Obama's Trillion-Dollar Spending Plan
What does "change" cost? About a quarter of a trillion bucks a year, according to Barack Obama. But first, this: "I wish Obama would go further than that, but it's a start," was the reaction of one DailyKos poster to Barack Obama's economic plan unveiled yesterday in a campaign appearance in Janesville, Wis. Some hard-core liberals may be underwhelmed by the scope of Obama's agenda—after all, there's no single-payer healthcare plan or Scandinavian-style "flexicurity" worker benefits program in the mix—but my guess is that the average person would find it all pretty aggressive. Here are the priciest parts:
- A $65 billion-a-year health plan
- $15 billion in green energy spending
- $85 billion in tax cuts and credits
- A $25 billion-a-year increase in foreign aid
- $18 billion a year in education spending
- $3.5 billion for a national service plan
Put it all together, and we are talking about a $200 billon plan, $800 billion over four years. And that does not even include fixing the alternative minimum tax, a $50 billion-a-year item that will assuredly get passed. A few thoughts:
1) Let's put aside for a moment whether the Obama plan will actually increase our standard of living, enhance productivity, or encourage innovation. As a matter of accounting, I don't get how Obama will pay for his plan. Now he claims he's paid "for every element of this economic agenda—by ending a war that's costing us billions, closing tax loopholes for corporations, putting a price on carbon pollution, and ending George Bush's tax cuts for the wealthiest 2 percent of Americans."
But I don't think that adds up. Take, for instance, eliminating those Bush tax cuts on top earners. That might gain $50 billion a year, assuming no negative economic effect. But Congressional Budget Office estimates already assume that the Bush tax cuts expire at the end of 2010. So Obama gains nothing beyond, perhaps, a one-year bump in 2010 if he repeals the tax cuts a year earlier.
2) Obama clearly advocates jacking up payroll taxes as a way of creating long-term solvency for Social Security. Check out this chunk from his campaign press release:
Obama will be honest with the American people about the long-term solvency of Social Security and the ways we can address the shortfall. Obama will protect Social Security benefits for current and future beneficiaries alike. And he does not believe it is necessary or fair to hardworking seniors to raise the retirement age. Obama is strongly opposed to privatizing Social Security. Currently, the Social Security payroll tax applies to only the first $97,500 a worker makes. Obama has consistently said that we may want to include a "doughnut hole" to ensure that lifting the payroll tax cap does not ensnare any middle-class Americans. Obama supports increasing the maximum amount of earnings covered by Social Security, and he will work with Congress and the American people to choose a payroll tax reform package that will keep Social Security solvent for at least the next half century.
Taken at face value, Obama is proposing no benefit cuts at all. None. He won't cut future benefit increases by linking them to the inflation rate rather than wages, nor will he extend the retirement age even as life expectancy increases. Retirement accounts, a way to make Social Security a better deal for younger workers but not a way to directly deal with the solvency issue, are also out of the question. I will update all this after I chat with Team Obama about its candidate's ideas.
Tags: economics | presidential election 2008 | Barack Obama
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Reader Comments
Anywhere is better than here
People who are not concerned about their own financial situation or repairing the planet for future situations will find it easy to criticize any financial plan that includes trying to provide health care for people who don't have it, funds for green energy, and an increase in foreign aid. After eight years of the most shamelessly irresponsible administration throwing money out the window on a war designed to make the rich richer and put on the tab of future administrations I find it hard to believe there's anything wrong with any plan that tries to redirect money to places where it's really needed. The two percent have had their moment in the sun and it's been proven time and again that they don't let that money get back into the economy once they have it. And they have enough.
Everyone is Not Equal
oh, do they? I suppose we will put you on top of the new socialist state you call for. Good idea, lets tell families that generations of hard work were for nothing. Lets tell poor people that they will never have a chance to get rich now, because once they have any money they will have to give it to the government. Basically the democrats are espousing a system where nobody wins and nobody loses. Rich people this, rich people that. Get real and look at the world we live in. Try to do something for yourself, and stop whining that you don't get everything you want. Chris of AZ is right: anyone with any business or financial sense immediately recognizes that the liberals have nothing but a weathervane to see which way the wind blows. Government didn't build this country. Independent thinking and hard work built this country, not handouts. The US Government is the biggest waster of money in this country already.
Why do people think that a sprawling government magically knows what to do with private citizens money, rather than the people themselves? However this is the central issue for liberals. Redistribution of wealth is not progress.
Obama Economic Plan
Where is the money coming from? Duh! It's coming from the increase in social security taxes! The CATO institute estimates the Obama payroll tax increase will raise $1.3 trillion over 10 years. The system is collecting more money than it pays out in benefits currently, and that is supposed to continue until 2017. The additional funds collected, as all social security taxes collected since the 1960's, will be spent, leaving more IOU's in the famous "lock-box." Interestingly, the bills start coming due just as a second term Obama leaves office. The only way to meet social security obligations remains to cut benefits, raise taxes, up the retirement age or privatize the system so that funds are used for income producing assets instead of government spending.
Obama's Trillion-Dollar Spending Plan
As one of the "rich" Americans who will be laid waste by Mr. Obama's policies, I am appalled at the idea that there can be any justification for taking the money that I work so hard for and redistributing it to anyone else. I am writing this email from the office on a Saturday. I will be in work tomorrow. Last year I didn't work about 15 weekends. I have my own business and I have nobody to push this work off to, so I must do it myself, and I work exceeding hard to finish my work, often sacrificing personal and family time in the process. My wife is a doctor who easily works 60 hours a week, unless she is on call on the weekend, during which can work up to 80 hours in a week. Our hard work creates the need for support staff, which means jobs. Our hard work creates the need for products and services associated with our businesses, which means more jobs. We spend our money in our local economy and the more we make the more we feel comfortable spending. Conversely the less we make the more we feel we have to save in order to fulfill our long term goals, such as college for our daughter. This is kitchen table economics, it is not complicated.
Not only does Mr. Obama propose to cut the amount of money that we receive for our ridiculously hard work, he proposes to shift our hard earned money to pay for a bunch of budget busting pet projects, a concept that Mr. Obama is well familiar with since he requested $321,766,475.00 dollars in earmarks last year. Does he believe that his proposals will encourage us to work even harder to receive the same income? Of course not. We will find ways to work less, which means less revenue to pay our support staffs, less need for products and services from our vendors and less jobs all the way around. Redistributing wealth does not encourage those at the bottom end of the pay scale to work harder, why should they, they will in essence be paid more for working the same amount that they are already working.
Mr. Obama’s healthcare plan will result in less money for doctors who perform lifesaving work while working hours that few blue collar workers would ever consider. How often is an assembly line person woken from a deep sleep and told to come into work at 3:00 in the morning, with no prospect of time and half? It doesn’t happen.
It is all fine for Mr. Obama, who pulled in over a million dollars last year, to call for greater taxes. After all, he works for the Senate which means he is paid $169,300.00 dollars, gets about 4 months off a year in vacations, guaranteed excellent healthcare and about a thousand other benefits, and that doesn’t include his royalties from his books and speaking engagements. If he is elected president he can expect more of the same benefits, so Mr. Obama will not feel the sting of being paid less to work more.
My wife and I work so hard because we want to leave our daughter with the resources necessary to allow her to achieve whatever she dreams. It is unjust for the rich and powerful Mr. Obama to punish us for our hard work. It is through our hard work, dedication, entrepreneurship, and willingness to sacrifice that so many related jobs have been created. Mr. Obama’s plan will squelch our drive to work, and the drive of the entire entrepreneurial class, and will result in a rippling effect of lost jobs for the very people that Mr. Obama proposes to benefit.
To the above hard-worker and his doctor-wife
Well said sir!
Thank you
To the above.
Thank you.
It's people like you that make this country great. I'm in a much lower bracket than you. But I completely understand why Mr. Obama's socialistic views would completely ruin me. As well as you.
Thank you for creating jobs. Thank you for creating commerce. Thank you for growing our economy. Thank you for your saved capital in banks that is being used to help me currently start my own business through business loans.
It amazes me how short sighted socialists like Mr. Obama are. If the expenses of a poor person goes up, their are going to spend less. Why do people think that is any different for businesses? When a business owners expenses go up (Taxes) They hire less people, or even lay people off. Why is that so hard to understand?
There must be a point people realize. The more people you put in the wagon, the harder it will be to pull. And the harder you make it for people to pull the wagon, the less likely they are going to pull. We need more people pulling the wagon, and less people in the wagon.
Mr. Kelly
Is It Socialism or Communism?
I knew Obama was either socialist or communist from the beginning of his presidential campaign because he didn't ever say anything substantial. It was all hope and change and yes we can. That's a smoke screen for socialism.
However, on health care, neither Hillary Clinton nor Obama are going to do nationalized health care. They are simply going to force everyone to go out and pay for a health care plan. If they legalize all the illegal Mexicans and force them to get health insurance themselves, that would save more hospitals in the U.S. from going bankrupt. We do neglect our health care in that sense. Americans are willing to pay for cigarettes and booze, but zero for health insurance. Hillary wants to mandate that everyone has to have health insurance.
What I worry about with Obama is that he wants to tax everyone who works to give much more welfare to all the people who never work and never pay taxes. Most people don't know this, but people on welfare get free rent and utilities, cash, food stamps, free medical and dental. The Cato Institute published a report showing that people on welfare make more than many people who work do. Obama wants to give them homes for free instead of just free apartments, give them Pell Grants for each child in school, give them bank accounts for their kids when they are born. It's basically to take the country from the people who worked and built it and give it to new immigrants, and those who have never worked and will never work, and redidstribute the weath to them.
This is why Michele Obama showed the other day how much she hates this country. I think they are communist, they hate white people and they want to take over the resources of the people of the country and give them away to other people. It is close to Atlas Shrugged at this point.
Racist hysteria
"This is why Michele Obama showed the other day how much she hates this country. I think they are communist, they hate white people and they want to take over the resources of the people of the country and give them away to other people."
You mean like hedge fund managers and banks in China, Singapore, Saudi Arabia, etc.? Or former Merrill Lynch CEO Stan O'Neal? After an $8 billion write down (aka money down the drain), he got $125 million worth of 'resources'.
increased payroll taxes
Most people tend to cast the debate over the higher payroll taxes in moral terms. I think that the practical ramifications are at least as important. The fact is that the higher payroll taxes will lead to changes in behavior and unintended consequences. Among the various behavioral changes would be the following: (a) Fewer workers hired; (b) Wages cut for people earning less than 100K to help pay the additional payroll tax on those above 100K; (c) More outsourcing; (d) Raising of prices on goods and services that the company provides; (e) Paying some employees a portion of their wages in cash; (f) Increased use of barter transactions; (g) Fewer hours worked; (h) More hiding of company revenue; (i) More overstating of company costs; (j) Providing low-interest loans to some employees as part of the compensation package; (k) Greater use of stock options, or other vehicles that generate capital gains; (l) Compensating some employees by paying their mortgage.
Thus, the feds will collect a lot less tax revenue than they expect, and many other people will be adversely affected, beyond those targeted by the tax.
To Michael of Michigan:
So you work hard? How about the poor people who never had the same chance and opportunities you did? Stop trying to make it seem like you are a completely hard-working man with a needy family. Your opportunity was given to you by sheer luck and some work-- most people living in poverty never had that chance to work in the first place. Don't act like Obama is just stealing money from you and directly giving it to the poor.. the government inherently has to collect taxes. You think its fair that someone dying from poverty should be charged just as much as a super rich wealthy white man? I call that greed.
If Obama was actually able to pass an issue through our bipartisan Congress and get those politicians to agree, then the issue must be important enough to emphasize that it shouldn't matter how much it costs. And it's not like Bush/Republicans have done a good job managing the economy right now anyway.. we are severely in debt. For what? The mistake regarding nukes in Iraq? To tap into Americans' phone calls without warrants and invade their privacy? At least Obama's plan incoporates things that will BENEFIT the community, like education and alternative energies. Of course, for a rich white man like you, you dont care about about other countires in dire need of foreign aid. It's all a waste of money to you.. but in my opinion, YOU are a waste of money.
"My wife and I work so hard because we want to leave our daughter with the resources necessary to allow her to achieve whatever she dreams. It is unjust for the rich and powerful Mr. Obama to punish us for our hard work. "
That is the most crap I have ever heard in my life. You're just trying to amass pity by making yourself look like the victim.. aren't YOU the one who is rich and powerful? Obama may be just as wealthy as you, but at least he has the ambitions to HELP the poor, while you just bathe in your greed. Everyone wants their children to do well in the future, but your daughter is not starving, uneducated, and associating with dangerous activites like drugs and crimes. She already has is very well off, yet people are severely being hurt in the classes below you-- yet you could care less.
If the cost is really that important, the War in Iraq is JUST as much
CHECK THE FACTS:
http://www.nationalpriorities.org/costofwar_home
Cutting the War in Iraq would give us that money.
$275 million per day
$4,100 per household
Almost 4,000 U.S. soldiers killed and more than 60,000 wounded
700,000 Iraqis killed and 4 million refugees
To the Good Doctor and To Mr. Bush
Healthcare cost are out of this world, and there is no good reason why every person in this country shouldn't be able to afford healthcare, but big business once again intervenes. It's not just pharmaceutical companies, it is also the for profit hospitals/HMO's and the companies that make the equpiment for healthcare facilities. that is why the average American bitches about their bill from the doctor and they see the docs name and associate all the forces at work wit the bill from that healthcare professional.
Our beloved President has increased the debt more than all of the presidents before him combined. That's over 200 years of spending exceeded in 8. Somehow, I don't think our needs have increased that much in that amount of time. Some figures for you: When Clinton left office, our national debt stood at $5.7 trillion, our budget was balanced and we had started paying off the debt (over $300 billion paid back). Under Presidnet Bush our national debt has increased over $3.7 trillion to top $9.4 trillion currently. George should have talked more with his dad, It's the economy stupid!
CAN I GET SOME !!
HELLO .. IAM IN US ,. IAM POOR .. IN NEED OF SOME MONEY
CAN I GET ... ,,..
coz.. trillions is spend to KILL PEOPLES!!!
AND A CAN A MILLIONS TO ME !! TO LIVE!!
plzz????
mikey in MI
Why don't you get off your lazy behind and earn some money and quit trying to steal from others that work harder or smarter than you?
Don't have a chance to get wealthy?
Only the stupid or lazy have no chance, at least until we elect a demosocialist, then no one will have a chance except the new marxist ruling class.
correction
my ost above directed at the wrong party, it should have been directed to karl of AZ, as in karl marx
socailism works
untill the workers quit working.
OMG
DUDE WHY ARE U GOING TO CUT OUR MONEY WHEN WE WORK HARD FOR IT ........ITS NOT REALLY FARE TO US WELL NOT TO MY PARENTS CAUSE THEY MAKE ALL THE MONEY.....I STILL DONT THINK THATS RIGHT SO THE POOR CAN GET ON TOP.....
How much Aide to Africa?
Since his roots are in Africa (Kenya) how much of the 25B will go to those thieves?
Where do i sign up for free money?
Can the post man hand me the cash? Going to the bank a real pain the rear!
Both the Wife and I have 60k year jobs , we have a house payment of 3500 a month plus 11k a year tax on it. Just saw Obama on cnn saying 100k + house holds are rich. We have zero money to spare unless you take away our saving for College , Retirement and such. Bunch of crap.
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It should be obvious to anyone with a lick of financial sense that Obama's economic plan cannot simply be paid for by ending the war in Iraq, ending Bush's tax cuts and raising taxes only on the wealthy. When the government spends, eventually it is the middle class that is left holding the tab. Of course, Obama's supporters are too caught in the wind of change and hope to notice this.
Feb 14, 2008 15:38:24 PM [permalink] [report comment]