Category Archives: President Obama

Democrats lied about spending cuts in 1982 and 1990

August 21, 2011 – 7:53 am

Washington Could Learn a Lot from a Drug Addict

What kind of intervention does Congress need to get it to spend with its spending addiction? Back in 1982 Reagan was promised $3 in cuts for every $1 in tax increases but the cuts never came. In 1990 Bush was promised 2 for 1 but they never came either. HOW LONG DOES IT TAKE FOR PEOPLE TO REALIZE THAT THE LIBERALS IN CONGRESS ARE ADDICTED TO SPENDING?

June 13, 2011 4:00 A.M.

‘Read My Lips’ Won’t Happen Again
Trading immediate tax hikes for promised spending cuts is a sucker’s bargain.

In 1990, Washington, D.C., was in a panic. The deficit would kill us all. The Japanese (the Chinese of the era) would eat our lunch. Foreign creditors would own America within a decade. Democrats and Republicans in Washington just had to do something, said the mainstream media. Wars, natural-disaster relief, and bailouts were handled without regard to looming entitlement crises. Tax increases were obviously on the table for anyone with half a brain. Sound familiar?

Back then, the solution was practical and obvious to Beltway types, who had been here before in 1982’s TEFRA (Tax Equity and Fiscal Responsibility Act) tax hike: Democrats would promise future spending cuts in exchange for Republicans’ agreeing to immediate tax increases.

That’s exactly what happened. In October of 1990, Pres. George H. W. Bush agreed to a five-year, $137 billion tax increase. In exchange, Housespeaker Tom Foley (D., Wash.) and Senate majority leader George Mitchell (D., Me.) promised to cut spending by $274 billion over the FY1991–1995 period. In total, this $2-for-$1 deal was supposed to cut the budget deficit by $411 billion over this budget window. Almost three-quarters of the House GOP conference — 126 representatives — voted against their president’s deal, citing the promise they had made to their constituents when they signed the then-new “Taxpayer Protection Pledge” maintained by Grover Norquist of Americans for Tax Reform. It was not enough. Washington had won, and taxpayers had lost.

The deal turned out to be a disaster for President Bush. By breaking his “read my lips” promise at a summit with Congressional Democrats (famously held at Andrews Air Force Base), he lost his political support and likely the 1992 election. Undoing the seminal Tax Reform Act of 1986, he raised the top marginal income-tax rate from 28 percent to 31 percent — and also phased out some deductions and exemptions. He hiked Medicare payroll taxes. He raised excise taxes on gasoline, cigarettes, beer, wine, and other common goods. He famously added a 10 percent “luxury tax” on yachts, which had to be repealed three years later since all it served to do was put boat makers out of business, causing layoffs.

These tax hikes became a setup for the 1993 Clinton tax hikes, the cornerstone of which was raising the top individual rate to 39.6 percent, the level President Obama wants to return to after the 2012 elections. In many ways, the conservative movement is still paying the price for Papa Bush’s stupid mistake.

Surely, though, all those spending cuts must have done some good; after all, the deal promised twice as much in spending cuts as it delivered in tax increases. Think again. The Congressional Budget Office (CBO) projected before the deal that 1991–1995 spending would total $7.07 trillion. In fact, total spending for this period was $7.09 trillion. In other words, in return for agreeing to tax hikes, Republicans got $22 billion in extra spending rather than the promised $274 billion in cuts. This was despite the fact that there was another “spending cut” deal in 1993 — the Clinton tax-increase budget.

Sadly, this wasn’t even the first time this happened. Back in 1982, President Reagan agreed to $3 in spending cuts for every $1 in tax hikes. Inflation projections make the analysis difficult, but it seems clear (and President Reagan believed) that almost none of the promised spending cuts materialized in real terms.

There is a clear lesson from these budget deals: Tax increases are real — they become law immediately — but promised spending cuts are illusory. There is always an S&L bailout, a Hurricane Andrew, or a Gulf War — or a financial meltdown, a string of tornadoes, and a three-front War on Terror. After a while, the spending-cut promises are forgotten, and all that remains is higher taxes on the American people.

This should be obvious to anyone who knows the history, including thinking Republicans in Washington. For the most part, it is. All but six of the 239 Republican representatives — including Speaker John Boehner (Ohio) and the rest of the House GOP leadership — have signed the Taxpayer Protection Pledge, in which they rule out net tax hikes. Even in the more moderate Senate, 40 out of 47 GOP senators, including Minority Leader Mitch McConnell (Ky.) and whip Jon Kyl (Ariz.), have taken the pledge.

Yet there are several GOP senators who don’t quite get it. Formerly known as the “Gang of Six” (now known as “Five Guys” because Tom Coburn left), this group includes Sens. Saxby Chambliss (Ga.) and Mike Crapo (Idaho) — both pledge signers. The point of this group was to put legislative meat on the bones of President Obama’s “Simpson-Bowles” debt commission. Bragging of at least a $3-to-$1 spending-cuts-to-tax-hikes ratio (sound familiar?), this plan was a ten-year net tax hike of either $1 trillion (the commission estimate), $2 trillion (House Budget Committee chairman Paul Ryan’s estimate), or $3 trillion (the Heritage Foundation’s estimate). The political strategy of the Democrats is to get GOP fingerprints on a tax hike, and ultimately to do a repeat of 1982 and 1990 — real tax hikes coupled with spending-cut promises that don’t come to fruition.

Official Washington is shocked that the old playbook isn’t working this time. For all but a few Republican senators, the reason is obvious: “I promised my constituents that I would not raise their taxes, and I’m honoring that promise.” Lucy has pulled the football away from Charlie Brown twice already, but congressional Republicans have finally gotten the message that tax hikes are a sucker’s bet.

— Ryan Ellis is tax-policy director of Americans for Tax Reform.

By Everette Hatcher III | Also posted in Ronald Reagan, spending out of control | Comments (0)

President Obama taking orders from Michael Moore? (Part 2 of series “What is the cause of the U.S. credit downgrade?”)

August 17, 2011 – 10:46 pm
Still of Alan Alda, John Candy, Kevin Pollak, Rip Torn, Michael Moore and Rhea Perlman in Canadian Bacon

7 January 2011
© 1995 Metro-Goldwyn-Mayer Studios Inc. All Rights Reserved.
Still of Alan Alda, John Candy, Kevin Pollak, Rip Torn, Michael Moore and Rhea Perlman in Canadian Bacon

Michael Moore is a liberal movie director and his films have been pitiful. However, I did enjoy the movie “Canadian Bacon” which was very funny. Above is a clip from that movie.

Liberal firebrand Michael Moore called on President Obama to respond to the U.S. credit downgrade by arresting the leaders of the credit-ratings agencies.

On his Twitter feed Monday, the Oscar-winning film director also blamed the 2008 economic collapse on Standard & Poor’s — apparently because it and other credit-ratings agencies did not downgrade mortgage-based bonds, which encouraged the housing bubble and let it spread throughout the economy.

“Pres Obama, show some guts & arrest the CEO of Standard & Poors. These criminals brought down the economy in 2008& now they will do it again,” Mr. Moore wrote.

Standard & Poor’s, one of three key debt agencies, stripped the U.S. federal government of its AAA status Friday night and reduced it to AA+ for the first time in the nation’s history.

Now I read this story that just came out at 10:30pm CST on August 17th that evidently President Obama thinks that he better get to marching to Michael Moore’s orders!!!!

The Associated Press reported:

 The Justice Department is investigating whether the Standard & Poor’s credit ratings agency improperly rated dozens of mortgage securities in the years leading up to the financial crisis, The New York Times reported Wednesday.

The investigation began before Standard & Poor’s cut the United States’ AAA credit rating this month, but it’s likely to add to the political firestorm created by the downgrade, the newspaper said. Some government officials have since questioned the agency’s secretive process, its credibility and the competence of its analysts, claiming to have found an error in its debt calculations.

The Times cites two people interviewed by the government and another briefed on such interviews as its sources. According to people with knowledge of the interviews, the Justice Department has been asking about instances in which the company’s analysts wanted to award lower ratings on mortgage bonds but may have been overruled by other S&P business managers.

If the government finds enough evidence to support a case, it could undercut S&P’s longstanding claim that its analysts act independently from business concerns. The newspaper said it was unclear whether the Justice Department investigation involves the other two major ratings agencies, Moody’s and Fitch, or only S&P.

__________________________

I don’t think that Standard and Poors did anything wrong and I think they would have been wrong if they did not act because of all the political pressure they were receiving from the Obama administration. My views are much closer to those below.

Ron and Rand Paul say downgrade is fault of Washington, not Tea Party
CBS ^ | Lucy Madison

Posted on Monday, August 08, 2011 9:02:27 PM by dragnet2

Rep. Ron Paul, R-Tex., and his son, Sen. Rand Paul, R-Ky., both blasted Tea Party critics on Monday for suggesting that the conservative movement with which they’re both linked may have had something to do with America’s recent credit downgrade by the ratings agency Standard & Poor’s.

The elder Paul, a longtime lawmaker, staunch libertarian, and presidential candidate, decried the allegations as an “attempt to scapegoat” Tea Party lawmakers. He pinned the downgrade on the Washington establishment.

“This attempt to scapegoat folks who recognize that our debt is out of control and that we must change course should not be tolerated,” he said in a Monday statement. “They are simply demanding that Washington do its job.”

He continued: “We were downgraded because of years of reckless spending, not because concerned Americans demanded we get our finances in order.

The Washington establishment has spent us into near default and now a downgrade, and here they are again trying to escape responsibility for their negligence in handling the economy.”

In a Sunday appearance on CBS’ “Face the Nation,” Obama campaign adviser David Axelrod pinned responsibility for America’s recent downgrade – arguing that the group’s political “brinksmanship” during debt ceiling negotiations “brought us to the brink of a default.”

“The fact of the matter is that this is essentially a Tea Party downgrade,” Axelrod declared.

Former presidential candidate Howard Dean, also speaking on “Face the Nation,” argued that the “radical right” had essentially scared mainstream Republicans off of voting for a debt limit package that could have included tax increases – and staved off the ratings dip.

Dean said the American people are there, the Democrats are there, a lot of reasonable Republicans are there, but they are terrified of these right wing splinter groups, the radical right, because they are so powerful in the primaries.”

Rand Paul, the first-term Kentucky Senator who was elected in 2010 with the support of the Tea Party, argued that blaming the movement for America’s economic woes was like “blaming the fireman for fires “he said in a statement. “The Tea Party has been fighting for a serious solution that would rescue our finances through immediate spending cuts, spending caps and most importantly, a Balanced Budget Amendment to the Constitution.”

“While Democrats would like to lay blame on the Tea Party for the current economic failure, it is their President who has failed in leadership, failed to lower unemployment, failed to rescue our economy, failed to prevent a downgrade of our debt, and failed to control spending,” he added.

The Dow Jones industrial fell 634.76 points on Monday, as anxiety plagued Wall Street on the first trading day since Standard & Poor’s downgraded American debt. The drop is the sixth worst point decline for the Dow in the last 112 years. Every stock in the S&P’s 500 index declined Monday.

Ron Paul: S&P Downgraded US Credit Rating… The Day Of Reckoning Is Coming

By Everette Hatcher III | Also posted in Current Events, spending out of control | Tagged , , , , , | Comments (0)

David Boaz of Cato Institute: “Is Obama worse than Carter and Bush?

August 14, 2011 – 10:14 am

 

 

Is Obama Worse Than Carter and Bush?

Posted by David Boaz

Conservatives have become so furious with President Obama that they forget just how bad some of his predecessors were. One Jeffrey Kuhner, whose over-the-top op-eds in the Washington Times belie the sober and judicious conservatism you might expect from the president of the “Edmund Burke Institute,” writes most recently:

A possible Great Depression haunts the land. Primarily one man is to blame: President Obama.

Mr. Obama has racked up more than $4 trillion in debt.

Yes, he has. And that’s almost as much as the $5 trillion in debt rung up by his predecessor, George W. Bush. True, on an annual basis Obama is leaving Bush in the dust. But acceleration has been the name of the game: In 190 years, 39 presidents racked up a trillion dollars in debt. The next three presidents ran the debt up to about $5.73 trillion. Then Bush 43 almost doubled the total public debt, to $10.7 trillion, in eight years. And now the 44th president has added almost $4 trillion in two years and seven months.  (Here’s an online video depicting each president’s debt accumulation as driving speed.) So Obama is winning the debt war, but it’s not like he caused the debt crisis or the unemployment crisis all by himself.

And then, trying to prove that Obama is even worse than Jimmy Carter — even worse than Jimmy Carter! — Kuhner makes this curious claim:

Most importantly, Mr. Carter had respect for the dignity and integrity of the presidency. He never trashed his opponents the way Mr. Obama does.

Really? Maybe Mr. Kuhner is too young to remember Carter, and didn’t bother to check his claim, or maybe he just got carried away. But I can remember October 1980, when President Carter repeatedly said that the election of Ronald Reagan would be “a catastrophe” that would mean an America

separated, black from white, Jew from Christian, North from South, rural from urban.

Liberal columnist Anthony Lewis asked in the New York Times, “Has there ever been a campaign as vacuous, as negative, as whiny? Probably so — somewhere back in the mists of the American Presidency. But it would take a good deal of research to come up with anything like Jimmy Carter’s performance in the campaign of 1980.” The venerable Hugh Sidey wrote in Time magazine, “The wrath that escapes Carter’s lips about racism and hatred when he prays and poses as the epitome of Christian charity leads even his supporters to protest his meanness.”

Obama is a big spender who portrays himself as a “beyond left and right” above-the-fray president trying to work with everyone while demonizing his opponents. But let’s not forget the meanness of Jimmy Carter and the spendthrift record of George W. Bush in seeking to establish Obama’s uniqueness.

 

By Everette Hatcher III | Also posted in Cato Institute, spending out of control | Comments (0)

Do you believe Obama’s promise to cut spending?

August 14, 2011 – 7:36 am

Washington Could Learn a Lot from a Drug Addict

Did you notice in President Obama’s speech on July 31, 2011 that he said cuts would be made in a 10 yr period but because of our sensitive economy we would spared in the near future? Will cuts ever come or is the government addicted to spending too much?

Reagan’s Error

 

In making his case for tax increases last night, President Obama described past deals in which Democrats promised spending cuts in return for tax increases, and said:
The first time a deal passed, a predecessor of mine made the case for a balanced approach by saying this: “Would you rather reduce deficits and interest rates by raising revenue from those who are not now paying their fair share, or would you rather accept larger budget deficits, higher interest rates, and higher unemployment? And I think I know your answer.” Those words were spoken by Ronald Reagan. But today, many Republicans in the House refuse to consider this kind of balanced approach.
Well, yes, those words were spoken by Ronald Reagan (in August of 1982) in reference to TEFRA—the Tax Equity and Fiscal Responsibility Act—which congressional Democrats promised would involve a ratio of $3 in spending cuts for every $1 in tax increases (which they said would consist only of closing loopholes). TEFRA passed later that year, and the tax increases certainly happened but, as Reagan later put it in his autobiography, “the Democrats reneged on their pledge and we never got those cuts.”
 
TEFRA was one of Reagan’s great regrets about his time in the White House, and should serve as a warning to Republicans contemplating similar grand bargains. Obama’s reference to it only highlights the fact that he tried to pull off something much like TEFRA. Luckily, he appears to have failed.
By Everette Hatcher III | Also posted in Ronald Reagan, spending out of control | Comments (0)

What is the cause of the U.S. credit downgrade? (Part 1)

August 11, 2011 – 4:01 pm
moore

Movie Clip Canadian Bacon Prt 1

What is the cause of the U.S. credit downgrade? (Part 1)

 
Still of Alan Alda, John Candy, Kevin Pollak, Rip Torn, Michael Moore and Rhea Perlman in Canadian Bacon

7 January 2011
© 1995 Metro-Goldwyn-Mayer Studios Inc. All Rights Reserved.
Still of Alan Alda, John Candy, Kevin Pollak, Rip Torn, Michael Moore and Rhea Perlman in Canadian Bacon

Michael Moore is a liberal movie director and his films have been pitiful. However, I did enjoy the movie “Canadian Bacon” which was very funny. Above is a clip from that movie.

Liberal firebrand Michael Moore called on President Obama to respond to the U.S. credit downgrade by arresting the leaders of the credit-ratings agencies.

On his Twitter feed Monday, the Oscar-winning film director also blamed the 2008 economic collapse on Standard & Poor’s — apparently because it and other credit-ratings agencies did not downgrade mortgage-based bonds, which encouraged the housing bubble and let it spread throughout the economy.

“Pres Obama, show some guts & arrest the CEO of Standard & Poors. These criminals brought down the economy in 2008& now they will do it again,” Mr. Moore wrote.

Standard & Poor’s, one of three key debt agencies, stripped the U.S. federal government of its AAA status Friday night and reduced it to AA+ for the first time in the nation’s history.

___________________________

I don’t think that Standard and Poors did anything wrong and I think they would have been wrong if they did not act because of all the political pressure they were receiving from the Obama administration. My views are much closer to those below.

GOPers Romney, Bachmann, Huntsman, Santorum blame President Obama on S&P credit downgrade

BY Aliyah Shahid
DAILY NEWS STAFF WRITER

Saturday, August 6th 2011, 12:10 PM

The GOP‘s cadre of anti-Obama presidential candidates are hammering their nemesis for the first credit downgrade in U.S. history.Late Friday night, following months of bruising, rancorous debate in Washington over the debt ceiling and America’s future deficit, the credit ratings agency Standard & Poor’s downgraded the country’s sterling AAA credit rating to AA+. The other two major ratings agencies — Moody’sand Fitch — maintained the nation’s AAA rating.”America’s creditworthiness just became the latest casualty in President Obama‘s failed record of leadership on the economy,” said former Massachusetts Gov. Mitt Romney in a statement.

“Standard & Poor’s rating downgrade is a deeply troubling indicator of our country’s decline under President Obama. His failed policies have led to high unemployment, skyrocketing deficits, and now, the unprecedented loss of our nation’s prized AAA credit rating.”

The Obama administration slammed the credibility of the analysis S&P used to downgrade the nation’s credit rating, insisting there was a $2 trillion error in S&P’s calculations. The ratings agency conceded the error, but did not alter its conclusion.

Tea Party darling Rep. Michele Bachmann — who voted against the debt-ceiling deal — also laid into Obama, declaring that the “President has destroyed the credit rating of the United States.”

She even went as far as calling for the resignation of Treasury Secretary Tim Geithner.

Former Utah Gov. Jon Huntsman described the downgrade as a result of a “lack of leadership in Washington,” adding that “for far too long we have let reckless government spending go unchecked and the cancerous debt afflicting our nation has spread.”

And ex-Pennsylvania Sen. Rick Santorum blamed Obama for not taking more responsibility.

“I understand the U.S. Treasury is going back to Standard and Poor’s to say that a two trillion dollar mathematical error by S&P contributed to the downgrade,” he said. “So, in addition to blaming President Bush for all of its problems, now the White Houseis blaming S&P – but this happened on the President’s watch – and he has to deal with it.”

 
By Everette Hatcher III | Also posted in Current Events, spending out of control | Tagged , , , , | Comments (0)

Cutting spending is the way to balance the budget despite what liberals say

August 11, 2011 – 8:49 am

President Obama really believes that we must raise taxes in order to balance the budget. Nevertheless, conservatives argue that the bloated federal spending should come down to a level where he can balance the budget. Take a look at the excellent article “Unbalanced,” by Michael D. Tanner 

Michael Tanner is a senior fellow at the Cato Institute and coauthor of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.

Added to cato.org on August 10, 2011

This article appeared on National Review (Online) on August 10, 2011

During his brief media appearance on Monday responding to S&P’s downgrade of the U.S. credit rating and the subsequent stark market plunge, Pres. Barack Obama once again renewed his call for a “balanced approach” to debt reduction, combining modest entitlement reform with tax increases. This was the same formulation repeated endlessly by the president, Democrats in Congress, and much of the media throughout the recent negotiations over raising the debt ceiling.

But beyond raw ideology, there is no reason to believe that coupling tax hikes with spending cuts would solve our debt problems.

President Obama usually couches his call for tax hikes in terms of fairness. How, he asks, can we cut programs that help people without also asking the wealthy to “sacrifice” something as well? Setting aside the fact that this formulation establishes a false moral equivalence between giving less to people who have not earned it and taking more from the people who have, this ignores the fact that the wealthy in America already pay a disproportionate share of taxes.

The richest 1 percent of Americans earn 20 percent of all income in America but pay 38 percent of income taxes. The top 5 percent earn slightly more than one-third of U.S. income while paying nearly 59 percent of income taxes. At the same time, roughly half of Americans pay no federal income tax. One might suggest, therefore, that the wealthy already pay their fair share, and then some.

Of course other taxes, such as payroll taxes, property taxes, sales taxes, and the like, tend to be more regressive. But even if you include all types of federal, state, and local taxes, the wealthy pay a considerably higher proportion of taxes than their share of income would warrant.

Others less prone to moral posturing argue for including tax hikes along with spending reductions on the grounds that it is “impossible to balance the budget through cuts alone.” But the evidence strongly suggests that cutting spending alone may be the only way to really balance the budget. Indeed, by including tax hikes, we slow economic growth, thereby making it harder to balance the budget.

Simply look to those European countries today that have adopted such a “balanced” approach to debt reduction. Britain, Greece, Portugal, and Spain have all included major tax hikes as part of their austerity packages. The result across the board has been anemic economic growth and scant progress toward debt reduction. Britain, for instance, imposed a new 50 percent top income-tax rate, hiked the capital-gains tax rate from 18 percent to 28 percent, and increased the VAT rate from 17.5 percent to 20 percent. The result: During the first quarter of 2011, the British economy grew at just 0.5 percent, barely enough to offset the 0.5 percent decline during the last quarter of 2010.

Paul Krugman and others have argued that it was the spending cuts, not the tax hikes, that slowed economic growth. Others more plausibly have suggested that the continuing shocks that are buffeting the world economic system have reduced economic growth generally and made it difficult to judge the effectiveness of any particular policy or group of policies.

But the body of evidence from outside the current economic crisis tends to confirm the hypothesis that additional taxes would slow economic growth, making it harder to reduce the debt. For example, a study by Harvard economists Alberto Alesina and Silvia Ardagna looked at more than 100 debt-reduction efforts in 21 countries between 1970 and 2007. They found that a combination of spending cuts and revenue reductions was actually more likely to result in debt reduction than a combination of spending cuts and revenue increases.

History shows us that countries as divergent as Canada, Ireland, New Zealand, and Slovenia successfully reduced the size of their governments relative to their economies and lowered their debt burden substantially. They did so by controlling spending, not by raising taxes.

In this country, look to the end of World War II. The U.S. government cut spending by nearly two-thirds, from $84 billion in 1945 to just $39 billion in 1946. While the country ran a budget deficit of nearly 21 percent of GDP in 1945, it was running a surplus by 1947. At the time, many economists predicted that cuts of that magnitude would destroy the U.S. economy and bring about Depression-era levels of unemployment. Instead, civilian employment actually grew, and an era of economic expansion began that would last throughout the 1950s.

All this implies that we should find a way to cut spending. And that brings us back to President Obama’s press briefing. At the end of his remarks, the president once again laid out his plans for the future, and called for more spending: more spending on education, more spending on unemployment insurance, more spending for an infrastructure bank, more, more, more.

Perhaps that, and not a mythical “balance,” is what really lies behind his calls for higher taxes.

By Everette Hatcher III | Also posted in Cato Institute, spending out of control | Tagged , , , , | Comments (0)

Kerry and Brummett: Downgrade was Tea Party’s fault

August 9, 2011 – 1:09 am

They denied that there would be a downgrade. Then they denied it meant anything,  and now they are blaming it all on the Tea Party. The truth of the matter is that the Tea Party has been pushing for a balanced budget. So how could they have been responsible for all this overspending which is the true cause of the downgrade?

John Brummett in his article “Why is this culprit smiling?,” Arkansas News Bureau, August 9, 2011, asserted that Republican leaders “caved to the extreme right and sent the issue to the very brink, compelling S&P’s to downgrade the country’s rating, thus adding further uncertainty to the American economy and threatening the beleaguered every-day American with further equity losses and higher borrowing rates.”

Who were these extreme right people responsible for the downgrade? Brummett identifies them as ” the  tea party-inclined insurgents.”

Daniel Doherty in his excellent article, “Congressman Allen West Defends Tea Party Republicans,” 8/8/2011, Townhall, noted:

During an appearance on Fox & Friends this morning, Congressman Allen West (R-FL) slammed Senator John Kerry for his egregious assertion that House Republicans were exclusively to blame for the U.S. credit downgrade. In 2007, as Mr. West explains on the program, the debt ceiling stood at $8.6 trillion when Democrats held both chambers of Congress. Today, after a $787 billion failed stimulus package and a partisan health care law — the federal deficit has risen to $14.5 trillion.

As Katie Pavlich posted earlier, the Cato Institute has proven in unequivocal terms how our ongoing debt problems stem not from a lack of revenue, but from an addiction to spending. Senator Kerry’s argument, then, that Republicans should be blamed for the impasse – especially when Democrats in the senate have yet to propose a budget in over 800 days – is unfounded and an obvious attempt to denigrate his political rivals.

Furthermore, Senator Kerry’s statement conveniently overlooks the intransigence of his own party. As George Will pointed out today on ABC, 95 House Democrats voted against raising the debt ceiling compared to only 66 House Republicans. The notion, therefore, that Republicans were solely responsible for the near calamitous U.S. default is demonstrably false.

____________________________

Democrats’ “tea-party downgrade” spin is self-defeating

 

posted at 8:25 pm on August 8, 2011 by Karl
printer-friendly

Various Dems, including but not limited to Pres. Obama’s presidential campaign adviser David Axelrod, Sen. John Kerry, and fmr. DNC Chairman Howard Dean, were busy Sunday blaming S&P’s downgrade of America’s credit rating on the Tea Party. It is bad spin on at least two levels.

First, the spin creates mixed messages. To quote Jim Treacher: “Yesterday, the downgrade was fake. Today, the Tea Party caused it. ‘This isn’t happening… and it’s all your fault!’” In particular, it muddles the Obama administration’s official position, which is that S&P is mistaken. If the administration is trying to stave off similar downgrades from other ratings agencies (even if the impact is more limited than many think), having the president’s campaign flack suggesting a real phenomenon is at work is counter-productive.

Second, the left’s focus on S&P’s comments about GOP opposition to higher taxes (and avoidance of S&P’s comments on entitlement reform) sends a toxic subliminal message to voters. Consider this from the S&P explanation:

Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.

Of course, S&P may not be entirely accurate on this point: Obama blew up a grand bargain with Speaker Boehner that included $800 billion in revenue. But taken on its own terms, S&P’s explanation necessarily assumes not only that the GOP will continue to oppose raising tax rates, but also that the GOP will succeed in doing so. S&P’s analysis implies: (a) the House GOP is unlikely to suffer serious losses in 2012 from their position on the debt ceiling; (b) Pres. Obama may not win re-election in 2012; (c) if Pres. Obama is re-elected, he will likely be beaten a third time on taxes, despite being a lame duck with nothing to lose. These are the narratives being advanced by Democratic spin about a “Tea Party downgrade.”

As the WSJ’s James Taranto quipped: “So the argument for re-election is going to be ‘Don’t blame Obama, he was no match for the Tea Party’?”

By Everette Hatcher III | Also posted in Current Events, spending out of control | Tagged , , , , | Comments (0)

President Obama still loves big government policies but our problem is the overspending.

August 8, 2011 – 7:57 pm

President Obama wants to extend unemployment benefits again and he would love to spend more money, but he says they are not “big government proposals.” He still does not get it. It is the spending and we will not always be a triple A country if we keep spending like this.

Rory Cooper

August 8, 2011 at 10:42 am

On Friday evening, Standard & Poor’s (S&P) downgraded the U.S. credit rating from AAA to AA+. As we and other conservatives warned, the spending reductions in the deal negotiated by President Obama to raise the debt ceiling were inadequate, and S&P reacted as we predicted but sooner. Neither Moody’s nor Fitch, two other rating agencies, have downgraded federal debt yet, but they are not providing much rosier outlooks.

Decades of over-spending and over-borrowing by the federal government have damaged America’s creditworthiness. Congress after Congress, President after President, the federal government spent every penny it took in—and borrowed over $14 trillion on top of that—to try to keep happy the voters to whom the government made promises it could not afford. The government kept shifting the burden of paying the bills forward onto future generations.

Well, the future has arrived, and it is bleak. Our economy is weak, millions of Americans are out of work, and America is so deep in debt that we have lost our good credit rating. Our nation needs to drive federal spending, including our ever-growing entitlement programs, down toward a balanced budget while maintaining our ability to protect America and without raising taxes. That is the sound path forward to a stronger economy with smaller government and more real jobs.

The White House’s first reaction to this news was to blame S&P itself, claiming that their math was wrong as spokesmen pointed out S&P’s past rating failures. Correcting the math didn’t correct the problem, however, and so S&P went ahead with its downgrade. Debating S&P’s credibility misses the more important point, which is there for all to see: Projected deficit spending properly raises questions about U.S. credit quality.

We cannot waste time shooting the messenger when the message itself is impossible to ignore: It’s the spending.

Unsustainable entitlement programs have been built up over many Congresses and Presidents. Elected officials from both parties over many decades helped push us closer to this point. But the last chance to start correcting the problem before damage to America’s credit occurred was during the recent debate over the debt limit.

Regrettably, President Obama and the Senate liberals refused to allow reforms to any entitlement programs and refused to make significant cuts in other federal spending unless they could raise taxes on America. Conservatives rightly resisted increasing taxes, which is a recipe for economic disaster during an economic slowdown. The resulting deal on the Budget Control Act brought little in the way of spending cuts and lots in the way of increased borrowing, and it was the last straw that cost America its top credit rating. President Obama and his liberal allies on Capitol Hill brought America’s credit down

The White House claims that its tax-hike centered “grand bargain” would have prevented a downgrade, yet they still have not told us what was in that “bargain.” Even as Senate Democrats are nearing three years without a budget, President Obama has offered to the American people rhetoric and class warfare, rather than solutions and responsible leadership.

Other liberals went out of their way this weekend to blame this downgrade on the Tea Party, with Senator John Kerry (D–MA) going as far as calling it the “Tea Party downgrade“ on NBC’s Meet the Press. Former Obama advisor David Axelrod echoed that coordinated spin on Face the Nation. Besides proclaiming for all to see that the liberals have no solutions themselves, this argument ignores the facts.

The Tea Party’s primary focus is our nation’s fiscal health. If it were not for the Tea Party’s positive influence, Congress would still be spending, taxing, and borrowing with little regard for the burden it is placing on future generations. Only months ago, President Obama was demanding a so-called “clean” debt limit increase that would allow him to keep on borrowing without any cuts to spending.

As our colleague J. D. Foster points out in his expert analysis of Friday’s downgrade, the debate over the debt limit was the substantive ideas of the conservatives versus empty political rhetoric of liberals:

In the course of negotiations on the debt ceiling, congressional Republicans tried tirelessly to get the President and Senate Democrats to get serious about cutting spending. All Obama and Senate Majority Leader Harry Reid (D–NV) could do was carp about symbolic tax hikes on the rich, oil companies, and their latest silly affection—corporate jets. To be clear, despite the perilous state of the nation’s finances, the President’s sole objective was ideological and symbolic: Even if Republicans had caved on tax hikes, which they wisely refused to do, the revenue gains would have been inconsequential compared to the spending cuts that are necessary. The President played politics while the nation’s credit rating was set to burn, and now it has.

President Obama, congressional liberals, and their allies believe that if we remain silent on our fiscal future, then markets and credit agencies will not notice our perilous future. Thus we heard from liberal pundits and politicians who called the debt debate a “manufactured crisis”—as if everything would be fine with more blank checks. The problem of federal over-borrowing and over-spending was and is real, as the credit downgrade and market reactions reflect. Congress and the President must fix the problem and fix it now.

Liberals this week will try to equate revenue increases with tax hikes. But that is simply not factual. Government revenues increase when we have greater economic growth and more taxpayers in the workforce. That economic growth is impossible with job-killing tax hikes and increased regulation. Raising taxes on taxpayers earning $250,000 or more hits entrepreneurs, small business owners, and investors, thus slowing economic growth still further.

In the next 10 years, once the economy recovers, revenue will rapidly approach and will likely surpass its historical average of 18.5 percent of GDP, while spending is projected to shoot past its historical average of 20.3 percent to 26.4 percent of GDP. Government spending will have increased by 22 percent just on President Obama’s watch.

Yet some liberals were still calling for more debt and deficits this weekend in the name of new “stimulus.” On Friday evening, Obama’s former economic advisor Christina Romer said the first failed stimulus she helped design should have been bigger and argued for a new and larger stimulus saying: “What I want is more now.”

That is, more of what President Obama has given us in the past—fruitless new spending programs. This would give us a bigger problem, not a solution. With America and the world in the grips of an economic slowdown, we need action to create economic growth and jobs and restore America’s credit. We do not need more government.

As dire is the domestic situation, as Foster notes, the consequences for the global financial crisis may be worse:

In today’s global economy, however, the U.S. credit rating downgrade may prove catastrophic. Prior to the credit rating downgrade, Europe was already teetering on the brink. Last week European stock exchanges plunged 10 percent, their worst weekly losses since November 2008. The long-building government debt crisis in Europe, which had been so unsuccessfully papered over just a few weeks ago by its leaders, is reaching the boiling point, threatening to wash over not just the worst offenders like Greece and Portugal but also some of the pillars of the European Union like Spain and Italy.

We cannot improve domestic or global economic conditions by becoming more like Europe. America can do better by adopting better ideas.

Heritage has offered its fiscal plan, “Saving the American Dream,” which would balance the budget in 10 years and lower our debt-to-GDP ratio to 30 percent (from the 100 percent it reached last week). It would accomplish this through responsible reform of Social Security, Medicare, Medicaid, and the tax code.

As Foster concludes:

A number of sound incremental reforms can garner strong bipartisan support and can substantially improve these program’s sustainability and the nation’s finances. The President must lead his party to join hands with Republicans in the joint select committee to embrace these reforms and be ready to enact them, saving far more than $1.2 trillion and far sooner than November 23. The objective for the nation, the President, and the joint select committee is clear: drive down spending—including and especially on entitlement programs—toward a balanced budget while protecting America and without raising taxes. Properly done, this would lead to economic growth, more jobs, less government, and a restoration of the nation’s credit rating. It can be done.

It can be done.

By Everette Hatcher III | Also posted in spending out of control | Tagged , , , , | Comments (0)

The Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 2)

August 5, 2011 – 6:00 am

“What good is a debt limit that is always increased?”

The Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 2)

This post today is a part of a series I am doing on the 66 Republican Tea Party favorites that resisted eating the “Sugar-coated Satan Sandwich” Debt Deal. Actually that name did not originate from a representative who agrees with the Tea Party, but from a liberal.

Rep. Emanuel Clever (D-Mo.) called the newly agreed-upon bipartisan compromise deal to raise the  debt limit “a sugar-coated satan sandwich.”

“This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see,” Clever tweeted on August 1, 2011.

Roby Comments on Debt Limit Vote

Aug 1, 2011 Issues: Spending Cuts and Debt
 
 
 

WASHINGTON—U.S. Rep. Martha Roby (AL-02), a member of the House Committee on Armed Services, made the following comments today regarding the House of Representative’s vote to increase the statutory limit on the national debt:

                “I applaud the efforts of Speaker Boehner, Majority Leader Cantor, Majority Whip McCarthy, and Budget Chairman Ryan over the last month. Every dollar saved under the plan approved tonight is a result of their steadfast advocacy on behalf of the American People. While the final legislation is far from perfect and while many of us would prefer the more fundamental reforms found in the ‘Cut, Cap, and Balance Act,’ this compromise cuts a dollar of spending for every new dollar of debt. That is a significant accomplishment given that Democrats—who wanted new taxes and no spending reductions—outnumbered Republicans two to one at the negotiating table.

                “During this debate, I voted for two separate proposals that would significantly cut future spending, put our nation on firmer financial footing, and avoid a potentially catastrophic default. Each was killed by Senate Democrats.

                “I am pleased that a default has been avoided as a result of the vote tonight. However, I was unable to support this legislation because, after a careful reading of the bill, I fear it could ultimately result in devastating and unjustified cuts to our national security. This bill, unlike previous proposals I supported, has a weak firewall against potentially destructive defense cuts. To be sure, there are savings to be found in the Pentagon’s budget, and I have already voted this year to trim wasteful and unnecessary defense spending. But this bill goes much too far. The legislation would use our defense budget as an insurance policy to guarantee savings in the event that the special joint committee, which this legislation creates, fails to achieve cuts in other areas of the government bureaucracy.

                “Of course we lack a crystal ball to know how it will play out, but my best judgment is that the chances the special joint committee will fail are too high to risk our national defense, which is one of few legitimate government functions enumerated in the Constitution. If required, the cuts would be so deep as to affect the readiness of our troops around the world—a risk I am not willing to take. As important as deficit reduction is, what good is it for a country that is unable to adequately defend the freedom and liberty it cherishes? Certainly there are other places in the massive federal bureaucracy that are more deserving of deep cuts.

                “I reject the idea that we need not worry about these cuts because Washington will never let them happen. To make that suggestion is to say that the legislation does not actually do what we have said it does.

                “In the end, I hope that the special joint committee will find the spending cuts that it is charged to identify, and I look forward to reviewing the product of its work. Our prayer is that the special joint committee members will do their jobs, thereby ensuring that the damaging military cuts that could occur never see the light of day.

                “On the broader question of restoring fiscal responsibility, our work has just begun. This has been a long and convoluted process, but the takeaway is simple: in a short period of time, House Republicans have successfully changed the conversation in Washington from ‘how do we spend more’ to ‘how do we spend less.’ Even so, much work remains, and only a sustained, dedicated effort will truly change the spending culture in Washington.”

# # #

NOTE: Congress debated how best to raise the debt limit for many months. Members considered numerous proposals, and the House of Representatives and the Senate each took several votes on the issue. On May 31, Rep. Martha Roby voted against President Obama’s original request for a clean debtincrease that would expand the government’s ability to borrow money without placing any restrictions on future spending. She saidthat any debt limit increase should be accompanied by “significant” spending cuts. On July 22, Roby voted in favor of the “Cut, Cap, and Balance Act,” referringto the “strong” measure as her “preference.” The Democratic Senaterejected the measure. With the debt deadline looming, Roby supported Speaker Boehner’sproposal on July 29, notingthat it was “far from perfect” but that it cut a dollar of spending for every dollar of additional debt and included no new taxes. Again, the Senaterejected that measure. On July 28, Roby opposed Sen. Reid’s proposal, which she pointed outincluded an unacceptable budget gimmick that would not result in real savings. (The Senatealso rejectedthe Reid proposal.) That vote was followed by the events described in the press release above.

 

By Everette Hatcher III | Also posted in spending out of control | Comments (0)

Dan Mitchell on Debt Deal: drifting to Greek-style fiscal meltdown

August 2, 2011 – 4:44 pm

It is sad that they passed this debt deal. They just kicked the can down the road.

Debt Deal: Politicians Win, Middle Class Loses

by Daniel J. Mitchell

Daniel J. Mitchell is a senior fellow at the Cato Institute, a libertarian think tank based in Washington.

Added to cato.org on August 2, 2011

This article appeared on CNN.com on August 2, 2011.

America is on a path to becoming a Greek-style welfare state. Thanks to the Bush-Obama spending binge, the burden of federal spending has climbed to about 25% of national economic output, up from only 18.2% of GDP when Bill Clinton left office.

But that’s just the tip of the iceberg. Because of a combination of demographic forces and poorly designed entitlement programs, federal spending could consume as much as 50% of economic output by the time the baby boom generation is fully retired.

One symptom of all this excessive spending is that Washington is awash in red ink. We’re now in our third consecutive year of trillion-dollar deficits and the politicians just had to increase the nation’s $14.3 trillion debt limit.

Daniel J. Mitchell is a senior fellow at the Cato Institute, a libertarian think tank based in Washington.

 

More by Daniel J. Mitchell

But it wasn’t easy getting there. Just as happened with the “government shutdown” debate in March, Republicans and Democrats had fierce disagreements over the right approach. They bickered until the last minute and then finally agreed to more than $900 billion of supposed spending cuts and the creation of a “supercommittee” charged with proposing another $1.5 trillion of deficit reduction.

So which side won this fight? Republicans are bragging that they got spending cuts today, a promise of spending cuts in the future, and no tax increases. Democrats, meanwhile, are chortling that they took the debt issue off the table until after the 2012 elections, protected their favorite programs and created a supercommittee that will seduce the GOP into a tax increase.

Ignore that bragging. The easy answer is that politicians of both parties were the victors and taxpayers are the ones left in the cold.

In other words, the budget deal was a victory for the political establishment.

Here’s why Republicans are winners. They get to tell their tea party activists that they forced Obama to cut spending. It doesn’t matter that federal spending will actually be higher every year and that the cuts were based on Washington math (a spending increase becomes a spending cut if outlays don’t climb as fast as some artificial benchmark).

They also get to tell their anti-tax activists that they held the line. Perhaps most important, the supercommittee must use the “current law” baseline, which assumes that the 2001 and 2003 tax cuts expire at the end of 2012. But why are GOPers happy about this, considering they want those tax cuts extended? For the simple reason that Democrats on the supercommittee therefore can’t use repeal of the “Bush tax cuts for the rich” as a revenue raiser.

This means that most Republican incumbents are well-positioned to win re-election.

Here’s why Democrats are winners. Thanks to the magic of government math, despite all the talk of budget cuts, discretionary spending will be more than $100 billion higher in 2021 than it is this year. And since defense spending in Iraq and Afghanistan presumably is winding down, this means even more money will be available for domestic programs.

In addition to telling the pro-spending lobbies that the gravy train is still on the tracks, they also get to tell the class-warfare crowd that there’s an improved likelihood of higher taxes for corporate jet owners and other “rich” people. Notwithstanding GOP assertions, nothing in the agreement precludes the supercommittee from meeting its $1.5 trillion target with tax revenue. The 2001 and 2003 tax legislation is not an option, but everything else is on the table.

This means that most Democratic incumbents are well-positioned to win re-election.

It’s worth pointing out that this doesn’t mean all Republicans and all Democrats are happy about the deal. The hard-core conservatives are upset that the deal is mostly smoke and mirrors on the spending side and that there may be a tax-increase trap on the revenue side.

The hard-core liberals, by contrast, are angry that there are any spending cuts, even ones based on Washington math. Moreover, they want higher tax rates on upper-income taxpayers today, not a supercommittee that may or may not follow through on soak-the-rich policies in the future.

One group of people, however, unambiguously got the short end of the stick in this budget deal. Ordinary Americans are caught in the middle. They’re not poor enough to benefit from the federal government’s plethora of income-redistribution programs. But they’re not rich enough to have the clever lobbyists and insider connections needed to benefit from the high-dollar handouts like ethanol subsidies and bank bailouts.

Instead, middle-class Americans play by the rules, pay ever-higher taxes, and struggle to make ends meet while the establishment of both parties engages in posturing as America slowly drifts toward a Greek-style fiscal meltdown.

By Everette Hatcher III | Also posted in Cato Institute | Tagged , , , , | Comments (0)