More on the Budget

In an excellent article prepared for The Heritage Foundation, Brian M. Riedl provides yet more detail about the unsustainable levels of spending proposed by President Obama in in 2011 Federal budget.

The article points out that in FY 2007 during the Bush Administration, the Federal budget deficit was a (relatively) modest $162 Billion.  Only during FY 2008 and 2009 did the Bush deficits skyrocket as a result of measures taken in response to the recession and the banking crisis.  Now that the recession appears to be over and the massive stimulus and bailout spending is no longer needed, the Federal deficit should return to pre-recession levels, right?  Wrong!  Under the Obama spending plan, deficits remain at staggering levels through 2020, with almost all (90%) of the deficits resulting from increased spending.  Even when compared with President Obama's budget from last year for FY 2010, the FY 2011 budget reflects $2 Trillion in additional deficits through 2020 (see table).

President Obama must act to curb these massive spending increases and to reign in uncontrolled entitlement spending.  Every year that passes without these issues being addressed just sends our nation deeper into a financial hole.

The Obama Budget

Yesterday, President Obama presented his fiscal year 2011 budget to Congress.  Since then, every news organization and every pundit on every side have tried to parse the text to determine what it all means.  For certain, when The New York Times, which never wastes an opportunity to serve as cheerleader for Team Obama, calls the President's spending and debt levels unsustainable, they certainly must be so.

Shall we consider the numbers?  Here are a few to ponder:

• A deficit in the Federal budget of $1,270,000,000,000 (that is $1.27 Trillion) for the coming year, which is on top of the deficit of $1.56 Trillion during President Obama's first year in office.
• According to the President's own projections, after a short period of leveling off from 2014 to 2018, the Federal budget deficit will begin another cycle of dramatic increases beginning in 2019.
• The President's projected budget deficits over the next ten years cumulatively total $8.53 Trillion (and remember, these are just the deficits, not the total national debt).
• Total Federal revenues for FY 2011 will exceed $2.57 Trillion, an increase of 18.6% over Federal revenues for the preceding year.

In the President's remarks, linked above, he blames George W. Bush for the budget problems, continuing a trend that is growing old.  For example, he placed part of the blame for the current budget deficit on the passage of Medicare Part D (the drug benefit) during the Bush Administration.  However, he conveniently leaves out the fact that Part D was strongly supported by BOTH parties in Congress and that the version favored by the Democrats was actually much more costly than the version that was ultimately adopted.  And if Part D entitlement is to blame for a large part of the Federal budget shortfall, then why doesn't President Obama simply urge the repeal of the benefit?  The current budget belongs to President Obama, not President Bush, and he needs to take the blame for his own runaway spending rather than blaming it on the previous Administration.  And just so you know, I am not now, nor have I ever been, a supporter of the free-spending of President Bush and Congressional Republicans when they controlled the budget.  The same rules apply to all, and there is plenty of blame to go around.

We should not lose sight, either, that all of the numbers being pushed around by the Administration and others regarding the budget fail to consider the consequences of Federal unfunded budget liabilities, which add Trillions and Trillions more to the national debt.  According to David Walker, former Comptroller General of the United States, the current national debt figure of $12.3 Trillion that is quoted by politicians and news sources should actually be $45 to $50 Trillion more to account for unfunded liabilities from Medicare, Social Security and other Federal programs.  And you can also add to the bottom line the $6 Trillion or so that taxpayers are on the hook for as a result of the Fannie Mae/Freddie Mac takeovers.

Our government cannot continue to bury us under mountains of debt.  If the current trend continues, we will become a client state of China, to whom we owe all of that money.  (Do you think the Chinese know this fact?  I'm betting they do.)  Someone must step up and speak the truth:  entitlement spending must be brought under control.  We must stop borrowing our way out of economic hard times.  Creation of a massive new entitlement program in the form of Obamacare cannot be justified in the face of our current budget crisis.

On Debts and Spending

No, the title of this post does not refer to my personal financial situation.  Instead, I have a reality check on our national debt and the effect of current runaway spending on our collective financial security.

"Yawn," you say?  Well then, just try to wrap your mind around the following numbers:

• The current unfunded liability for Social Security and Medicare amounts to $107 Trillion.
• The Social Security and Medicare unfunded liability is growing at the rate of $5 Trillion every year!
• Of the Social Security and Medicare unfunded liability, the greatest portion is due to Medicare, which alone accounts for $89 Trillion of the total.  The Medicare prescription drug benefit (enacted by the Bush Administration, which was no stranger to overspending) accounts for $17 Trillion of the Medicare liability.
• By the year 2054 (when my daughter will be approaching retirement age), the payroll tax rate for Social Security and Medicare Parts A, B and D will need to be a staggering 37% in order to cover then-current obligations to retirees.  And remember that the payroll tax does not include Federal, state and local income taxes, with total combined rates that can be as much as 40% in some states.
• According to the Congressional Budget Office, if spending on Medicare and Medicaid continues to increase at its current rate, by the year 2050, at current income tax rates, the entire Federal budget will be consumed just to pay for Social Security, Medicare and Medicaid.

Source:  "Social Security and Medicare Projections:  2009", National Center for Policy Analysis, June 11, 2009.

Now, if those numbers do not wake you up, try this one for size:  Obamacare, depending on the final form it takes, will increase the size of the Federal budget by $1 Trillion to $2 Trillion each year.  And the "savings" that will supposedly pay the cost is a myth.  The only way that the Baucus bill that is under consideration in the Senate would achieve revenue neutrality will be if all employers place all of their employees into the government-subsidized plan and then, get this, give all of the savings back to their employees in the form of higher wages!!  Oh yeah, that's gonna happen.

The next time someone says that Obamacare is just like Medicare except that everyone will be covered, ask them whether they have a clear conscience about turning their grandchildren into indentured servants who work for nothing except to pay the bills run up by their grandparents.

And lest you think that the Obama Administration and the Democratic controlled Congress only want to spend your money on Obamacare, you should consider that they have approved increases in domestic discretionary spending of 12.1% for 2010 alone.   The linked article reminds us that inflation is less than 1%, yet the Democrats are increasing domestic spending by 12.1%.  And the increase does not even include the expenditure of the so-called "stimulus" money.  When the stimulus money is included, federal agencies will receive, on average, an increase in their budgets of 57% this year.  And through the magic of baseline budgeting, the increases become a permanent part of the agencies' budgets.  So if a conservative Congressman wants to decrease the size of a particular agency's budget in 2012 by, say, a modest 5%, he or she will be decried by the media and liberal interest groups for taking away from programs that benefit the masses, even though the actual budget, taking into account the 5% decrease, would still be up more than 50% in a two year period.

So remember, even as millions of Americans have lost jobs and real household incomes have shrunk this year, the Obama Administration and the Democrats in Congress are having no trouble at all spending money we do not have on programs we do not need.

Interesting Stuff from Here and There

A few stories I have come across today that I find interesting, in no particular order . . .

From The Washington Post:  Senate Democrats suffer heartburn after attempting to hide $250 Billion in increased health care costs:

John Cornyn (R-Tex.) . . . [stated], "This, of course, violates one of the president's first principles, when he said he won't sign any health-care bill that adds one dime to the deficit," he reminded reporters. "This adds a lot of dimes to the deficit."

From the Associated Press:  The House version of Obamacare will cause health cares costs to increase.

Measures in the legislation to reduce cost may take 15 years to 20 years to deliver a savings dividend . . . [and] tens of millions of newly insured people could put a strain on the health care system.

Again from The Washington Post:  an editorial warning about the runaway Obama budget deficits, which have now reached the staggering sum of $1.4 Trillion just for 2009:

Today, foreigners hold nearly half the $7.5 trillion U.S. public debt. As a result, the politics of deficit reduction are not only extremely difficult, they are extremely difficult and international. Inflation could trigger a global run on the dollar and a nasty interest rate spike.

From The New York Times:  an article about AP reporter Michael Graczyk, who has covered more than 300 Texas executions [I am personally opposed to capital punishment, which is a topic for another day]:

Seeing inmates in the death chamber, strapped to a gurney and moments away from lethal injections, he has heard them greet him by name, confess to their crimes for the first time, sing, pray and, once, spit out a concealed handcuff key. He has stood shoulder to shoulder with other witnesses who stared, wept, fainted, turned their backs or, in one case, exchanged high-fives.

From Newsweek:  an opinion piece by Jacob Weisberg concerning the Obama Administration's attacks on Fox News in which Weisberg calls Fox News "un-American":

What's most distinctive about the American press is not its freedom but its century-old tradition of independence—that it serves the public interest rather than those of parties, persuasions, or pressure groups. Media independence is a 20th-century innovation that has never fully taken root in many other countries that do have a free press. The Australian-British-continental model of politicized media that Murdoch has applied at Fox is un-American, so much so that he has little choice but go on denying what he's doing as he does it. For Murdoch, Ailes, and company, "fair and balanced" is a necessary lie. To admit that their coverage is slanted by design would violate the American understanding of the media's role in democracy and our idea of what constitutes fair play.

This is rich.  The American press is about as independent of political inclination as, well, as I am.  The real reason Weisberg, who usually writes for Slate, is upset with Fox News is that Fox is cleaning everyone else's clock in the ratings.  If no one were watching Fox, neither the left-leaning media nor the Obama Administration would care what was being said.  And it is equally rich that a liberal would call Fox News "un-American" after all of the cries from the left that "dissent is patriotic" when George W. Bush was still in office.  By the way, I do not watch either Glenn Beck or Bill O'Reilly.  About the only show I watch with any regularity on Fox News is Special Report, which is on from 6:00 to 7:00 p.m.

Obama's Spending Mania

Anyone who knows me knows that my biggest complaint about former President George W. Bush was his runaway spending.  In concert with a Republican Congress that should have known better (and that was punished for it at the polls in 2006 and 2008), President Bush ushered in the age of Republican Party Big Government.  From the federalization of public education under "No Child Left Behind" to the massive bailouts of Freddie Mac and Fannie Mae, President Bush proved that he knew how to spend my money.  But how about President Obama?  Now, there is a politician who really knows how to spend my money.  In an article for The American, Veronique de Rugy provides graphic evidence of the massive spending of the Obama Administration:

Oh my.  Read the article, and remember that the projected deficits of the Obama years do not factor in the massive costs of his proposed health care "reforms".