Facts are still such stubborn things!
By Peter Ferrara at Forbes:
The U.S. has never before had a President who thinks so little of the
American people that he imagines he can win re-election running on the
opposite of reality. But that is the reality of President Obama today.
Waving a planted press commentary, Obama recently claimed on the
campaign stump, “federal spending since I took office has risen at the
slowest pace of any President in almost 60 years.”
Peggy Noonan aptly summarized in last weekend’s Wall Street Journal the take away by the still holding majority of Americans living in the real world:
“There is, now, a
house-of-cards feel about this administration. It became apparent some
weeks ago when the President talked on the stump – where else? – about
an essay by a fellow who said spending growth [under Obama] is actually
lower than that of previous Presidents. This was startling to a lot of
people, who looked into it and found the man had left out most spending
from 2009, the first year of Mr. Obama’s Presidency. People sneered:
The President was deliberately using a misleading argument to paint a
false picture! But you know, why would he go out there waiving an
article that could immediately be debunked? Maybe because he thought it
was true. That’s more alarming, isn’t it, the idea that he
knows so little about the effects of his own economic program that he
thinks he really is a low spender.”
What this shows most importantly is that the recognition is starting
to break through to the general public regarding the President’s
rhetorical strategy that I’ve have been calling Calculated Deception.
The latter is deliberately using a misleading argument to paint a false
picture. That has been a central Obama practice not only throughout his
entire presidency, but also as the foundation of his 2008 campaign
strategy, and actually throughout his whole career.
Rest assured, Ms. Noonan, that the President is not as nuts as he may
seem at times. He knows very well that he is not a careful
spender. His whole mission is to transform the U.S. not into a Big
Government country, but a Huge Government country, because only a
country run by a Huge Government can be satisfactorily controlled by
superior, all wise and beneficent individuals like himself. That is why
he is at minimum a Swedish socialist, if not worse. Notice, though,
how far behind the times he and his weak minded supporters are, as even
the Swedes have abandoned Swedish socialism as a failure.
The analysis by Internet commentator Rex Nutting on which Obama based
his claim begins by telling us “What people forget (or never knew) is
that the first year of every presidential term starts with a budget
approved by the previous administration and Congress.” Not exactly.
The previous administration, or President,
proposes a budget. The previous Congress
approves a budget. And what Congress approves can be radically different from what the President proposes.
As Art Laffer and Steve Moore showed in the
Wall Street Journal on
Tuesday, President Bush began a spending spree in his term that erased
most of the gains in reduced government spending as a percent of GDP
achieved by the Republican Congress in the 1990s led by former House
Speaker Newt Gingrich, in conjunction with President Clinton. But for
fiscal year 2009, President Bush in February, 2008 proposed a budget
with just a 3% spending increase over the prior year. Fiscal year 2009
ran from October 1, 2008 until September 30, 2009. President Obama’s
term began on January 20, 2009.
Recall, however, that in 2008 Congress was controlled by Democrat majorities, with
Nancy Pelosi as Speaker of the House, and the restless
Senator Obama already running for President, just four years removed from his glorious career as a
state Senator in the Illinois legislature. As Hans Bader reported on May 26 for the
Washington Examiner, the budget
approved and implemented by Pelosi, Obama and the rest of the Congressional Democrat majorities provided for a
17.9 percent increase in spending for fiscal 2009!
Actually, President Obama and the Democrats were even more deeply
involved in the fiscal 2009 spending explosion than that. As Bader also
reports, “The Democrat Congress [in 2008], confident Obama was going to
win in 2008, passed only three of fiscal 2009’s 12 appropriations bills
(Defense, Military Construction and Veterans Affairs, and Homeland
Security). The
Democrat Congress passed the rest of them [in 2009], and [President]
Obama signed them.” So Obama played a very direct role in the runaway
fiscal 2009 spending explosion.
Note as well that President Reagan didn’t just go along with the wild
spending binge of the previous Democratic Congress for fiscal year 1981
when he came into office on January 20 of that year. Almost no one
remembers now the much vilified at the time 1981 Reagan budget cuts, his
first major legislative initiative. Then Democrat Rep. Phil Gramm
joined with Ohio Republican Del Latta to push through the Democratic
House $31 billion in Reagan proposed budget cuts to the
fiscal year 1981 budget,
which totaled $681 billion, resulting in a cut of nearly 5% in that
budget. Obama could have done the exact same thing when he entered
office in January, 2009, even more so with the Congress totally
controlled by his own party at the time.
Reagan then ramped up the spending cuts from there. In nominal
terms, non-defense discretionary spending actually declined by 7.1% from
1981 to 1982. But roaring inflation at the time actually masks the
true magnitude of the Reagan spending cut achievement. In constant
dollars, non-defense discretionary spending declined by 14.4% from 1981
to 1982, and by 16.8% from 1981 to 1983. Moreover, in constant dollars,
this non-defense discretionary spending never returned to its 1981 level for the rest of Reagan’s two terms! By 1988, this spending was still down 14.4% from its 1981 level in constant dollars.
Even with the Reagan defense buildup, which, remember, won the Cold
War without firing a shot, total federal spending as a percent of GDP
declined from a high of 23.5% of GDP in 1983 to 21.3% in 1988 and 21.2%
in 1989. That’s a real reduction in the size of government relative to
the economy of 10%, a huge achievement.
In sharp contrast to Reagan, Obama’s first major legislative initiative was the so-called stimulus, which
increased future
federal spending by nearly a trillion dollars, the most expensive
legislation in history up till that point. We know now, as thinking
people knew at the time, that this record shattering spending bill only
stimulated government spending, deficits and debt. Contrary to official
Democrat Keynesian witchcraft, you don’t promote economic recovery,
growth and prosperity by borrowing a trillion dollars out of the economy
to spend a trillion dollars back into it.
But this was just a warm up for Obama’s Swedish socialism. Obama
worked with Pelosi’s Democratic Congress to pass an additional, $410
billion, supplemental spending bill for fiscal year 2009, which was too
much even for big spending President Bush, who had specifically rejected
it in 2008.
Next
in 2009 came a $40 billion expansion in the SCHIP entitlement program,
as if we didn’t already have way more than too much entitlement
spending.
But those were just the preliminaries for the biggest
single spending bill in world history, Obamacare, enacted in March,
2010. That legislation is not yet even counted in Obama’s spending
record so far because it mostly does not go into effect until 2014. But
it is now scored by CBO as increasing federal spending by $1.6 trillion
in the first 10 years alone, with trillions more to come in future
years.
After just one year of the Obama spending binge, federal spending had
already rocketed to 25.2% of GDP, the highest in American history
except for World War II. That compares to 20.8% in 2008, and an average
of 19.6% during Bush’s two terms. The average during President
Clinton’s two terms was 19.8%, and during the 60-plus years from World
War II until 2008 — 19.7%. Obama’s own fiscal 2013 budget released in
February projects the average during the entire 4 years of the Obama
Administration to come in at 24.4% in just a few months. That budget
shows federal spending increasing from $2.983 trillion in 2008 to an all
time record $3.796 trillion in 2012, an increase of 27.3%.
Moreover, before Obama there had never been a deficit anywhere near
$1 trillion. The highest previously was $458 billion, or less than half
a trillion, in 2008. The federal deficit for the last budget adopted by
a Republican controlled Congress was $161 billion for fiscal year
2007. But the budget deficits for Obama’s four years were reported in
Obama’s own 2013 budget as $1.413 trillion for 2009, $1.293 trillion for
2010, $1.3 trillion for 2011, and $1.327 trillion for 2012, four years
in a row of deficits of $1.3 trillion or more, the highest in world
history.
President Obama’s own 2013 budget shows that as a result federal debt
held by the public will double during Obama’s four years as
President. That means in just one term President Obama will have
increased the national debt as much as all prior Presidents, from George
Washington to George Bush, combined.
But this 2012 election is defined for the voters by the future, not
the past. And that future is fully revealed by the stark contrast
between President Obama’s spending, deficits and debt projected under
his proposed 2013 budget, and the projections under House Budget
Committee Chairman Paul Ryan’s budget, adopted by the Republican House,
and endorsed by presumptive Republican Presidential nominee Mitt Romney.
Despite all the controversy in Washington and in the media over
Ryan’s budget, what it all adds up to is just to restore federal
spending to its long term, postwar, historical average of 20% of
GDP. That stable level of federal spending, with some modest variance,
prevailed for over 60 years after the end of World War II, until
2009. Ryan’s budget reduces federal spending from an average of 24.4%
of GDP during the Obama years to 20.1% after just 3 years, by 2015.
By contrast, under the budget policies supported by President Obama
and Congressional Democrats, federal spending soars to 30% of GDP by
2027, 40% by 2040, 50% by 2060, and 80% by 2080. Obama’s 2013 budget
proposes to spend $47 trillion over the next 10 years, the most in world
history by far, increasing federal spending by $1.5 trillion
above the
current CBO baseline. Ryan’s budget proposes to cut that by $6.8
trillion. By 2022, Ryan’s budget would be spending nearly a trillion
dollars less
per year than President Obama’s budget.
Ryan proposes tax reform to consolidate the current 6 individual
income tax rates, ranging up to 35%, to just two rates of 10% and
25%. His budget would otherwise retain the Bush tax rates of 15% for
capital gains and 15% for corporate dividends, and repeal the
Alternative Minimum Tax. Ryan also proposes corporate tax reform,
closing loopholes and reducing the federal corporate tax rate from 35%
to 25%, which is roughly the international average. CBO scores these
reforms, even with the rate cuts, as again restoring federal revenues to
their long term, postwar, historical average of 18.3% of GDP by 2015.
Obama’s budget, in sharp contrast, proposes to increase federal taxes
by nearly $2 trillion over the next 10 years above the CBO
baseline. The budget projects that under Obama’s tax policies federal
income tax revenues will double by 2020, federal corporate tax revenues
will double by 2017, and federal payroll taxes will double by 2022.
Next year, under President Obama’s policies, the top tax rates of
virtually every major federal tax are already scheduled to increase
under current law. That is because the Obamacare tax increases are
scheduled to go into effect, and the Bush tax cuts expire, which
President Obama proposes refuses to renew for singles making over
$200,000 a year, and couples making over $250,000. President Obama is
now proposing on top of that the Buffett Rule, which would increase tax
rates on capital gains and dividends even further. Counting that, next
year the top tax rate for capital gains would increase by 100%, the top
tax rate on corporate dividends would increase by 100%, the top two
income tax rates would increase by nearly 20%, and the Medicare payroll
tax again for singles making over $200,000 and couples making over
$250,000 would increase by 62% (under Obamacare).
This is all on top of the corporate income tax rate, which counting
state corporate rates is nearly 40%, the highest in the world now,
except for the socialist one party state of Cameroon. Under the Buffett
Rule, America’s capital gains tax rate would be the fourth highest in
the industrialized world. Based on historical precedent, these tax rate
increases are unlikely to raise anywhere near the revenue projected by
CBO, meaning even higher future deficits and debt.
Under Ryan’s budget, even with CBO’s static scoring, the federal
deficit in actual nominal dollars would be reduced to $182 billion by
2017, the fifth year of the budget. That compares to $1,327 billion, or
$1.327 trillion, today. So in just 5 years, the deficit would be
reduced by at least 86%. The deficit under Ryan’s budget would be less
than 1% of GDP by 2017, at 0.9%, where it stabilizes for 6 years to the
end of the 10 year budget window. Most importantly, given the sharp tax
rate cuts in Ryan’s budget, with dynamic scoring the budget would
probably be balanced by 2017. That is because in the real world the
rate cuts will not lose nearly as much revenue as CBO scores.
Under President Obama’s budget, his own projections show
the deficit never gets anywhere near balance. Indeed, the deficit never
gets below or anywhere near the former all time record in 2008. By
2022, his own budget projects the deficit rising over the previous 5
years to $704 billion. But if Obama’s comprehensive tax rate increases
throw the country back into recession next year, the deficits will soar
much higher for several years, to new all time records.
Even under CBO’s horse and buggy static scoring, Ryan’s budget does
serve to get federal debt under control and avoid any debt crisis,
putting federal debt held by the public on a declining path from 77% of
GDP in 2013 to 62% by 2022. That debt continues on a sharp decline from
there, as the long term effects of Ryan’s structural entitlement
reforms phase in. Debt held by the public is reduced to 53% of GDP by
2030, 38% by 2040, and 10% by 2050. That means the national debt is all
but paid off by 2050, and would be soon thereafter. In fact, under
dynamic scoring it probably would be paid off by then.
In stark contrast, on our current course, under President Obama’s
budget policies, federal debt held by the public rockets to 140% of GDP
by 2030, 220%by 2040, and 320% by 2050, on its way to over 700% by
2080. That would undoubtedly create a Grecian style sovereign debt
crisis for America before that point.
So which course will you choose America?
