In his speech Wednesday President Barack Obama outlined his plan for putting the nation’s fiscal house back in order. It comes as little surprise that it relies heavily on more taxes. It seems to be the only answer the Democrats have, no matter what the question is.
The current crisis is not the result of too little taxation. It is the product of too much spending. The first months of the Obama administration were marked by an incredible boom, not in the private economy but in the public sector. Billions upon billions upon billions of federal dollars were borrowed in order to finance so-called “shovel ready” projects without the accountability and transparency the American people were promised. [See editorial cartoons about President Obama.]
No one is sure where the money went, to whom or for what. Even the White House admits this. Meanwhile unemployment, which was not supposed to go above eight percent, spent months hovering near 10. And that’s just among the people that continued to look for work. If you add in the number that gave up it is probably much, much higher.
Now that the nation is floating on a sea of red ink the president has once again come out in favor of raising taxes. He claims that these will be accompanied by real reforms and spending cuts but we should all remain skeptical. This promise has been made several times before, with the result always being that we get the higher taxes while the spending cuts never seem to appear. [Check out a roundup of political cartoons on the budget and deficit.]
The House Republicans have it right. The budget deal they forced on the president contains the first real cuts in many years and marks the first few tentative steps down the right road. A new analysis released Thursday by the nonpartisan Congressional Budget Office reaffirms the claims being made by its supporters. According to CBO the new budget deal will:
- Reduce budget outlays by $20-25 billion, clearing a path for the “Path to Prosperity” budget put forth by Budget Committee Chairman Paul Ryan, which cuts trillions more.
- Immediately reduce budget authority by nearly $40 billion versus fiscal year 2010, stripping the Obama administration of its license to spend nearly $40 billion that could otherwise have gone to government programs and projects, $79 billion less than the President’s original request.
- Cut hundreds of billions of dollars from the federal budget over the next decade--which the GOP leadership says amounts to an estimated $315 billion in deficit savings over 10 years.
The way forward to recovery does not include raising taxes, even on the so-called “wealthiest Americans,” whoever they might be. Taking money out of the private economy in order to squander it in the public sector is a recipe for more of what the country has experienced since Obama was elected. The president’s call for higher taxes is, rightly, a non-starter on Capitol Hill.
- Vote now: Who won in the 2011 budget compromise?
- Check out a roundup of political cartoons about the budget and the deficit.
- Follow the money in Congress.