Wednesday, February 3, 2010

The $3.8 Trillion Federal budget, WASHINGTON STEP OFF!

I have spent entirely too much time reviewing the new budget. I read the documentation, analyzed the graphs, watched the debates, and listed to President Obama try to sell the budget at the fake "townhalls" where only supporters attended. It is entirely a disgusting situation of lies, deceit, misinformation, mischaracterization, and misunderstanding of American ideals.

To quote our President, "Let me be clear..." we Americans understand that the alleged $100 billion savings that health care reform supposedly creates is at best fictional and at worst the cost of lowering quality of care by allowing government bureaucrats to decide which care is "comparatively effective." In other words, that is $100 billion in savings from refusing preventive and reducing quality of care. In the context of $3.8 Trillion, that is no real savings, and it is spread over 10 years and based on increased tax revenues for several years before the plan starts. It is a scam to provide unions with Cadillac health care, while taxing everyone else.

The President's budget increases taxes on small business, and the middle class through backdoor "tricks." Meanwhile, asking someone else to make the hard decisions on the huge national debt by asking for a committee to review the situation.

Reuters reported then retracted the following:

"Middle-class families also will find fewer tax breaks available to them in 2010 if other popular tax provisions are allowed to expire. Among them:

*Taxpayers who itemize will lose the option to deduct state sales-tax payments instead of state and local income taxes;

*The $250 teacher tax credit for classroom supplies;

*The tax deduction for up to $4,000 of college tuition and expenses;

*Individuals who don't itemize will no longer be able to increase their standard deduction by up to $1,000 for property taxes paid;

* The first $2,400 of unemployment benefits are taxable, in 2009 that amount was tax-free."

Claims that the above report is false because there is a promise to continue these Bush era tax breaks for the middle class are LIES because the $250,000 FAMILY income is often pass through income from small business. This injects more disincentives for entrepreneurs to create jobs and for the economy to grow.

Additionally, the capital gains rate will be increased to 20%. This means investors are going to be soaked along with savers and the entire supply side of the economy. This is more "Doo Doo Economics" and exactly the wrong thing to do in a recession, but another example of tax and spend demand-side non-economic thought.

Finally, there is the blame Bush mentality of going from budget surplus to budget deficits. The Bush administration made all the tough choices that led us out of the economic crisis, which Obama of course takes credit for. Meanwhile, Obama blames Bush for the cost of these policies. Maybe, these people need to remember that the job losses and huge deficits really started after congress was taken over by the Democrats in 2006-2007 (see chart)

To summarize the problem, American families make these hard choices everyday, and the government's inability to make these choices reflects the fundamental reason that government cannot be allowed to grow and take on additional responsibilities. These decisions are best left up to the people.

Economically, twenty five to thirty-three cents of every dollar in U.S. economic growth reduces the national debt even according to Timothy Geithner. This is why Reagan era supply-side policies allowed the country to grow out to a projected budget surplus. All the American people need is for Washington to STOP SPENDING! 

Wishy-washy Washington, particularly our weak willed President Obama, needs to "STEP OFF!"

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