Wednesday, September 21, 2011

More criticisms of the President's Wimpy's jobs and deficit reduction bill

Glenn Hubbard explains why Obama has been traveling down the wrong road by advocating short-term stimulus. We need to change structural defects in our economy in order to achieve true job growth. And we need to address uncertainty over future policies.
This observation points out two problems with the case for stimulus being made by Obama. The first is that near-term and temporary support for household incomes does little to counterbalance the chilling effect of announced future policies. Uncertainty becomes the enemy.

This is particularly true for the president’s proposal to reduce the employer portion of the payroll tax for small- business owners, while proposing to raise marginal tax rates on those same business owners. The president’s advocacy for higher marginal tax rates on the well-to-do dampens both job creation and asset prices.
Barack Obama might want to paint the Republicans as the roadblock to his jobs proposals, but that would be to ignore the fact that Democratic senators have come out against his ideas. Ben Nelson, Mary Landrieu, Jim Webb have come out against the proposals. Jon Tester and Chuck Schumer sound a bit iffy. Perhaps that is why Harry Reid and Dick Durbin are in no hurry to bring up the President's bill. Claire McCaskill and Ben Cardin are up for election next year. How much are they going to support? Kent Conrad is retiring. He doesn't sound enthusiastic. Right now the Democrats control 53 seats in the Senate. Perhaps Obama should be talking to his own side. Maybe he could give a speech to Reid and the Democratic Senate caucus to "pass this bill!"

Check out this chart from Daniel Indiviglio at The Atlantic that looks at how much of the 2009 deficit the government might obtain even if we taxed up to 100% of the income of those earning over $1 million. So the Buffett Rule wouldn't do much to tackle the deficit. And, as Indiviglio points out, 2009 was a generous year for examining the impact of the Buffett Rule.
And of course, this isn't examining the long-term impact of such policies on job growth overall. The Buffett Rule is solely for demagogic purposes, but it's not a serious approach to our fiscal problems.

The Washington Post isn't all that impressed either.
But independent budget experts said the blueprint that Obama unveiled Monday — which White House officials say would save more than $4 trillion when added to earlier budget deals this year — appears to fall short of his target. The plan also relies on an array of well-worn budget ploys that do little to advance the cause of bipartisan cooperation in taming the nation’s spiraling debt, the experts said.

According to White House estimates, the new framework would require $6.6 trillion in fresh government borrowing over the next decade. That’s only slightly less borrowing than projected in the budget outline Obama proposed in April.

Both parties, in their budget talks this summer, set an even earlier White House budget proposal submitted in February as the benchmark for measuring deficit savings. Against that standard, the new debt-reduction plan would save $3 trillion over the next decade — well short of the $4 trillion target.

The latest Obama plan “doesn’t produce any more in realistic savings than the plan they offered in April,” said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget. “They’ve filled in details, repackaged it and replaced one gimmick with another. They don't even stabilize the debt. This is just not enough.”

The most disheartening development, MacGuineas and others said, is Obama’s decision to count $1.1 trillion in savings from the drawdown of troops in Iraq and Afghanistan toward his debt-reduction total. Because Obama has no intention of continuing war spending at last year’s elevated levels, that $1.1 trillion would never have been spent.
And as the WP article points out, this supposed new plan is just a repackaging of former proposals that went nowhere in Congress.

Peter Wehner examines "Obama Unplugged." First there were his "crass distortions" to pretend that the rich aren't paying more in taxes.
As others have pointed out, the top 10 percent of earners pay nearly 70 percent of all income taxes and the richest one percent pay more than 30 percent of their income to the federal government, while the average worker pays less than 14 percent. In addition, almost half of the public do not pay any income taxes at all. This is known as a progressive tax system. Now, one may argue the wealthy should pay even more than they do in taxes – but to pretend not embracing Obama’s plan would place the “entire” burden on the middle class and the poor isn’t “math”; it’s a massive distortion.
But what the speech really reveals is the President's dishonest view of himself.
Obama has a deep, almost desperate, need to portray himself as the opposite of what he is. This appears to involve more than simple political considerations. Obama has an unusual capacity to conceive of himself in a way that is at odds with reality. And so the most profligate spender in history warns the rest of us about profligacy and not placing a debt burden “on our children’s shoulders.” The man on whose watch America amassed more than $4 trillion in debt says, “Washington has to live within its means.” The president whose stimulus package was among the most wasteful and ineffective in history insists we have to “go through the budget line-by-line looking for waste.” The same individual who ridiculed Speaker Boehner for his “my way or the highway” approach then threatened, in the very same speech, to issue a veto unless he got his way. And the man who professes solidarity with the poor has seen poverty increase each year of his presidency, with a record number of people (46 million) now living in poverty. If that weren’t enough, Obama also wants to reduce the tax benefit for charitable giving.

Then there’s the fellow who lectured us yesterday about fighting for the middle class “as hard as the lobbyists and some lawmakers have fought to protect special treatment for billionaires and big corporations.” This admonition comes from the same fellow who presides over a White House that inappropriately pressured the Office of Management and Budget to approve half-billion dollars to a company, Solyndra, which wasn’t deserving of the money and has now gone belly up. The reason the money was fast-tracked and funneled to Solyndra was because its chief investor, George Kaiser, is a significant fundraiser for Obama. Kaiser, by the way, is a billionaire.
Seeing Obama unplugged is revealing, but also distasteful.