I love the first two grafs of this WashPost story: "Tax pledge is a target as deficits, debt grow – Obama advisers will not rule out broad-based tax hike"
During last year's campaign, President Obama vowed to enact a bold agenda without raising taxes for the middle class, a pledge budget experts viewed with skepticism. Since then, a severe recession, massive deficits and a national debt that is swelling toward a 50-year high have only made his promise harder to keep.In other words, junior senator Barack Obama is stamping his feet and screaming "no!" while the big men are insisting: "We're going to have to eat that spinach."
The Obama administration has insisted that the pledge will stand. But the president's top economic advisers have refused to rule out broad-based tax increases to close the yawning gap between federal revenue and government spending and are warning of tough choices ahead.
4 comments:
In what possible room does the GOP imagine they're the adults? Romper Room?
Nice article. I love the 10th, 11th, 12th and 18th grafs even more:
Today's problem is more complex. Obama not only faces the fallout from the worst economic downturn in 30 years, but also inherited the debt piled up by his predecessor, Republican George W. Bush. Bush invaded Iraq and approved an expensive new prescription drug benefit for the elderly while pushing through one of the biggest tax cuts of the post-war era -- worth an estimated $1.6 trillion in foregone revenue by the time the provisions expire next year. This was the first time the United States had not adjusted its fiscal policy to meet its wartime needs, according to "The Price of Liberty," a book on war financing by Goldman Sachs vice chairman Robert D. Hormats.
After running surpluses in the late 1990s, the government began spending far more than it took in, forcing the Treasury to increase borrowing from China and other creditors. During the Bush administration, the portion of the debt held by the public jumped from just over $3 trillion to nearly $6 trillion. Federal rescue efforts in the face of last fall's financial meltdown have rapidly driven the debt higher. Today it stands at nearly $7.4 trillion, or about 52 percent of the overall U.S. economy.
"There's no question in my view that Bush was the most fiscally irresponsible president in the history of the republic," said David M. Walker, the comptroller general under Bush who now advocates for deficit reduction. Obama "was handed a bad deck," he said. "But the question is, are you making it better or not? And so far the answer is no."
And the fastest-growing budget category is one Obama cannot touch: interest payments on the debt. These are likely to rise as the world demands higher interest rates in return for continuing to sate Washington's voracious appetite for credit. The White House projects interest payments will quadruple by 2019, when debt service will account for nearly the entire budget deficit. At that point, much like a family that has run up big credit card balances, the debt will continue to grow even if the nation all but stops borrowing money.
I liked this paragraph too:
"With more than 80 percent of federal spending devoted to politically untouchable programs such as Social Security, Medicare and Medicaid, he said, "it's going to be really hard to make significant headway on the spending side. So that means you've got to think about taxes."
I seem to recall somebody tried to reform Social Security but he was blocked by the Democrats in Congress. They KNEW entitlements were a growing problem - then - but it was more important to demagogue and regain control of Congress.
Too late to cry: "no fair!" like a big crybaby.
Mmm, naturally. George W. Bush was honestly trying to "reform" Social Security. Big fan of Obama's "change" then?
As for the paragraph you cited, that data makes the GOP's 2001/2003 full court press for tax cuts all the more moronic, no? Bush's "big men" weren't telling him to eat his spinach, they were telling him to spend trillions in Iraq. In retrospect, it's amazing that Bush was able to sneak his policies past all those conservative fiscal watchdogs, and in the face of all those grass roots protests. The man was a wizard!
But the balance sheet would have added up, if only the Democrats had let Bush partially privatize Social Security, right? The plan was foolproof!
As we've seen again and again, a publicly traded stock's value often differs from the actual value of the company. Now, add the largest artificial, forced injection of capital in U.S. history. The resulting bubble would have puffed up the overvalued stock prices even higher than they already were. The top 1% would have sold their stock at the inflated valuations to the novice investors-by-obligation. Next, we wait for the market to plunge. The same 1% would then have re-purchased their holdings at pennies on the dollar. Bingo, Social Security is bankrupt, barring the federal bailout of all federal bailouts.
But that's the "glass half empty" view. Surely our stiff regulatory oversight would have averted that kind of farfetched meltdown.
I won't go so far to say that the Bush tax cuts paid for themselves (because they didn't) but he believed that Americans should keep more of their own money. Contrast this with the guy whose guiding principle is that we should "spread the wealth around."
And even with the mounting deficits, which I criticized on this blog, Bush looks like a penny pincher compared to the far-as-the-eye-can-see deficits crafted by Obama. Yeah, Obama was "handed a bad deck" and he's making the fiscal situation much worse and a lot of Americans are terrified we're mortgaging our future to the bankers and foreign lenders.
As for Social Security reform, just like the tax cuts, the idea was that the American people should have the freedom to make their own decisions rather than lash them to a Depression-era Ponzi scheme with a negative growth rate. But now we're stuck with it because NO President will ever have the political will to tackle reform, thanks to the efforts of the Democrats, circa 2005.
You know what's going to be a fun time? When all the lenders say: "no more." Good times.
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