But think about it. We are on an unsustainable fiscal path. We have been for years. And the reason is the promises we've made for entitlements without regard for our future ability to pay for them. Study this chart depicting the future of the budget if we stay on this path.
The tea party has been objecting to all the spending that has piled up in recent years. When Obama had a chance for a stimulus bill to help produce jobs, he succumbed to all the interest groups and provided a pork-laden bill that many economists at the time warned would not help fight unemployment. And then, instead of working to decrease our spending on Medicare, he pushed through Obamacare which will, contrary to Democratic claims at the time, are piling on more spending on Medicare while making affecting the health care plans of many people who had perfectly find plans before Obamacare. Philip Klein explains why his efforts to blame Bush for today's economy are becoming increasingly unbelievable.
Defenders of Obama will attempt to pin the blame on his predecessor, President Bush, and on intransigent Tea Party radicals in the current Congress. But that would leave out the part in between. For his first two years in office, Obama’s party controlled both chambers of Congress – for part of that period, he had a filibuster proof majority in the Senate. During that time period, he and his fellow Democrats could have passed his supposedly ideal, long-term, deficit-reduction package -- one that represented a “balanced approach” between spending cuts and tax increases. It also could have delayed the deficit reduction for several years, so it wouldn’t have affected the current weak economy or the “investments” he considers crucial. Forget about actually accomplishing serious deficit reduction -- he didn’t even attempt it.This is his record. He can't escape it. Watch for the Republicans to hammer home this message over the next year.
When Obama came into office, he argued that we needed deficit spending to boost the economy, so he passed a $800 billion stimulus package. Then, in one of his first supposed pivots to the deficit, he convened a ‘fiscal responsibility summit’ in February 2009. But that actually turned out to be part of a different pivot altogether. It was during that summit that then White House Budget Director Peter Orszag declared, “health care reform is entitlement reform.”
And so, for the next 13 months, Obama spent all of his energies trying to get health care legislation across the finish line. The end product was a plan that, according to both the Congressional Budget Office and actuary for the Centers for Medicare and Medicaid Services, did not bend the health care cost curve down. Let’s even set aside the argument over the accounting gimmicks that were employed to obtain a CBO score that showed modest deficit reduction. The reality is this: the law used money raised through tax hikes and Medicare cuts that otherwise would have been available for deficit reduction, to instead expand Medicaid by 18 million beneficiaries and create a massive new health care entitlement.
Of course, there’s more. After health care passed last March, Obama punted on the debt for the rest of the year as he awaited a report from his fiscal commission. He then ignored its recommendations and released a budget so ludicrous that within two months, it failed 0 to 97 in the Senate and he himself rejected it. He instead delivered a speech about his deficit reduction vision, which didn’t have enough details for the CBO to score. And then he spent the last few months arguing that he was prepared to offer Republicans a “grand bargain,” but to this day he hasn’t released details of this supposedly awesome deal that Republicans refused, beyond calculated leaks to favored reporters.
And when they make their claims that what we really need are increased taxes, they're ignoring the fact that there just aren't enough revenues possible to get from the top earners. Don Surber makes this clear.
Soak the rich, eh?So when they talk about a "balanced approach," they can't do with just taxing the millionaires and billionaires as they claim is all they want to do. They'd have to tax those middle class voters that they pretend to be protecting.
They do not have the money.
A report from the Internal Revenue Service found that the rich — 8,274 people with incomes of $10 million per year or more — earned a total of $240 billion in 2009.
Even of you confiscated every dime they earned, you would barely have enough money to cover government spending for 24 days.
Of course, about a quarter of that money already goes to the federal government for federal income. So make that 18 days.
Another 227,000 people earned $1 million or more in 2009.
Millionaires averaged taxes of 24.4% of their income — up from 23.1% in 2008.
They, too, did not earn enough money to come anywhere close to covering the annual deficits that are $1.5 trillion a year.
Doubling federal income taxes for everyone would still leave us $400 billion or so shy of balancing the budget.The response of the Democrats has been to blame S&P, Bush, and the tea party. But they're ignoring their own role. The WSJ reminds us of the comparative history on spending.
The real reason for White House fury at S&P is that it realizes how symbolically damaging this downgrade is to President Obama's economic record. Democrats can rail all they want about the tea party, but Republicans have controlled the House for a mere seven months. The entire GOP emphasis in those seven months—backed by the tea party—has been on reversing the historic spending damage of Mr. Obama's first two years.
The Bush Presidency and previous GOP Congresses contributed to the current problem by not insisting on domestic cuts to finance the cost of war, and by adding the prescription drug benefit without reforming Medicare. But as recently as 2008 spending was still only 20.7%, and debt held by the public was only 40.3%, of GDP.
In the name of saving the economy from panic, the White House and the Pelosi Congress then blew out the American government balance sheet. They compounded the problem of excessive private debt by adding unsustainable public debt.
They boosted federal spending to 25% of GDP in 2009, 23.8% in 2010 (as TARP repayments provided a temporary reduction in overall spending), and back nearly to 25% this fiscal year. Meanwhile, debt to GDP climbed to 53.5% in 2009, 62.2% in 2010, and is estimated to hit 72% this year—and to keep rising. These are all figures from Mr. Obama's own budget office. Rather than change direction this year, Mr. Obama's main political focus has been to preserve those spending levels by raising taxes. His initial budget in February for fiscal 2012 proposed higher spending. He then resisted the modest spending cuts that the GOP proposed for the rest of fiscal 2011.
He responded to Paul Ryan's proposal to reform Medicare and Medicaid by calling it un-American and unworthy of debate. In the most recent budget talks, he would only consider small entitlement reforms (cuts in payments to providers) if Republicans agreed to raise taxes. He has refused even to discuss ObamaCare or serious reforms in Medicare and Social Security. Meanwhile, federal payments to individuals continue to grow as a share of all spending, as the nearby chart shows.
It's the spending and our entitlement promises that have put us on this unsustainable path. Those whom are labeled the "tea party" are the ones calling attention to our situation and crying out for that trajectory to be changed. But somehow they're the ones getting the blame.