Obama budget D.O.A.

How many trees died so the Government Printing Office could distribute all those never-to-be-implemented budget proposals put out earlier this week by the Obama Administration. Let’s face it. The Obama budget is basically dead on arrival. The Republicans are loath to agree on proposals – like infrastructure rebuilding, essential to undergird the economy – that they might have supported in the past, because it is an election year. Still less are they going to embrace items, expanded education funding, for example, that they would normally have shied away from in the first place. The President knows all this. What he has put forward is a campaign document, not dissimilar to the purpose of those government-funded newsletters that members of Congress put out on a quarterly or semi-annual basis.

He seems intent on tackling the unfairness of the tax system (e.g different rates for dividends and ordinary income) and letting at least some of the Bush tax cuts go away. That plays to his base, but he knows there’s no support in Congress for raising taxes on families earning $250,000 a year. He might have gotten more traction if the cut-off were $1 million a year, but that wouldn’t have generated as much revenue. Surely, if the Bush tax cuts were eliminated in their entirety, it would have a significant impact on the deficit, but few are advocating the long-term benefits of shared sacrifice . Given that his tax increase proposals won’t go through, the President also ensures the deficit will again be well over $1 trillion the next fiscal year, breaking his earlier naive pledge to cut the deficit in half by the end of his first term.

The plan claims to cut $4milion from the deficit over the next decade, but it’s festooned with accounting gimmicks, rosy forecasts and unwarranted economic assumptions.  As I indicated after the State-of-the-Union speech, a major part of Obama’s plan to pay for new initiatives is to “take the money we will no longer be spending on Iraq and Afghanistan, use half to reduce the deficit and the other half to do nation building here at home.” The fallacy here is that we have been deficit-financing the two wars. Not making the huge expenditures there doesn’t translate into money in the bank. The money was never there in the first place, and, much as I wish him success in this and other endeavors, I am insulted that he thinks we will fall for this.

It seems that after a feckless couple of years of waffling, and trying inartfully to court a myopic and hypocritrical Congress, the President finally has decided that the time for austerity is not now and that job creation trumps deficit reduction. Reading with concern the news from Europe, I wish him and our country well.

It’s all a mess and not likely to be less so until at least after the election. Then Congress will find itself on the brink of the sequestration agreed to in last year’s debt ceiling impasse, with debt ceiling, the sequel also just over the horizon. It’s no wonder that people are turned off by politics and have such contempt for the shell games that everyone in Washington insists on playing.

I’d greatly appreciate your thoughts in the comments section below.

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