Obama Economic Plan: $25.4 trillion Deficit In 10 Years

Hare said:

Quite curiously this addiction you speak of just so happened to rear it's ugly head in perfect harmony with the destruction of the housing market, and the simultaneous mass destruction of wealth that followed.

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No, its been around longer than that. Its just now becoming unafordable.

Fletch said:

No, its been around longer than that. Its just now becoming unafordable.

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Benefit expenditures have risen in accordance with the labor market decline, hardly an abnormal occurrence, nor will handouts be the cause of widespread economic ruin.

Objective Voice said:

Only if Conservative Republicans continue to be obstructionist and bullheaded. You're not going to get this country moving again economically with spending cuts only, and you're certainly not going to start drawing down the deficit without more revenue. No one's saying that tax increases on the wealth-class would continue forever. By your party's own admission, increased revenue through taxes collected from lower unemployment (job creation) would go a long way towards paying down the deficit. But how exactly are we as a nation suppose to do that? So, unless the wealthy does more to spur job growth, the only source left to do it is the federal government. Think that through for a moment...

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Obama has added 5 trillion to the deficit within 4 years. The result has been 15% Real Unemployment. Demand Driven Keynesian wealth redistribution schemes do not work. Government needs to get out of the way and allow private investment to spur innovation and economic growth. The US Government spends more than 2 trillion dollars a year that it has to confiscate from someone else who earns it privately, yet it still not enough for Big Government statists who wish to wield centralized authority. Obama is still running trillion+ deficits, though if you talk to the liberals on this board they'll try and convince you Obama is a responsible spender with reasonable proposed budgets or something, but I digress...

Conservatism says that free men should risk their own finances to put their ideas and initiatives to work in the marketplace, but how is that possible when the largest segment of the popullation - the middle-class - can't afford to take such risks? Our income (wages) pays for less, our taxes eat up a larger percentage of our income than it does the wealth. It costs us more in goods and services than it does our wealthy counterparts (if there is such a thing). And everyone knows that the wealth-class has made money in this down economy while the middle-class earnings have largely decreased. So, how exactly is the 99% to participate in the free market system other than as mere consumers unless someone is willing to help them become more than just consumers?

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Government is the reason that the middle class is afraid to take such risks. Regulations such as Obamacare has made hiring people very expensive. It also attracts unwanted attention from the Government. When you raise taxes on the poor and middle class with taxes disguised as mandates, that is a negative externality on an up and coming business wishing to hire someone. Small business owners hire people because they want to make money. They don't hire someone because they want to give you a job. You sell your labor in a the market like any other scarce resource in an economy. Equilibrium is achieved naturally. It's not something that can be controlled with artificially low interest rates forever as we are witnessing now.

Either Conservatism follows through on the theory behind trickle-down economics or those who would wish to continue with this popularistic ideology step the (blank) out of the way and give the nation a chance to recover from their ideological scew-up.

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Demand Driven or Trickle Up Poverty schemes have now been shown more than ever to be a huge scam. Obama basically robbed 5 trillion from future generations to pay off his crony campaign bundlers and union allies. There is simply no comparison. When you compare the results of Ronald Reagan's economic policies to that of Barack Obama, history is absolutely crystal clear. There is no system ever devised by a Government that can hold a candle to the free market. No system ever conceived by man on the face of the Earth can come close to prosperity and increase in health/standard of living than Free Market Capitalism.

Objective Voice said:

Only if Conservative Republicans continue to be obstructionist and bullheaded.

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Quite the contrary; Republicans obstructing major Democrat initiatives - for example cap and tax - are part of the reason we haven't plunged further than we have into this hellhole.

You're not going to get this country moving again economically with spending cuts only

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that is certainly correct. we also need tax and regulatory reform, to say nothing of spurring new growth industries by removing their current barriers.

and you're certainly not going to start drawing down the deficit without more revenue

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that is also correct. however, we are also certainly not going to draw more revenue through hiking up nominal tax rates. In order to increase revenue you need to increase GDP growth along with decreasing the size of government relative to GDP.

No one's saying that tax increases on the wealth-class would continue forever

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No one has said that any tax rate would continue forever. However, if you are looking to statically score increased revenues with the goal of reducing the deficit by hiking rates on the rich, you're doing it wrong. The Middle Class is where the money is at - CBO static scoring (which is to say, ridiculously optimistic) of going back to the Clinton rates for the above 250K crowd is $80 Bn a year. For the Middle Class, it's $320 Bn a year - four times the revenue drawn from taxing the wealthy.

Again, both scores are wrong, because both optimistically assume that people are mindless robots who do not respond to incentives. But if that's the debate you want to have, then sticking to the "rich" is ineffective.

By your party's own admission, increased revenue through taxes collected from lower unemployment (job creation) would go a long way towards paying down the deficit. But how exactly are we as a nation suppose to do that?

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So glad you asked.

1. Drop the barriers to energy production on federal lands, in Alaska, and off both coasts. Energy jobs hire blue collar non-college educated workers (who are suffering more than their more educated fellows in this recession) and pay them well above-median wages. In North Dakota, where private energy production is producing quite the boom, unemployment is less than half the national average, and truck drivers are pulling six figures. Where there is a major growth industry, others spring around it; and California, Washington, Oregon, Louisiana, Alabama, Georgia, Florida, Alaska, et al start pumping out wealth, energy, and jobs.

2. Currently the United States wastes $400 Bn a year in tax compliance due to our idiotic behemoth-like indecipherable mess of a tax code. Simplification of the tax code that reduces those expenses... think of it as a massive, annual stimulus that we get every year and which we don't have to pay for, but which instead of going into the pockets of political cronies actually stays in what is by definition production. GDP growth accelerates and with it hundreds and hundreds of thousands of jobs annually.

3. According to the Small Business Association, the regulatory burden in American currently stands at just shy of $2 Trillion. It costs us more than we spend on healthcare. While regulation is needed in order to ensure solutions to problems of the commons, the current regime is overly oppressive, destructive, and enforced at random. With a federal register of over 80,000 pages, our regulatory burden is beyond human comprehension, and denies small business owners the ability to predict when they will get hit with a lawsuit, or what for. The incentives are for mid to low level regulatory officers to build their reputation by ruining businesses, as they face promotion capricious abuse rather than dismissal. Simplification of the regulatory burden placed on small businesses along with a "loser pays" ruling that reduces the incentives for regulatory abuse will free businesses to be productive while reducing the overhanging threat of fishing-expedition lawsuits. In addition, putting in place cost-benefit analysis for each new regulatory measure with a requirement for Congress to approve all measures with costs over a certain threshold will ensure that we actually put into place laws whose prices we are willing to bear. Depending on the level of regulatory simplification, the potential growth and job benefits from this are massive.

4. In line with regulatory reduction, repeal Obamacare and Dodd-Frank and replace them both with actual, simple, predictable solutions that everyone can understand and that don't put in place heavy burdens on businesses and a giant wet-blanket on job creation.

5. Make all tax rates post-simplification (in which nominal rates are lowered to effective rates as complexity is removed) permanent. Regulatory and Tax uncertainty are choking us right now, and are a large part of the reason why businesses are sitting on cash rather than investing and expanding.

6. (this is not a current GOP idea, but rather a current GOP general intent that I have matched to one of my ideas) Currently our social safety net system contains large benefit cliffs wherein people face net income losses when they get jobs or increase their productivity (and thus, compensation). We need to remove these disincentives to work and productivity by fixing our social safety net. One good way (cpwill's idea) to do this while also fulfilling objective #2 is to put in place a flat tax on all income over 200% of the poverty line. In this way we progressively tax income (for each dollar earned over the threshold raises the effective tax rate just a little bit more), while receiving the economic benefits (and revenue) of a flat tax. In addition, the current spaggetti hodgepodge of conflicting, failing welfare programs can be replaced with a negative income tax rate of 50% of every dollar less than the tax threshold. In this way we ensure that not a single man, woman, or child in America lives below the poverty line, while costing the government less money, reducing the net size of governance, and without creating disincentives to work and productivity (since not a single dollar earned means a net reduction in income).


1-5 is the explicit GOP platform this year. If we can get that accomplished.... well, growth and employment won't be a problem, and we can move on to figuring out the (now much easier) problem of how we are going to pay for our burgeoning entitlement programs.

So, unless the wealthy does more to spur job growth, the only source left to do it is the federal government.

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Yeah. We've been trying that every year since 2008, starting with Bush. Thus far, the Federal Government appears to have sucked at it.

Conservatism says that free men should risk their own finances to put their ideas and initiatives to work in the marketplace, but how is that possible when the largest segment of the population - the middle-class - can't afford to take such risks?

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Most small businesses aren't started by the wealthy, they are started by members of the middle class.

Our income (wages) pays for less, our taxes eat up a larger percentage of our income than it does the wealth.

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at the state level that might be true, depending on the state - but at the federal level it is not. since we are discussing the federal government here, this statement is not an accurate depiction of reality.

It costs us more in goods and services than it does our wealthy counterparts (if there is such a thing).

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that is also not true. Wal Mart does not charge less to someone making $285K a year than it charges to someone making $40K a year for the same sweater.

And everyone knows that the wealth-class has made money in this down economy while the middle-class earnings have largely decreased.

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Really? Everyone knows this? You need to write the Director of the CBO right away, because apparently he is unaware of something that everyone knows.

Income has increased across all deciles. It has just increased much much faster for knowledge workers.

So, how exactly is the 99% to participate in the free market system other than as mere consumers unless someone is willing to help them become more than just consumers?

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well, let me say that I applaud your implicit endorsement of Mitt Romney's plan to get rid of all capital gains taxes for people making less than $200,000 a year, thus helping them to become wealth accumulators and builders. In addition, I would like to take this particular question from you to hawk my proposed social security reform (here) which was designed explicitly to allow even low-income workers the ability to achieve financial independence.

Hare said:

Benefit expenditures have risen in accordance with the labor market decline, hardly an abnormal occurrence, nor will handouts be the cause of widespread economic ruin.

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Under the President's budget, spending stays permanently high, around 23-24 percent of GDP. It sure looks as if Democrats are taking advantage of the recession to create a "new normal" as far as federal spending, especially benefit programs, goes. They've expanded eligibility for food stamps and the Obama administration is waiving work requirements for welfare.

And the worst part is that they are trying to hide the increase by calling it temporary, knowing that the public would never tolerate a full 3-4% of GDP permanent spending increase. Actually, that's the second worst part. The worst part is that they plan to spend 3-4% more in GDP, but have no plan to collect the revenue to support that level of spending.

AdamT said:

This is the non-partisan analysis of the Senate Republicans' staff? :rofl

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Even if it's only half correct, it's bad.

American said:

Even if it's only half correct, it's bad.

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It is bad. It's going to be bad no matter who wins the election. Romney has endorsed Ryan's budget which adds $10 trillion to the debt.

That's mistaken. Some liberal blogs have compared Ryan's budget to the CBO baseline. But that's a bad measurement because no one actually supports the CBO baseline, which assumes that all the Bush tax cuts expire this year and payments to doctors under Medicare drop in accordance with the sustainable growth policy.

The correct comparison is with the current policy baseline, or better yet, the Obama budget. Compared to those, it cuts the deficit more:

http://blogs.reuters.com/james-peth...s-ryan-an-apples-to-apples-budget-comparison/

5) Those savings – 2.4 percent for Obama, 3.5 percent for Ryan — are over ten years vs. cumulative GDP of $196 trillion over 2012-2021 (not counting interest expense). In dollar amounts, that works to savings of $4.7 trillion for Obama and $6.9 trillion for Ryan. So the Ryan Path saves $2.2 trillion more.

6) But that’s not all! The Obama Framework likely uses the same higher growth assumptions as Obama’s February budget. When CBO re-ran that budget using its own gloomier forecast, it found the Obama plan raised $1.7 trillion less than it claimed. Ryan uses the CBO numbers. So a back-of-the-envelope estimate — adjusted for similar economic assumptions — finds the Obama Framework would only save $3 trillion vs. $6.9 trillion for the Ryan Path over ten years. And nearly 2/3 of Obama’s savings comes from higher taxes (net interest)

francois60 said:

That's mistaken. Some liberal blogs have compared Ryan's budget to the CBO baseline. But that's a bad measurement because no one actually supports the CBO baseline, which assumes that all the Bush tax cuts expire this year and payments to doctors under Medicare drop in accordance with the sustainable growth policy.

The correct comparison is with the current policy baseline, or better yet, the Obama budget. Compared to those, it cuts the deficit more:

James Pethokoukis | Analysis & Opinion | Reuters.com

5) Those savings – 2.4 percent for Obama, 3.5 percent for Ryan — are over ten years vs. cumulative GDP of $196 trillion over 2012-2021 (not counting interest expense). In dollar amounts, that works to savings of $4.7 trillion for Obama and $6.9 trillion for Ryan. So the Ryan Path saves $2.2 trillion more.

6) But that’s not all! The Obama Framework likely uses the same higher growth assumptions as Obama’s February budget. When CBO re-ran that budget using its own gloomier forecast, it found the Obama plan raised $1.7 trillion less than it claimed. Ryan uses the CBO numbers. So a back-of-the-envelope estimate — adjusted for similar economic assumptions — finds the Obama Framework would only save $3 trillion vs. $6.9 trillion for the Ryan Path over ten years. And nearly 2/3 of Obama’s savings comes from higher taxes (net interest)

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I hate to break this to you, but Ryan's plan uses ludicrously unrealistic growth projections. He assumes a level of growth that would be unprecedented in this nation's history.

All politicians use optimistic growth projections resulting from their policies. Which, underscores the severity of the fiscal cliff we are actually likely to face, meaning that we will likely have no choice but to cut the budget (including entitlements) by more than the Ryan Plan.

cpwill said:

All politicians use optimistic growth projections resulting from their policies. Which, underscores the severity of the fiscal cliff we are actually likely to face, meaning that we will likely have no choice but to cut the budget (including entitlements) by more than the Ryan Plan.

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Unfortunately, I fear that until a country like Japan FINALLY starts to collapse under the weight of their debt (which is the worst in the world - outside of Zimbabwe....43% of Japan's taxes go just towards debt servicing) and people FINALLY stop buying their bonds will people in America FINALLY realize how unsustainable this path of debt is.

Because right now it seems that no matter how big the deficits are - the masses just act slightly shocked, the politicians promise to do something about it and everyone forgets about it.

DUMBASSES. The American masses are 'f''d within a generation if they don't stop this suicide debt train - and they have not a clue.

The answer to too much debt is NEVER more debt.

Noting to see here.

The link goes to Brietbart which links back to Jeff Sessions website.




Dear Friends on the RIGHT:

It's best to link to independent and non-partisan sources if you want us to take you seriously.:2wave:

AdamT said:

I hate to break this to you, but Ryan's plan uses ludicrously unrealistic growth projections. He assumes a level of growth that would be unprecedented in this nation's history.

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Which is why the analysis normalizes it. The exact numbers Ryan's plan generates changes based on economic assumptions, but since it is more reliant on spending cuts than revenue increases, it is not as vulnerable to poor economic growth as Obama's plan is.

hazlnut said:

Noting to see here.

The link goes to Brietbart which links back to Jeff Sessions website.




Dear Friends on the RIGHT:

It's best to link to independent and non-partisan sources if you want us to take you seriously.:2wave:

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Well, there are tons of different analyses of the Ryan budget. I can't find any that says it increases the deficit against the current policy baseline over 10 years. The most "damning" analysis is that it matches the OMB current law baseline by saving only $160 billion more. But the OMB current law baseline cuts the deficit by $5 trillion compared to current policy!

francois60 said:

Which is why the analysis normalizes it. The exact numbers Ryan's plan generates changes based on economic assumptions, but since it is more reliant on spending cuts than revenue increases, it is not as vulnerable to poor economic growth as Obama's plan is.

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These are two sides of the same coin. If those spending cuts stuff the economy then it will result in less revenue than projected and therefore bigger deficits. This is happening all over Europe; they cut and cut and deficits are still growing because all the spending cuts have led to GDP contraction.

Spending cuts only cause economic contraction if we are already in recession. In good times, spending cuts are always beneficial because lower deficits means more growth, which is an assumption the CBO uses.

francois60 said:

Spending cuts only cause economic contraction if we are already in recession.

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That is not true. See: early 1920's. It is spending cuts combined with tax hikes that create problems, as it hinders the ability of the released capital to reallocate itself.

I think that's right, but I didn't want to make an absolute claim that spending cuts are never harmful since it wasn't necessary for the argument. Paul Ryan's budget doesn't make big cuts right away, or even big cuts at all. It just holds spending growth to 2.8% per year. that's definitely not austerity, so it never causes a problem of any sort and the CBO confirms that it is a pro-growth budget.

Objective Voice said:

Hate to tell you this, but your article is dead wrong per the CBO's 10-year projections.

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Can you name 1 time ever when the CBO 10-year projection was ever right?

They aren't meant to be right, they are meant to be objective guesses. The CBO was created so that parties wouldn't just make up BS numbers to sell their legislation. The CBO score isn't considered absolutely correct, but it is at least objective.

francois60 said:

I think that's right, but I didn't want to make an absolute claim that spending cuts are never harmful since it wasn't necessary for the argument. Paul Ryan's budget doesn't make big cuts right away, or even big cuts at all. It just holds spending growth to 2.8% per year. that's definitely not austerity, so it never causes a problem of any sort and the CBO confirms that it is a pro-growth budget.

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Agreed... the other difference between the Ryan budget and austerity, is that the government is not the sole provider of services, taking massive amounts of tax dollars that it does in the european nations...

The negative side of the austerity measures is taking peoples money, and not using it for the services they gave it to you for...

In the US, we don't take nearly as much, and we aren't expected to provide as much...

francois60 said:

They aren't meant to be right, they are meant to be objective guesses. The CBO was created so that parties wouldn't just make up BS numbers to sell their legislation. The CBO score isn't considered absolutely correct, but it is at least objective.

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Sorry... accuracy of the prediction is quite relevant, when they're being touted as a source of anything... If they're just guesses than everyone's guess is just as qualified as the next, since nothing can be predicted...

10-year budgets are ridiculous since it spans 5 different Congresses, 3 presidential administrations, and 2 senates... so much policy is adjusted in that time period that none of the "current policy"s that they base their projections on will matter by the end of the 10 years... which is why the CBO forecasts have always been way off...

So let's learn our lesson, stop looking 10 years into the future, and look to the next 2-4...

Their guesses are also better than anyone else's guesses. They use scientific models. But of course predicting economic trends over ten years, or even one year, is difficult. It's like predicting the weather.

I don't see a better alternative to these educated guesses. At the very least, they are useful for making apples-to-apples comparisons of various budget plans. We may not know exactly how much deficit savings we'll get out of the Ryan budget, but we do know it will save more than current law, current policy, or the President's budget.

francois60 said:

Their guesses are also better than anyone else's guesses. They use scientific models. But of course predicting economic trends over ten years, or even one year, is difficult. It's like predicting the weather.

I don't see a better alternative to these educated guesses. At the very least, they are useful for making apples-to-apples comparisons of various budget plans. We may not know exactly how much deficit savings we'll get out of the Ryan budget, but we do know it will save more than current law, current policy, or the President's budget.

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Their guesses have been consistently wrong by several billion... If their guesses are consistently that wrong... they're not worth paying attention to...

I agree that the Ryan budget will save us more than the current policy and the presidents proposals... but not based off of 10 year projects by the CBO... because of the simple short term math involved... There's no need to look at the next 10, just the next 4...

Here's the Obama "spending cuts" in a nutshell...

Step 1: Propose $1 trillion in spending hikes.
Step 2: Pass a law reducing "spending" within that time frame by $100MM
Step 3: Puff out your chest, and brag that you lowered spending by $100MM
Step 4: Confuse the voters by thinking your $900MM in hikes really is $100MM in cuts.