Obama Proposes ‘A Budget Too Far’
Just days after President Obama said that cutting the budget deficit was as important as creating jobs, he submitted a proposed record budget that will escalate the US budget deficit by at least $100 billion dollars. The president’s $3.8 trillion budget will result in a record deficit of $1.6 trillion.
But the budget plan, mostly by allowing the Bush tax cuts to expire, will raise taxes by nearly $1 trillion on those upper-income Americans who are the real job creators and sign the paychecks. In addition, the banking industry and multinational corporations would be hit by new fees and levies, while oil companies would lose $39 billion in federal tax breaks. The tax increases are listed in more detail here.
The Obama budget puts the U.S. economy at even greater risk than it faced in 2009, according to the Wall Street Journal:
Overall, Mr. Obama’s budget plan would shrink the current deficit to $727 billion, or 4.2% of the gross domestic product, by 2013. But if annual deficits shrink, the total federal debt will keep growing. In all, the president’s budget would add $8.5 trillion to the federal debt through 2020, pushing the debt as a percentage of GDP to 77% from 53%.
Kenneth Rogoff, a Harvard University economist who has studied other countries’ experiences, said that level could push the U.S. toward a tipping point where interest rates could soar, the value of the dollar could plunge and the economy could face another crisis.
“We will hit a point where it comes on us very quickly, and you don’t want to edge up to that point,” Mr. Rogoff said. “Going beyond 80%, you’re taking a real chance.”
But the president’s budget has no chance of surviving Congressional scrutiny intact in the face of criticism from both sides of the aisle:
The White House’s budget isn’t popular with either major party. Liberals want the President to spend more to shore up the sagging job market. Republicans want more cuts to bring down the huge federal deficit. “If borrowing and spending all this money led to more jobs, then we’d be at full employment already,” said Rep. Paul Ryan (R-WI), during an appearance on Fox News Sunday.
Meanwhile, the Democrats in control of Congress have already expressed their reluctance to cut spending with unemployment hovering at 10%.
Let the Battle of the Budget begin!
- JP of Political Lore Blog