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Friday with the ‘hammer – The Louis XV budget

by Mojambo ( 131 Comments › )
Filed under Barack Obama, Economy, History at February 18th, 2011 - 11:30 am

Apres mois – le deluge (“After me, the deluge”) is a phrase attributed to the Bourbon King Louis XV of France. Louis XV ran up so much debt with his ostentatious living and reckless spending that his grandson Louis XVI (and France) paid the price for it – on the guillotine! Obama has added $7.2 trillion to the national debt and our children and grand children will pay the price for it. The Duke of Wellington quipped about the Bourbon Kings of France that “they learn nothing and forget everything” – can be applied to progressive economics.

by Charles Krauthammer

Five days before his inauguration, President-elect Obama told The Post that entitlement reform could no longer be kicked down the road. He then spent the next two years kicking – racking up $3 trillion in new debt along the way – on the grounds that massive temporary deficit spending was necessary to prevent another Great Depression.

To prove his bona fides, he later appointed a deficit reduction commission. It made its report last December, when the economy was well past recession, solemnly declaring that “the era of debt denial is over.”

That lasted all of two months. The president’s first post-commission budget, submitted Monday, marks a return to obliviousness. Even Erskine Bowles, Obama’s Democratic debt commission co-chair, says it goes “nowhere near where they will have to go to resolve our fiscal nightmare.”

The budget touts a deficit reduction of $1.1 trillion over the next decade.

Where to begin? Even if you buy this number, Obama’s budget adds $7.2 trillion in new debt over that same decade.

But there’s a catch. The administration assumes economic growth levels higher than private economists and the Congressional Budget Office predict. Without this rosy scenario – using CBO growth estimates – $1.7 trillion of revenue disappears and U.S. debt increases $9 trillion over the next decade. This is almost $1 trillion every year.

Assume you buy the rosy scenario. Of what does this $1.1 trillion in deficit reduction consist? Painful cuts? Think again. It consists of $1.6 trillion in tax hikes, plus an odd $328 billion of some mysterious bipartisan funding for a transportation trust fund (gas taxes, one supposes) – for a grand total of nearly $2 trillion in new taxes.

Classic Obama debt reduction: Add $2 trillion in new taxes, then add $1 trillion in new spending and, presto, you’ve got $1 trillion of debt reduction. It’s the same kind of mad deficit accounting in Obamacare: It reduces debt by adding $540 billion in new spending, then adding $770 billion in new taxes. Presto: $230 billion of “debt reduction.” Bialystock & Bloom accounting.

[…]

Yet all this is penny-ante stuff. The real money is in entitlements. And the real scandal of this budget is that Obama doesn’t touch them. Not Social Security. Not Medicaid. Not Medicare.

What about tax reform, the other major recommendation of the deficit commission? Nothing.

How about just a subset of that – corporate tax reform, on which Republicans have signaled they are eager to collaborate? The formula is simple: Eliminate the loopholes to broaden the tax base, then lower the rates for everyone, promoting both fairness and economic efficiency. What does the Obama budget do? Removes tax breaks – and then keeps the rate at 35 percent, among the highest in the industrialized world (more than twice Canada’s, for example).

Yet for all its gimmicks, this budget leaves the country at decade’s end saddled with publicly held debt triple what Obama inherited.

A more cynical budget is hard to imagine. This one ignores the looming debt crisis, shifts all responsibility for serious budget-cutting to the Republicans – for which Democrats are ready with a two-year, full-artillery demagogic assault – and sets Obama up perfectly for reelection in 2012.

Obama fancies his happy talk, debt-denial optimism to be Reaganesque. It’s more Louis XV. Reagan begat a quarter-century of prosperity; Louis, the deluge.

Moreover, unlike Obama, Louis had the decency to admit he was forfeiting the future. He never pretended to be winning it.

Read the rest: Obama’s Louis XV Budget

Tags: Charles Krauthammer
Posted in Barack Obama, Economy, History | 131 Comments »

Friday with the ‘hammer – Obama has not changed his spots

by Mojambo ( 224 Comments › )
Filed under Barack Obama, Democratic Party, Economy, Elections 2010, Regulation, Republican Party, Socialism at January 28th, 2011 - 2:00 pm

When Dr. K is right, he’s spot-on. This is an excellent wrap up of the vapid State of the Union speech. The good news for the GOP is that while Obama may have heard the voters from November, he is too ideologically driven to listen to them.

by Charles Krauthammer

The November election sent a clear message to Washington: less government, less debt, less spending. President Obama certainly heard it, but judging from his State of the Union address, he doesn’t believe a word of it.

The people say they want cuts? Sure they do – in the abstract. But any party that actually dares carry them out will be punished severely. On that, Obama stakes his re-election.

No other conclusion can be drawn from a speech that didn’t even address the debt issue until 35 minutes in. And then what did he offer? A freeze on domestic discretionary spending that he himself admitted would affect a mere one-eighth of the budget.

Obama seemed impressed, however, that it would produce $400 billion in savings over 10 years. That’s an average of $40 billion a year. The deficit for last year alone was more than 30 times as much. And total federal spending was more than 85 times that amount. A $40 billion annual savings for a government that just racked up $3 trillion in new debt over the last two years is deeply unserious. It’s spillage, a rounding error.

As for entitlements, which are where the real money is, Obama said practically nothing. He is happy to discuss, but if Republicans dare take anything from granny, he shall be Horatius at the bridge.

[…]

Perhaps this is all to be expected from Democrats – the party of government – and from a President who from his very first address to Congress has boldly displayed his zeal to fundamentally transform the American social contract and place it on a “New Foundation” (an Obama slogan that never took). He’s been chastened enough by the election of 2010 to make gestures toward the center. But the State of the Union address revealed a man ideologically unbowed and undeterred. He served up an insignificant spending cut, yet another (if more modest) stimulus and a promise to fight any Republican attempt to significantly shrink the size of government.

Indeed, he went beyond this. He tried to cast this more-of-the-same into a call to national greatness, citing two Michigan brothers who produce solar shingles as a stirring example of rising to the Sputnik moment.

“We do big things,” Obama declared at the end of an address that was, on the contrary, the finest example of small-ball Clintonian minimalism since the days of school uniforms and midnight basketball.

From the moon landing to solar shingles. Is there a better example of American decline?

Read the rest here: The old Obama in new clothing

Tags: Charles Krauthammer
Posted in Barack Obama, Democratic Party, Economy, Elections 2010, Regulation, Republican Party, Socialism | 224 Comments »

Friday with the ‘hammer – It all starts with repeal of Obamacare

by Mojambo ( 111 Comments › )
Filed under Health Care at January 21st, 2011 - 6:30 pm

This is an issue in which we must be resolute – repeal ObamaCare. The tax compromise of December 2010 was a disaster for the GOP and we cannot afford another one. Having said that there are some things that we should keep such as no preconditions and no lifetime maximum expenses. Also we need to be able to shop for health insurance as we do auto insurance and lift regional restrictions. Competition does tend to lower prices!

by Charles Krauthammer

Suppose someone – say, the president of United States – proposed the following: We are drowning in debt. More than $14 trillion right now. I’ve got a great idea for deficit reduction. It will yield a savings of $230 billion over the next 10 years: We increase spending by $540 billion while we increase taxes by $770 billion.

He’d be laughed out of town. And yet, this is precisely what the Democrats are claiming as a virtue of Obamacare. During the debate over Republican attempts to repeal it, one of the Democrats’ major talking points has been that Obamacare reduces the deficit – and therefore repeal raises it – by $230 billion. Why, the Congressional Budget Office says exactly that.

Very true. And very convincing. Until you realize where that number comes from. Explains CBO Director Douglas Elmendorf in his “preliminary analysis of H.R. 2” (the Republican health-care repeal): “CBO anticipates that enacting H.R. 2 would probably yield, for the 2012-2021 period, a reduction in revenues in the neighborhood of $770 billion and a reduction in outlays in the vicinity of $540 billion.”

As National Affairs editor Yuval Levin pointed out when mining this remarkable nugget, this is a hell of a way to do deficit reduction: a radical increase in spending, topped by an even more radical increase in taxes.

Of course, the very numbers that yield this $230 billion “deficit reduction” are phony to begin with. The CBO is required to accept every assumption, promise (of future spending cuts, for example) and chronological gimmick that Congress gives it. All the CBO then does is perform the calculation and spit out the result.

In fact, the whole Obamacare bill was gamed to produce a favorable CBO number. Most glaringly, the entitlement it creates – government-subsidized health insurance for 32 million Americans – doesn’t kick in until 2014. That was deliberately designed so any projection for this decade would cover only six years of expenditures – while that same 10-year projection would capture 10 years of revenue. With 10 years of money inflow vs. six years of outflow, the result is a positive – i.e., deficit-reducing – number. Surprise.

If you think that’s audacious, consider this: Obamacare does not create just one new entitlement (health insurance for everyone); it actually creates a second – long-term care insurance. With an aging population, and with long-term care becoming extraordinarily expensive, this promises to be the biggest budget buster in the history of the welfare state.

And yet, in the CBO calculation, this new entitlement to long-term care reduces the deficit over the next 10 years. By $70 billion, no less. How is this possible? By collecting premiums now, and paying out no benefits for the first 10 years. Presto: a (temporary) surplus. As former CBO director Douglas Holtz-Eakin and scholars Joseph Antos and James Capretta note, “Only in Washington could the creation of a reckless entitlement program be used as ‘offset’ to grease the way for another entitlement.” I would note additionally that only in Washington could such a neat little swindle be titled the “CLASS Act” (for the Community Living Assistance Services and Supports Act).

[…]

This does not absolve the Republicans from producing a health-care replacement. They will and should be judged by how well their alternative addresses the needs of the uninsured and the anxieties of the currently insured. But amending an insanely complicated, contradictory, incoherent and arbitrary 2,000-page bill that will generate tens of thousands of pages of regulations is a complete non-starter. Everything begins with repeal.

Read the rest here: Everything starts with repeal

Tags: Charles Krauthammer
Posted in Health Care | 111 Comments »

Friday with the ‘hammer – About that transparency thing

by Mojambo ( 161 Comments › )
Filed under Democratic Party, Elections 2010, Health Care, Republican Party at December 31st, 2010 - 2:00 pm

A perfect example as to how Democrats view politics is their attempts to get “end of life counseling” past a sleeping public. Obama and his cronies have the mentality of third world dictators who prefer the dictating to actually getting their hands dirty with work. If you think that The One is a left-wing, hard driving, ideologue, just wait and see what will happen if he gets a second term.

by Charles Krauthammer

Most people don’t remember Obamacare’s notorious Section 1233, mandating government payments for end-of-life counseling. It aroused so much anxiety as a possible first slippery step on the road to state-mandated late-life rationing that the Senate never included it in the final health-care law.

Well, it’s back – by administrative fiat. A month ago, Medicare issued a regulation providing for end-of-life counseling during annual “wellness” visits. It was all nicely buried amid the simultaneous release of hundreds of new Medicare rules.

Rep. Earl Blumenauer (D-Ore.), author of Section 1233, was delighted. “Mr. Blumenauer’s office celebrated ‘a quiet victory,’ but urged supporters not to crow about it,” reports the New York Times. Deathly quiet. In early November, his office sent an e-mail plea to supporters: “We would ask that you not broadcast this accomplishment out to any of your lists . . . e-mails can too easily be forwarded.” They had been lucky that “thus far, it seems that no press or blogs have discovered it. . . . The longer this [regulation] goes unnoticed, the better our chances of keeping it.”

So much for the Democrats’ transparency – and for their repeated claim that the more people learn what is in the health-care law, the more they will like it. Turns out ignorance is the Democrats’ best hope.

And regulation is their perfect vehicle – so much quieter than legislation. Consider two other regulatory usurpations in just the past few days:

On Dec. 23, the Interior Department issued Secretarial Order 3310, reversing a 2003 decision and giving itself the authority to designate public lands as “Wild Lands.” A clever twofer: (1) a bureaucratic power grab – for seven years up through Dec. 22, wilderness designation had been the exclusive province of Congress, and (2) a leftward lurch – more land to be “protected” from such nefarious uses as domestic oil exploration in a country disastrously dependent on foreign sources.

The very same day, the Environmental Protection Agency declared that in 2011 it would begin drawing up anti-carbon regulations on oil refineries and power plants, another power grab effectively enacting what Congress had firmly rejected when presented as cap-and-trade legislation.

For an Obama bureaucrat, however, the will of Congress is a mere speed bump. Hence this regulatory trifecta, each one moving smartly left – and nicely clarifying what the spirit of bipartisan compromise that President Obama heralded in his post-lame-duck Dec. 22 news conference was really about: a shift to the center for public consumption and political appearance only.

[…]

It’s Obama’s only way forward during the next two years. He will never get past the half-Republican 112th Congress what he could not get past the overwhelmingly Democratic 111th. He doesn’t have the votes and he surely doesn’t want the publicity. Hence the quiet resurrection, as it were, of end-of-life counseling.

Obama knows he has only so many years to change the country. In his first two, he achieved much: the first stimulus, Obamacare and financial regulation. For the next two, however, the Republican House will prevent any repetition of that. Obama’s agenda will therefore have to be advanced by the more subterranean means of rule-by-regulation.

But this must simultaneously be mixed with ostentatious displays of legislative bipartisanship (e.g., the lame-duck tax-cut deal) in order to pull off the (apparent) centrist repositioning required for reelection. This, in turn, would grant Obama four more years when, freed from the need for pretense, he can reassert himself ideologically and complete the social-democratic transformation – begun Jan. 20, 2009; derailed Nov. 2, 2010 – that is the mission of his presidency.