With the ides of April upon us, we are required to provide the government with its “just deserts.”
After listening to President Barack Obama’s budget pronouncement earlier this week, it seems he has just deserted us.
His avuncular attempt was another haughty, verbose diatribe laced with irrational inconsistencies and political innuendo.
The introduction focused on core conservative values. He emphasized individual empowerment that fosters innovation, creativity, and value-added productivity. As a compliment, government exists to preserve and protect these individual liberties and creations in a fair and just manner, while providing help to those genuinely in need (anyone at any time).
Unfortunately, as is his proclivity, he digressed from this text, dissembled, and morphed back to his 2008 presidential campaign rhetoric. He became emphatic as he prescribed a litany of government involvement that defies the empirical evidence: he emphasized how value creation is inherent in massive, impersonal bureaucratic endeavors.
His credibility deficit continues to increase.
In analyzing the recent budget agreement, the Congressional Budget Office (CBO) indicates the $38 billion deficit reduction deal actually increases 2011 expenditures by $3 billion. Apparently, politicians attempt to classify an increase in expenditures as a decrease in expenditures. The “logical reasoning”: some included reductions occur after 2011 or were unlikely to be spent, and emergency funding for Afghanistan and Iraq was included in outlays, but not counted toward the deficit reduction deal.
In his 2012 Fiscal Year Budget (2012-2021), Obama projects the 2013 Fiscal Year Deficit to be $768 billion, 50 percent greater than the $533 billion he projected 2 years ago in his 2010 Fiscal Year Budget. This does not bode well for his economic prognostications. (To wit, he also claimed his stimulus plan would keep unemployment below 8 percent: it has hovered near 10 percent for quite some time, and this figure does not include an additional 7 percent for those underemployed.)
The president’s Fiscal 2012 budget (2012-2021) also projects a 10 year accumulated debt increase of $7 trillion (average of $700 billion per year). Prorated over 12 years, the total debt increase approaches $8.4 trillion.
He intends to reduce the projected debt level by 50 percent, or $4 trillion, over 12 years using a ratio of $3 in spending cuts for every $1 tax increase. Therefore, projected spending will be reduced by $3 trillion (from $55 trillion to $52 trillion) and projected taxes will increase by $1 trillion (from $47 trillion to $48 trillion).
The scary part: after nearly 45 minutes of hearing his vision for America and the sacrifices it requires by all, he presented a “fail safe” budget mechanism, which is safe to fail.
He suggested that if fiscal discipline was not realized by 2014 (debt levels did not stabilize), automatic spending cuts and tax increases would be instituted.
This statement is anathema to his entire presentation. It enables the current system to metastasize with knowledge it may be dealt with later, much later. By then, the problems will most likely worsen, leaving less impetus to administer the necessary reforms.
This is a disastrous budget strategy that needs a serious overhaul.
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