Budget

A Second Look At The So Called Budget Deal.

No, I haven’t had an epiphany regarding our leadership. We want to trust them and we want to believe what they say. It’s just that we’ve been led down the primrose path before, so we’d have to be certifiably nuts not to be a little bit skeptical.

I was listening to Larry Kudlow, who caught my attention with a different take on John Boehner and his leadership. He’s quite impressed with what Boehner has accomplished, pointing out that the 38 billion dollars are cuts to the base line budget. That translates to some 500 billion dollars in budget reductions over the next ten years. It sets the spending back to pre-2008 levels. That is hugely important. But it’s only part of the story.

The DeMarxists, Harry Reid, Barack Hussein Obama et al, got it put to them. They got their clocks cleaned. Not only that, but it set the stage for the battle over Paul Ryan’s budget proposal later on this month. You’ll never see it on network TV, or PBS and the liberal print media. It was actually fun to watch… Obama and Reid placed all their eggs in the basket when they banked on the Republicans taking it on the chin for shutting down the government once again. It was also fun watching the Lame Stream Media decry a few tourists who may be discomfited by our national monuments being closed. It was a tawdry exercise in yellow journalism, but no more than we’ve come to expect from the LSM.

There was a lot of speculation among Patriot friends of mine about just how gun-shy Boehner and the Republican establishment were going to be over an impending ‘government shutdown’. They got their noses bloodied the last time they allowed the DeMarxists to control the issue and paint the Republicans as heartless baby killers. Ironic, since the DeMarxists are themselves directly responsible for the murders of millions of unborn and near-born children, many of them black babies.

Boehner didn’t flinch. It’s no secret that I’ve been critical of John Boehner’s leadership. It’s also true that I’m impressed with his handling of the situation. He was determined, did not waver, earned the respect of his membership, and managed to give the DeMarxists a bloody nose in the process. He also managed to keep Obama and Reid from whacking military spending… which they clearly stated was their intention.

All in all, I have to give the Republican leadership high marks on this one. It is but the first of many battles to come, and we Patriots cannot take our eyes off of government for a second. Don’t underestimate the amount of weight we can swing on these issues. The Patriot Movement is here to stay, and we are a huge political force to be reckoned with.

Semper Vigilans, Semper Fidelis

© Skip MacLure 2011

Republicans Fail In Budget Wars… No Leadership, No Courage.

If that sounds harsh then perhaps the Republican leadership should look really closely at themselves and ask themselves just exactly who they’re working for, because right now, quite frankly, they’re not looking all that hot.

Sixty billion is the figure being cast about as the spending reductions for this budget. Another thirty billion was proposed but was not taken up by Republicans, for some unknown reason. I’ve really been concerned about what I perceive to be a demarcation in the party between the ‘old’ party members and the new conservatives.

As a quick for instance… look at good old reliable John McCain… now that he’s won re-election for another six years, we the American people, and especially his constituents, can collectively go to hell as he reverts to type. He nearly got whiplash running to kiss Barack Obama’s butt. Then he has the nerve to tell us that he ‘thinks he can work’ with Obama.

We seem to remember John working with ‘others’. They called it the gang of fourteen… they called it the McCain-Feingold assault on the First Amendment… they called it the Illegal Amnesty Act. Remember? I sure do. John hasn’t wasted any time either. He’s got his pet amnesty act out again and he’s dusting it off.

John’s just one guy, but he’s not alone. I’ve said this before… the times are past where Conservatives can afford to be burdened with wishy-washy moderate ‘Republicans’ who run into accommodation mode at the very first sign of a fight.

Sixty billion? A hundred billion? That’s a joke, right? We’re upside down 1.7 trillion dollars this year alone, and we’re dabbling with a hundred billion in ‘proposed’ cuts! We’re sick of the timidity and the outright cowardice shown by the Repubic leadership. If we get any more disappointed, that whole mess may be out of a job. So far, the only ones who have remained faithful to the mandate of the voters are the Patriot Tea Party freshmen. That says worlds about the party leadership.

It’s a little like what just occurred on the House floor. We thought we were sending tiger sharks in there to shred the unbelievably irresponsible spending of this government. Instead, we get these timid little mice nibbling away at the fringes of that megalithic monstrosity, the house that Obama built.

I’m afraid there are going to need to be more serious changes in the Republican Party if we are to succeed in saving the country. 2012 is going to be another watershed… but what will be shed will be the timid, the weak, the lame and the lazy. We warned them.

Semper Vigilans, Semper Fidelis

© Skip MacLure 2011

Mr. Boehner, Please Move Beyond Earmarks

This from the House Speaker-designate for the 112th Congress in today's Wall Street Journal:

[T]here are several steps I believe the next speaker should be prepared to take immediately. Among them:

No earmarks. Earmarks have become a symbol of a broken Washington, and an entire lobbying industry has been created around them. The speaker of the House shouldn't use the power of the office to raid the federal Treasury for pork-barrel projects. To the contrary, the speaker should be an advocate for ending the current earmark process, and should adhere to a personal no-earmarks policy that stands as an example for all members of Congress to follow.

I have maintained a no-earmarks policy throughout my time of service in Congress. I believe the House must adopt a moratorium on all earmarks as a signal of our commitment to ending business as usual in the spending process.

And this from the President during his post-election news conference on Wednesday:

My understanding is Eric Cantor today said that he wanted to see a moratorium on earmarks continuing.  That’s something I think we can -- we can work on together.

In light of the economy, I can understand why Boehner is focusing on earmarks as the most visible symbol of what needs to be fixed on Capitol Hill. And I agree that we need to fix the abuse of the earmark process by reforming it. But the fact is that not all earmarks can be construed as wasteful spending and not all wasteful spending are in earmarks. It's easy to come up with rhetoric denouncing "the evils of earmarks," but what we should be focusing on substantively is wasteful spending.

I don't want to get into debates over how Republicans should define public goods and wasteful spending. I do however want to talk about what principles should be espoused by Republicans when it comes to spending and how we can be innovative on sound spending policies.

What are some budgetary principles that should be communicated by Republicans to the American people?

  • The Solution Principle: Every challenge facing the American people does not require a federal office and federal funding.
  • The Priorities Principle: Every family and every business has to balance their checkbooks, their revenues with their expenses. Through good times and bad times, families and businesses have to sacrifice what they might want and prioritize their spending. The government should operate like any prudent family or business does, and prioritize.
  • The Investment Principle: The American people are "forced to invest" their income into government. Each taxpayer is, therefore, a shareholder in government. Because taxpayers have invested their money into government, taxpayers deserve the best return on their money. This means the "portfolio of investments" (otherwise known as government projects and agencies) must be reviewed carefully and objectively in order for the government to fulfill their due diligence.

How can we turn those principles into solutions? The answer is to do what's difficult, not easy (i.e. earmark moratoriums), and be innovative about our budget from both procedural and substantive points of view:

  • Follow the lead of Paul Ryan and his "Roadmap for America's Future" when it comes to restructuring our entitlements.
  • Don't allow earmarks to be placed during conference committees between the House and Senate.
  • Install a biennial budgeting process, something promoted by Senator George Voinovich (R-OH), while also requiring supermajorities to increase in a fiscal year after a budget has been passed (for legitimate emergencies).
  • Separate capital budgets from operating budgets for each department. Long term projects are very different from short term day-to-day costs.
  • Instead of an executive Chief Performance Officer that gets to pick and choose what works and what doesn't under subjective criteria, have Congress create a Congressional Agency Performance Office that has some independence (like CBO) to constantly scrutinize the operations of all government agencies.
  • On capital projects that go to specific state and local governments, quasi-agencies, and companies, start a Congressional Office for Spending Oversight. Just like every business has control officers, this independent office should scrutinize long term projects' spending practices. This can allow Congress to reward under-budgeted projects and punish over-budgeted projects.
  • Not only should spending be posted online before it's passed. It should also be posted online when it's spent. Just like many state governments have done, the federal government's checkbook should be posted online.

I'm glad that we're getting out in front of the President and Democrats on this. We need to be in a proactive position, not a reactive position. Talking about earmkars is too easy. This is just another area where we need to develop political communication and public policy entrepreneurship on a serious issue.

Tax Spend Tax Spend Tax Spend Tax Spend Tax Spend Tax Tax.

I feel like I’m living in an alternate universe. The Obamaverse is a little like a comic book existence where everything is twisted and backwards. Like Superman’s BIZARRO world. In Obama’s land of bleak outlook, a little less bleak landscape is a HUGE success. Twisted, turned and distorted to make it appear a little less colorless, it is fed to the hounds of bleak expression to spread across the land to all who will listen, “see what great things I/ME I/ME am doing for you”.

In Obama’s perverted world, TAXING the most productive segment of our society, the area from which MOST job growth is born in this country, is somehow a noble act for which we should be grateful. Obama plans to TAX the middle class by ONE TRILLION PLUS DOLLARS in the next decade, starting with allowing the BUSH tax cuts to expire next year. Unemployment in the private sector continues to increase, while at the same time the government adds more and more TAXPAYER FUNDED EMPLOYEES to its payrolls. Government produces nothing. Government takes from the private sector under the threat of the force of law… legal or not.

This government is unaccountable and out of control. We the denizens, the PEOPLE of Obama’s BIZARRO world, have a President who is literally running riot without the consent of the majority of the governed. We have a Congress which is a runaway freight train to nowhere, is not responsive to its controls (the Constitution) and is working directly in opposition to the people WITHOUT THE CONSENT OF THE MAJORITY OF THE GOVERNED.


Terri Cullen

The direct assault on the middle class in this country has a name. Lenin wrote about it. In a country where the free exchange of information and ideas is abridged by the power and influence of government, such as in the removal of TERRI CULLEN’S well researched and damning article on Reuters.com,”BACKDOOR TAXES TO HIT MIDDLE CLASS”, we call that tyranny. SOMEBODY in the administration got to Reuters objecting that Obama’s magnificent budget message was being compromised by the naked truth. The journalistic giants and seekers of the truth at Reuters rolled over like a scolded puppy with its feet in the air and they pulled the article.

TOO LATE, I’ve got it (me grinning). Reprinting is not something normally within our format, but this should be required reading for every taxpayer in this country. This is a clear abridgment of the public’s right to know and the First Amendment of our Constitution. There’s that pesky First Amendment thing again… seems like a would-be tyrant just can’t get a break anymore.

Semper Vigilans, Semper Fidelis

© Skip MacLure 2010

Backdoor Taxes To Hit Middle Class

by Terri Cullen

Millions of middle-class households already may be facing higher taxes in 2010 because Congress has failed to extend tax breaks that expired on January 1, most notably a “patch” that limited the impact of the alternative minimum tax. The AMT, initially designed to prevent the very rich from avoiding income taxes, was never indexed for inflation. Now the tax is affecting millions of middle-income households, but lawmakers have been reluctant to repeal it because it has become a key source of revenue.

Without annual legislation to renew the patch this year, the AMT could affect an estimated 25 million taxpayers with incomes as low as $33,750 (or $45,000 for joint filers). Even if the patch is extended to last year’s levels, the tax will hit American families that can hardly be considered wealthy — the AMT exemption for 2009 was $46,700 for singles and $70,950 for married couples filing jointly.

Middle-class families also will find fewer tax breaks available to them in 2010 if other popular tax provisions are allowed to expire. Among them:

* Taxpayers who itemize will lose the option to deduct state sales-tax payments instead of state and local income taxes;

* The $250 teacher tax credit for classroom supplies;

* The tax deduction for up to $4,000 of college tuition and expenses;

* Individuals who don’t itemize will no longer be able to increase their standard deduction by up to $1,000 for property taxes paid;

* The first $2,400 of unemployment benefits are taxable, in 2009 that amount was tax-free.

Reuter’s issued this advisory:

“The Feb 1 story headlined “Backdoor taxes to hit middle class” is wrong and has been withdrawn. The story said lower-income families will pay more under tax provisions scheduled to expire Dec 31. The Obama administration’s budget calls for the extension of those tax provisions for households earning less than $250,000.”

 

Obudget? Oh, Brother! Hold On To Your Wallets – Job Destroyer Inc.

I’m running out of superlatives again. It’s getting to be a barometer of NATIONAL LUNACY, as played out by the White House and the Congressional Clown College. While Obama is taxing the exact segment of the population where job growth is created, just about guaranteeing negative job growth in the private sector, the House Madam, Nancy Pelosi, is spending millions of taxpayer dollars in travel, food and booze for herself, her family and political cronies, while the country is scrambling to find work and scrabbling to survive. The corruption in this government is astounding and DISGUSTING.

Barack Obama announced the budget for 2010 today and it’s still burning holes through the floor…THREE POINT EIGHT TRILLION DOLLARS!! This dude is DELUSIONAL. Or as is beginning to become more likely and more apparent, this man is purposely and purposefully driving this country to ruin so that he and his extremist party may profit from the resulting confusion and ruin. The deficit for 2009 was fully 1.413 TRILLION dollars, the highest since World War Two. But hold on to your wallets and purses ladies and gents, I’m not finished yet. The federal budget deficit for this year, with the highly accomplished organizer at the helm, is ONE POINT FIVE FIVE SIX TRILLION FRESHLY MINTED DOLLARS. But all is not lost, take heart because our intrepid budget-cutting leader has identified TWENTY BILLION dollars he will fearlessly slash.


Barack Obama speaks about his budget for fiscal year 2011.

Meanwhile, his plans for your economic misery for 2011 encompass a modest budget of THREE POINT EIGHT TRILLION DOLLARS. Since the Obama administration ‘expects’ a 2011 budget shortfall of ONE POINT SIX TRILLION DOLLARS, expect that to be a lot closer to two trillion. By the way, the President has had the White House inform Senator John Kerry that the 2011 budget ‘assumes’ income from the controversial climate policy approach (cap and trade) which would appear to be dead on arrival given the catastrophic failure of the attempted theft of 1/6 of our economy through the single payer heath care bill. It looks like we can expect them to try and SNEAK all or parts of the detestable cap and tax bill past us. But sneaking and lying are a strong part of the Kerry resume. We can take absolutely nothing for granted with this bunch… not for a moment… not for a split second.

While the Republicans are putting up their 10 point program we have to remember and remind them that this is not a Republican revolution… this is not a Tea Party revolution… it is a CONSERVATIVE Republican revolution. It’s a Conservative revolution. It’s an Independent revolution. It’s a revolution of loyal, patriotic Americans who are sick and tired of having our money stolen, our freedoms abridged and taken and our Constitution violated. WE ARE FIGHTING MAD! But we have to remember… we have this year to get it right. This year there can be no RINOs, there can be no accommodation with evil. We have to put up a strong united front. The old style Republican party insider stuff won’t play any more. It’s your party, take it back.

Semper Vigilans, Semper Fidelis

© Skip MacLure 2010

 

What Up? Michael Steele's One Year Job Review

What up, GOP?

I’ve never been to Grover Norquist’s Wednesday meeting. It is, for many, a mainstay of the middle of the week and, for others, a launching pad into a fruitful career in Republican politics. But, for all who know about it, there’s no question that it is regarded as the de-facto braintrust of the center-right coalition that makes up the Republican Party. Thus, when I woke up Wednesday morning after Tuesday’s two-count of Democratic retirements, I couldn’t but imagine that the coffee at ATR tasted a little better than it did yesterday.

But, on a day that should be regarded as a pretty good one for Republicans, it’s very likely that this group was a little distracted by, to borrow a little from the French, our faux pas du jour—our great Chairman’s tactful use of the phrase “honest injun” in describing a platform that nobody knows about. Or, perhaps, to digress a little further, the news that, under his leadership, the money to run the races that just became within our reach  just may not exist (at least not under the RNC’s control)?

This is not an ad-hominem attack on Michael Steele—God knows the left has a monopoly on those. But, at some point, shouldn’t somebody step back and objectively evaluate, today almost one year after he was elected, how he’s performed in our party’s top job? Tragically, at this important moment in the history of our party and our nation, it’s very possible that, with seemingly endless embarrassments coming out of a cash-hemorrhaging RNC, Michael Steele has become a distraction worth dumping.

Notwithstanding the “honest injun” incident, the main political stories this year involving the RNC have centered on intra-party conflict and poor decisions by Mr. Steele. Most recently, The Washington Times reported on the disturbing trend of major donors fleeing the RNC as Steele makes paid appearances and prepares for his book tour on his six figure salary. Think about this for a second—in his capacity at the RNC, which pays him to give speeches and raise money, Chairman Steele has routinely collected speaking fees to stuff his personal bank account rather than fund our candidates. In many ways, this is tantamount to the CEO of a public company charging money to speak to his shareholders. Here’s a wake-up call, Mr. Chairman--- the shareholders have noticed, and they’re no longer buying.

The RNC has started the year off in the worst financial position in over ten years. Spending record amounts to win a race in Virginia by a whopping eighteen points, we now find ourselves wondering how to fully fund this year’s races (although, to be fair, Chairman Steele isn't sure that we can win them). In the real world, a company losing its stockholders after spending wads of cash would experience declining share values. In Washington, where we all know there is no accountability, inertia dictates business as usual. Except, of course, for Trevor Francis, the former RNC communications director who was fired for failing to get Steele enough credit for said victories—sorry, Trevor.

It's hard to believe that, just one year ago, we were arguing over Chairman Steele's conservative credentials.  Now, it's astonishing that we ever believed he had any credentials at all. If, in the 2008 elections, Barack Obama was the most idyllic image in his party’s history, Michael Steele may have become our party’s greatest liability. Republicans, at the very least, were relieved that, at the end of the Bush years, we would no longer have to hold our breath every time our party’s leader opened his mouth. Alas, that was life before “honest injun,” “hip-hop Republicans,” and, of course, “what up.” If we can’t trust Michael Steele to represent Republicans well, much less effectively manage our party, than why do we keep him around? I was at last year’s winter meeting, and the largest single justification for electing him was his communication ability. How do his passionate advocates of yesteryear feel today? Satisfied? I’m imagining some of you will read this, so please comment below.

Of course, there is life after the RNC. The RGA under Nick Ayers’ great management demonstrated this past November that we’re nowhere close to the depression that we felt in 2008. Donors that once donated in masse to the RNC have redirected their money to the campaign committees. And, in large part because of Democratic policies, personal fundraising by candidates is looking strong. But, is that the point? Should there be an adversarial relationship between the various parts of our larger party? Or, should they move in unison as a well-oiled machine, with a common message and a common goal? Just ask the Democrats of 2008.

Many comparisons have been made of 1994 and this upcoming cycle and—believe me—I hope to God they’re all true. But, there’s a part of me that wonders, when I think back to the spectacular year of the Republican Revolution—what would Grover’s Wednesday meeting have looked like then? Led by folks like Haley Barbour and, of course, Newt Gingrich, I want to imagine that the party of then was far more united than the party of now,  if there were disagreements along the way. But, that’s not now. And, it certainly isn’t an environment that’s encouraged by Michael Steele’s leadership. So, what now, GOP? Happy New Year, it’s 2010--- What up?

Note: Michael Steele's response to recent criticism (which has surely not come just from me): ""I'm looking them in the eye and say, 'I've had enough of it. If you don't want me in the job, fire me. But until then, shut up. Get with the program or get out of the way.'"

Thoughts?

Obama's new rule: When the math doesn't work, reject math and shoot the messenger

We now have a pattern on our hands. When the math behind Barack Obama's health care plans doesn't work, Obama attacks math. Now, he doesn't do it directly. He gets Peter Orzsag to debase his intellect for Obama's political ends. First, he did it with the IMF score. Then this week he pressured the CBO scorers early this week after their math provided defeat after defeat to his healthcare dreams. And then this weekend, Orzsag has attacked Doug Elmendorf, the CBO director.

Case 1: The IMF. At a G-20 meeting earlier this year, Barack Obama came away empty-handed. The only success was to send money to the IMF. $100b. This wasn't going to pass on its own, so they attached it to the Supplemental that paid for our troops. And claimed that $100b leaving the treasury costs nothing. According to the Politico, Orzsag had a totally unprecedented meeting with the OMB scorers putting political pressure on them to cook the books. Only a little comment at the time. Oh ... and no one bought Orzsag's nonsense, and the amount became a focus of attention as a bailout of European banks.

Case 2: CBO Whitehouse meeting. Earlier this week, the President meant with the Director of the CBO. According to Jake Tapper, there was a lot of pushback against the unprecedented nature of the meeting:

Said Senate Minority Leader Mitch McConnell, R-Kentucky: "I noticed that the CBO director was sort of called down to the White House yesterday. It strikes me as somewhat akin as the owner of the team asking the umpires to come up to the owner's box."

McConnell said that "if the CBO is to have credibility, they're the umpire. They're not players in this game."

CBO is tasked with providing “objective, nonpartisan, and timely analyses to aid in economic and budgetary decisions on the wide array of programs covered by the federal budget.”

Case 3: Keith Hennessey puts it nicely, "CBO Kills the President's Medicare Comission Proposal". You see, the CBO found that Obama's great plan to limit costs was to create a commission only saved $2b. One half of one percent of the total cost. So what happens? Orzsag goes after Elmendorff in all but name:

A final note is worth underscoring. As a former CBO director, I can attest that CBO is sometimes accused of a bias toward exaggerating costs and underestimating savings. Unfortunately, parts of today’s analysis from CBO could feed that perception. For example, and without specifying precisely how the various modifications would work, CBO somehow concluded that the council could "eventually achieve annual savings equal to several percent of Medicare spending...[which] would amount to tens of billions of dollars per year after 2019." Such savings are welcome (and rare!), but it is also the case that (for good reason) CBO has restricted itself to qualitative, not quantitative, analyses of long-term effects from legislative proposals.  In providing a quantitative estimate of long-term effects without any analytical basis for doing so, CBO seems to have overstepped.

What is going on is crystal clear. The CBO is not caving to extended political pressure. After weeks of Pelosi "scolding" and Baucus aides "expressing frustration" it has come to open attacks on the CBO, its director, and the institution's integrity.

Well. I have to say, finally Barack Obama is bringing change I can believe in. Chicago-style change.

How Obama failed on cap-and-trade and consequences for health care

Early coverage of the Cap and Trade bill has focused on the successes of Barack Obama and Nancy Pelosi, although I noted that it was also a success for conservative movement groups.

However, focus is beginning to shift. Maybe they didn't get what they wanted? The New York Times' John Broder notes that various groups lobbied the hell out of it. He focuses on the utilities:

The biggest concessions went to utilities, which wanted assurances that they could continue to operate and build coal-burning power plants without shouldering new costs. The utilities received not only tens of billions of dollars worth of free pollution permits, but also billions for work on technology to capture carbon-dioxide emissions from coal combustion to help meet future pollution targets.

By not auctioning these permits, Obama lost a huge amount of money for his earlier proposals. Donald Marron notes that this totals about $600b in revenue that this bill didn't create.

Now think about what Joe Lieberman said yesterday about the health care bill...

Lieberman cited the cost of a public plan as his primary beef with the plan.

"Part of my concern is that, and this goes to the…growing national debt, that inevitably if we create a public option, the public is going to end up pay for it and that's a cost we can't take on," he said.

If Obama had come out of this cap and trade debate with an extra $600b, the healthcare debate would look a lot -- A LOT -- different.

As the scope of the deficit becomes clearer and the political salience of it rises, the cap and trade bill may look like an increasingly poor deal for America, but also the rest of the Obama agenda.

$100MM In Government Cuts? Get Serious!

You have to assume that when Team Obama announced that the President would convene his cabinet and challenge them to cut $100MM from their budgets, they were thinking people would be impressed. Government doing its bit, setting an example, showing that they can be good managers and not just spenders of OPM.

So they are probably surprised at the derision with which their announcement was met. People like me who've worked all their lives in what Boston Herald columnist Howie Carr has called "the dreaded private sector" have always suspected that government managers live in a different world, one where prices can be increased in bad times, where budget baselines ALWAYS grow, year over year, by at least 3-5%, where the consumer of your services -- the taxpayer -- can be treated with indifference, since they cannot bring their business to a competitor.

President Obama's laughable idea of managerial frugality only confirms our worst fears. We're laughing because we work in smaller organizations than the federal government that have been cutting, cutting, cutting -- way beyond 1/36,000 of our company's budget.

Corporate managers across America are used to getting challenged to cut costs every year. Just one example: One of the Silicon Valley's largest and most important concerns, Cisco, committed last year to cut its expenses by over $1 billion over the following year. By all accounts, they are getting there.

From what I hear, people are Webexing instead of flying, eating in rather than out, reducing everything down to cafe hours and office supplies. Cisco is a company of about 60,000 employees, with total revenues in excess of $50 billion. By any measure, the federal government is several orders of magnitude larger -- and yet Cisco's frugality measures are several orders of magnitude larger than the federal government's.

There are similar examples here in the Silicon Valley, but only one makes the point: The President's challenge to his top managers belies either an ignorance of what frugality is all about, or is a disingenuous PR announcement that shows contempt for people's intelligence.

A while ago on this blog, I suggested that the President challenge his cabinet to reduce their administrative budgets by a percentage -- say, 10% -- and that they implement a hiring freeze to stop the growth of the federal workforce, to ensure that stimulus dollars go to local communities, not growing DC bureaucracies. Do more with less -- that's what good organizational managers should always try to do.

Instead, we're told that one cabinet secretary figured out how to save a million or so buying office supplies in bulk from Staples. (Guess the Bushies never captured that low-hanging fruit!).

C'mon Mr. President, set the bar higher than that.

Doubling Down on the Deficit Disaster

Paul Krugman's commentary from 2003, when the deficit was $374 billion.

It has been obvious all along, if you were willing to see it, that the administration's claims to fiscal responsibility have rested on thoroughly cooked books. [...] There's no mystery about why the administration's budget projections have borne so little resemblance to reality: realistic budget numbers would have undermined the case for tax cuts [2009: spending increases & new programs]. So budget analysts were pressured to high-ball estimates of future revenues and low-ball estimates of future expenditures ...

Furthermore, this time huge deficits have emerged [2009: increased] just a few years before the baby boomers start retiring and placing huge demands on Social Security and Medicare. ...

But haven't administration officials said they'll cut the deficit in half by 2008 [2009: 2013]? Yeah, right. I could explain in detail why that claim is nonsense, but in any case, why bother with what these people say? ...

The last defense of the budget deficit is that it helps a depressed economy — to which the answer is "yes, but." ...  And yes, deficits are appropriate as a temporary measure when the economy is depressed — but these deficits aren't temporary ...

Still, do deficits matter? Some economists worry, with good reason, about their long-run effect on economic growth. But I worry most about America's fiscal credibility.

You see, a government that has a reputation for sound finance and honest budgets can get away with running temporary deficits; if it lacks such a reputation, it can't. Right now the U.S. government is running deficits bigger [2009: much, much bigger], as a share of G.D.P., than those that plunged Argentina into crisis. The reason we don't face a comparable crisis is that markets, extrapolating from our responsible past, trust us to get our house in order.

But Mr. Bush [2009: Mr. Obama] shows no inclination to deal with the budget deficit. On the contrary, his administration continues to fudge the numbers and push for ever more tax cuts [2009: spending increases & new programs]. Eventually, markets will notice. And tarnished credibility, along with a much-increased debt, is a problem that Mr. Bush [2009: Mr. Obama] will pass along to other Congresses, other presidents and other generations.

The 2009 deficit is estimated to be $1.7 trillion.  So take Krugman's 2003 criticisms and multiply them by 4.5.  And the long-run deficits are much, much worse, too.

Now, there are legitimate - if unproven - economic arguments that, in the absence of many monetary options, rapid and very temporary fiscal stimulus/deficit spending can be beneficial in reducing the deadweight loss of a potential output shortfall.  But these are not temporary deficits. 

  • They are structural - even under the administration's absurdly optimistic economic assumptions, the deficits remain very large. Under the CBO's economic assumptions (pdf), they never go below $658 billion.
  • They are permanent - CBO estimates the 2019 deficit at over $1 Trillion (pdf).
  • They are driven by entitlements - Entitlements currently amount to about 45% of the federal budget, and that percentage increases dramatically in coming decades.  Yet Obama wants to dramatically expand entitlement spending (e.g., health care).

Republicans irresponsibly ran up enormous deficits during the Bush administration.  Democrats are now doubling down on the disaster.   Republicans and Democrats have played a game of chicken with tax cuts and spending in recent decades.  That's been a major strategic mistake.  Democrats have the advantage, because the majority of long term spending is structural.  When the bill comes due, taxes or inflation will rise dramatically.  For everybody.  At all income levels. There's simply no way around it.

"There are some things we have to do at home to get our house in order. No. 1 is we shouldn't be running up budget deficits." - Barack Obama - May 2006

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