Various Items On Obama’s Budget (UPDATED)

UPDATE: We called it a middle-finger salute, but The Wall Street Journal editorial page had a little different formulation to say the same thing – calling this the “Cee Lo Green Budget“…

This $3.73 trillion budget does a Cee Lo Green (“Forget You,” as cleaned up for the Grammys) to the voter mandate in November to control spending. It leaves every hard decision to the new House Republican majority. And it ignores almost entirely the recommendations of Mr. Obama’s own deficit commission. No wonder the commission’s Democratic co-chairman, Erskine Bowles, said Monday that this budget goes “nowhere near where they will have to go to resolve our fiscal nightmare.” And he’s an ally.

Nothing like a musical interlude when talking about the nation’s fisc.

We’ll start with this – John Hinderaker at Power Line points out that the $3.73 trillion budget President Obama presented to Congress today actually represents more spending than Obama had projected two years ago…

In its 2010 budget, the Obama administration projected that in FY 2012, total federal outlays would add up to $3,662,000,000. In its actual FY 2012 budget, the administration is asking for total outlays of $3,729,000,000. That’s right: the Obama administration has responded to skyrocketing deficits and heightened concern about federal debt by increasing the amount it is requesting for next year, compared to its projections of just two years ago, by $67 billion. Only in Washington is this a “cut.”

Moreover, in its 2010 budget, the Obama administration projected that in FY 2012, it would run a deficit of $581 billion, or 3.5% of GDP. Now, the administration tells us that its FY 2012 budget will run a deficit of $1.1 trillion, or 7% of GDP, nearly double what it had projected. The press expects us to take seriously the claim that Obama’s budget “would cut deficits by $1.1 trillion over the next decade.” But it doubles the FY 2012 deficit, compared to its own projection of just two years ago. Why on earth should we take seriously the administration’s new, revised projections for the next decade, grim as they are?

Naturally, several members of Louisiana’s congressional delegation hate this thing like poison.

Here’s Sen. David Vitter:

“The new budget proposal misses the mark in two big ways, by locking in current unsustainable spending levels for at least five years and failing to make serious progress toward balancing the budget,” said Vitter.  “In fact, the president’s budget adds $13 trillion to the debt over the next decade while increasing taxes by $1.6 trillion.  That’s totally unacceptable.

“I will continue to advocate for a much more substantive approach to reducing wasteful spending by going at the systemic problem.  The only way to cause deep rooted change in the spending culture is to change the system with a balanced budget amendment or some similar mechanism,” said Vitter.

And here’s Rep. Rodney Alexander:

“This Valentine’s Day, President Obama gave America a bitter treat – his FY2012 Budget, which still reflects a heavy tax-and-spend governing agenda.

“The president’s rhetoric may suggest he understands it is time to get our financial house in order, but his proposal simply does not live up to the hype. We must move beyond words and follow a financial blueprint that is within our means.

“While the President has fallen short, House Republicans are working to provide our families and businesses the strong leadership and fiscal discipline they need and deserve.”

Rep. Charles Boustany:

“The President’s budget emphasizes more of the same spending, tax increases, and borrowing this administration has advocated for the past two years,” Boustany said. “We need to be focused on creating jobs and getting all Americans back to work, especially in the Gulf of Mexico energy sector.  The spending outlined by the President in the State of the Union was a sign of what was to come from this budget, and the administration delivered on more massive increases in our debt.

“The burden of our national debt will be passed down to our children and grandchildren.  Adding another $1.6 trillion to it is unsustainable and irresponsible on the part of this administration.

“Much of the damage of this budget will be felt by Louisiana” Boustany said.

“Rather than using his budget to address issues that matter to our Gulf Coast, the President neglects Louisiana yet again.

“The unsustainable course outlined by this budget will be one of the biggest disasters ever for this country.  While the President continues to push for more stimulus spending, Republicans are encouraging business growth, both large and small, and increasing the amount of American jobs.  We need to reinvigorate our economy to increase American competitiveness.  This budget is not the answer.”

Yuval Levin at National Review isn’t impressed, either

This message seems clearly to be a function of a political calculation: that voters do not want to face the coming debt crisis, and so it would be bad politics to force them to do so. I tend to think that’s not entirely true, and that voters will judge this kind of blindfolded budget to be unserious and inadequate to the moment. People know we’ve got a major fiscal problem that will get worse as more of the baby boomers retire and while obviously no one wants to make avoidable sacrifices, Americans do seem increasingly to understand that some change of course will be required. But that’s hard to say, and maybe the Obama team is right about the politics.

Americans For Tax Reform says this is a $1.5 trillion tax increase over 10 years

  • Raising the top marginal income tax rate (at which a majority of small business profits face taxation) from 35% to 39.6%.  This is a $709 billion/10 year tax hike
  • Raising the capital gains and dividends rate from 15% to 20%
  • Raising the death tax rate from 35% to 45% and lowering the death tax exemption amount from $5 million ($10 million for couples) to $3.5 million.  This is a $98 billion/ten year tax hike
  • Capping the value of itemized deductions at the 28% bracket rate.  This will effectively cut tax deductions for mortgage interest, charitable contributions, property taxes, state and local income or sales taxes, out-of-pocket medical expenses, and unreimbursed employee business expenses.  A new means-tested phaseout of itemized deductions limits them even more.  This is a $321 billion/ten year tax hike
  • New bank taxes totaling $33 billion over ten years
  • New international corporate tax hikes totaling $129 billion over ten years
  • New life insurance company taxes totaling $14 billion over ten years
  • Massive new taxes on energy, including LIFO repeal, Superfund, domestic energy manufacturing, and many others totaling $120 billion over ten years
  • Increasing unemployment payroll taxes by $15 billion over ten years
  • Taxing management capital gains in an investment partnership (“carried interest”) as ordinary income.  This is a tax hike of $15 billion over ten years
  • A giveaway to the trial lawyers—not letting companies deduct the cost of punitive damages from a lawsuit settlement.  This is a tax hike of $300 million over ten years
  • Increasing tax penalties, information reporting, and IRS information sharing.  This is a ten-year tax hike of $20 billion.
  • Echoing the energy tax claim, we find this from the Times-Picayune

    According to the President’s budget document, “The Budget proposes over $500 million to restructure BOEMRE; hire new oil and gas inspectors, engineers, scientists, and other key staff to oversee industry operations; establish real-time monitoring of key drilling activities; conduct detailed engineering review of offshore drilling and production safety systems; and implement more aggressive review of company oil spill response plans.”

    And then, in a line certain to be the focus of some caustic comment from members of the Louisianacongressional delegation, the budget narratives states: “These reforms will also facilitate the timely review of offshore oil and gas permits.”

    In addition to calling for the imposition of the user fees on oil companies to pay the cost of processing permits, the budget also calls for other changes intended to wring a better return from energy development, including establishing the fee for new non-producing leases, and “making administrative changes to Federal oil and gas royalties, such as adjusting royalty rates and terminating the royalty-in-kind program.”

    The department last year announced it was ending the royalty-in-kind program – which allowed energy producers to provide the government gas and oil in lieu of cash payments — effective Sept. 30.

    The point is, not only is this budget absolutely dead on arrival in Congress – we didn’t break out any quotes from John Boehner, Mitch McConnell, Paul Ryan or Eric Cantor, which we easily could have done since Ryan called the budget a “punt” – but it’s a complete joke. It’s a total failure on both political and policy grounds. A $3.73 trillion budget after last November’s elections is nothing but a middle-finger salute to the majority of the population who voted to strip him of the legislative power to spend that he enjoyed in his first two years, and that’s politically stupid.

    From a policy standpoint, though, it’s worse. Sure, this budget is an attempt to stake out a negotiating position against the House Republicans – but it fails completely to do that. When you’re this far out of the ballpark, you give the other side no reason to attempt to find common ground with you.

    And as a result, just like with the question of raising the debt ceiling what we’re seeing is brinksmanship by the Democrats. Failure to raise the debt ceiling, despite some 70 percent of the American people disapproving of raising it, is considered reckless. When Sen. Pat Toomey offers a proposal to instruct the Treasury Department to pay interest on the debt first so that there is no danger of a default on the debt if the ceiling isn’t raised, it’s demagogued along the lines that Toomey cares more about China than the American people.

    And now, Obama and his Democrat minions are browbeating Republican opposition to the president’s budget with dire predictions of a government shutdown. So much so that Cantor took to the airwaves in an attempt to get them to shut up

    “Any time that we on our side propose a spending cut, it seems that Chuck Schumer, Dick Durbin…and Harry Reid, scream ’shutdown,’” Cantor said Monday during a question-and-answer session with reporters. “Why is it necessarily that you’re only hearing ’shutdown’ from one side? We have consistently said it’s not our intention to shut down this government. That is political talk and we ought to get that off the table.”

    What all this means is Obama isn’t seeking an accommodation with the GOP on the budget at all. He’s not serious about the deficit when the klaxons are sounding all around him. Obama convened a debt commission last year to come up with ways to eliminate the deficit, and he’s ignored all of their recommendations. He got clobbered in a national midterm election when deficits and debt were the primary issues, and he doesn’t care. All the financial people are screaming that the deficits will kill the economy, and he couldn’t care less.

    The guess here? Ryan is going to write the budget, and when push comes to shove Obama will more or less capitulate to him in the same manner he capitulated on the Bush tax rates in the lame duck session. And then the president will attempt to take credit for the harsh cuts to the public sector in front of the general public as part of his re-election effort to paint himself as a centrist, though he’ll have had nothing to do with those. But with his base, Obama will blame the heartless and evil Republicans for gutting all which is good and decent in America, in an attempt to resuscitate the coalition that elected him in 2008 – “we didn’t get you guys out in force in 2010 and look what happened; you’ve got to come out now or we’ll lose everything.”

    This, like Ryan noted today, isn’t leadership. It’s cowardice. And if there’s any justice in the world Obama’s credibility, such as it is, ought to be permanently lost as a result of what he did today.



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