jeb! but at least he was giving lip service to growth. No one really talks about GROWING THE ECONOMY which is how you alleviate income issues and help the poor and downtrodden. Wealth is not a fixed asset.

    You would think Trump would somehow capitalize on it, but he can’t seem to put forth a cogent argument on how GDP growth really does help everyone.

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