“During his presidential campaign, President Barack Obama promised the American people a “net spending cut.”1 Instead, he signed a “stimulus” bill that spends $800 billion, and he has proposed a budget that would:
- Increase spending by $1 trillion over the next decade;
- Include an additional $250 billion placeholder for another financial bailout;
- Likely lead to a 12 percent increase in discretionary spending;
- Permanently expand the federal government by nearly 3 percent of gross domestic product (GDP) over pre-recession levels;
- Raise taxes on all Americans by $1.4 trillion over the next decade;
- Raise taxes for 3.2 million taxpayers by an average of $300,000 over the next decade;
- Call for a pay-as-you-go (PAYGO) law despite offering a budget that would violate it by $3.4 trillion;
- Assume a rosy economic scenario that few economists anticipate;
- Leave permanent deficits averaging $600 billion even after the economy recovers; and
- Double the publicly held national debt to over $15 trillion ($12.5 trillion after inflation).”
“President Obama has framed his budget as a break from the “failed policies” of the Bush Administration. Actually, his budget doubles down on President George W. Bush’s borrow, spend, and bailout policies. For example:
- President Bush expanded the federal budget by a historic $700 billion through 2008. President Obama would add another $1 trillion.
- President Bush began a string of expensive financial bailouts. President Obama is accelerating that course.
- President Bush created a Medicare drug entitlement that will cost an estimated $800 billion in its first decade. President Obama has proposed a $634 billion down payment on a new government health care fund.
- President Bush increased federal education spending 58 percent faster than inflation. President Obama would double it.
- President Bush became the first President to spend 3 percent of GDP on federal antipoverty programs. President Obama has already increased this spending by 20 percent.
- President Bush tilted the income tax burden more toward upper-income taxpayers. President Obama would continue that trend.“
“Analysts have described President Obama’s budget as a repudiation of the past 25 years of economic policy. In doing so, the President has rejected the most prosperous economic period in American history.
Between 1953 and 1982—a period of high tax rates, spending growth, and applied Keynesian economics—the economy was in recession 21 percent of the time, inflation reached 13 percent, interest rates hit 19 percent, and the stock market grew only 5.4 percent annually.
However, beginning around 1982, tax rates were dramatically reduced, and federal spending began decreasing as a share of the economy. In the 26 years following this major policy shift, the economy has been in recession only 10 percent of the time (including the current recession), inflation has never topped 5 percent, interest rates have never exceeded 12 percent, and the stock market (despite increased volatility) has soared 7.0 percent annually, even including the recent 50 percent drop.
The United States has created enormous wealth over the past 25 years. For President Obama to propose returning to economic policies of the Carter Administration, which brought stagflation and malaise, is unfathomable. Lawmakers should reject this budget and instead reduce tax rates for families and entrepreneurs, restrain runaway government, and reform unaffordable entitlements.”