Spending Cuts Where Art Thou?
April 13, 2011
Ok, so President Obama has finally laid out his plan for balancing the budget and getting the federal government back on track fiscally. I am not going to use this blog to talk about how he should have done this in 2009 when he took office by not signing the Stimulus Bill or how he should have done this when he released his fiscal year (FY) 2012 back in February. Let’s instead look at some of the details (thanks to the Wall Street Journal that has his speech posted).
Here is the first interesting tidbit from his speech, “The first step in our approach is to keep annual domestic spending low by building on the savings that both parties agreed to last week – a step that will save us about $750 billion over twelve years.” His FY 2012 budget calls for a $1 trillion deficit.
“The second step in our approach is to find additional savings in our defense budget…Over the last two years, Secretary Gates has courageously taken on wasteful spending, saving $400 billion in current and future spending. I believe we can do that again.” Still not enough.
Now comes the amazing statement, “The third step in our approach is to further reduce health care spending in our budget…Our approach lowers the government’s health care bills by reducing the cost of health care itself. Already, the reforms we passed in the health care law will reduce our deficit by $1 trillion.” Yes, the Congressional Budget Office did say that Obamacare would reduce the deficit, only because it would increase taxes and people inherently know that government involvement in anything has never resulted in cost savings or reduced spending.
And then there are the tax increases. I will defer to my good friends at Americans for Tax Reform (ATR). According to ATR, “The main features of the Obama/Gang of Six tax hike are the following:
- Raise the tax revenue target from 18-19 percent of the economy (historical) to 21 percent of the economy.
- Raise net taxes by $1, $2, or $3 trillion over the next decade.
- A promise of $3 in spending cuts for every $1 in tax hikes.
- A tax hike “trigger” to pay for higher levels of government spending.
- Raise the rate at which two-thirds of small business profits face taxation, from 35% to 39.6%.
- Raise the tax rate on capital gains and dividends from 15% to 23.8%. .
- Raise the death tax rate from 35% to 45%, and cut the exemption from $10 million to $3.5 million.
- No rate target on “tax reform
- Keep the higher taxes of Obamacare in place.
- Violates President Obama’s oft-repeated campaign promise to not raise “any form” of taxes on families making less than $250,000 per year.”
This is a plan that uses over-taxed smoke and mirrors. Sorry, President Obama, go back to the drawing board and come up with a plan that doesn’t balance the budget on the back of businesses and hard-workng Americans.