Obama's Budget--Funny Numbers Based On Faulty Assumptions

OBAMA'S BUDGET EXPLODING WITH EYE-POPPING TAX HIKES

Calls for $5 of higher revenue for every $1 of spending cuts

Published: 16 hours ago

 GREG COROMBOS About | Email | Archive

 Subscribe to feed

• 
• Text smaller
• Text bigger

     179

President Obama’s budget is short on specifics, fudges America’s current economic state and is long on higher spending and higher taxes to pay for his political agenda, a taxpayer advocate warns.

National Taxpayers Union Executive Vice President Pete Sepp said Republicans offered more fiscally responsible budget proposals than Obama in recent years, but their blueprints were also far from what America needs to deal effectively with huge annual deficits and a massive national debt.

On Tuesday, the White House released the president’s budget blueprint for fiscal year 2015. It carries a price tag of nearly $4 trillion, billions more in new spending and higher taxes on the wealthy to pay for it.

Much of Obama’s additional spending would be for infrastructure upgrades and ramping up for universal pre-kindergarten.

“Our budget is about choices, it’s about our values,” Obama said.

House Budget Committee Chairman Paul Ryan dismissed the plan as nothing more than a campaign brochure.

So who is right?

“It is hard to call this a serious document if you are indeed serious about reducing the deficit through spending restraint. The message here is more spending and much higher revenues to pay for that spending, along with a lot of other rosy economic assumptions,” said Sepp, who listed several of what he considers flawed assumptions in the budget proposal.

“The assumptions for inflation – that it will be lower than what the Congressional Budget Office just projected, that entitlement payments will be lower than what the Congressional Budget Office projected and that Gross Domestic Product will be a whole lot higher – the differences here add up to a lot over the 10-year budget window,” Sepp said.

“It explains why the Congressional Budget Office just last month was projecting a budget deficit of over a $1 trillion 10 years from now. The Obama administration is projecting less than half that amount,” he said.

Listen to the WND/Radio America interview with National Taxpayers Union Executive Vice President Pete Sepp:

Sepp is also frustrated that the budget plan is lacking important components that make it nearly impossible to project what Obama’s blueprint would do.

“Even though it is once again late, it is also, for the first time, incomplete for this administration. There are two key documents in the whole set of budget items that are missing so far. These are the analytical perspectives and the historical tables of the budget.

“Without those, you can’t necessarily understand the assumptions for things like projections of beneficiary populations for the changes in entitlements they’re proposing. For an administration that prides itself on transparency, this is just basic managerial negligence,” Sepp said.

The Obama administration claims the new revenues needed to pay for the proposed spending will come from closing tax loopholes for the rich.

Sepp provided some insight on what officials mean by “rich” and “loopholes.”

“By ‘loopholes,’ they mean things like imposing the so-called Buffett Rule on wealthy taxpayers. That’s been a staple of Obama’s budgets year after year. They want to propose a shift in rules regarding what’s called carried-interest income. That has a great deal of controversy over how it would impact risk-taking fund managers and their investors,” Sepp said.

“They also want to take a serious bite out of the value of itemized deductions, limiting them to what somebody in the 28 percent, as opposed to the 39.6 percent tax bracket would take,” he said.

Sepp warned that Americans should also remember these tax changes would be on top of the tax hikes that came early last year as part of the deal to avert the so-called fiscal cliff.

House Republicans are expected to unveil their budget blueprint in the coming weeks. While Sepp is highly critical of Obama’s fiscal stewardship and record-setting deficits, he said Republicans do not often propose budgets that would make much of a dent in the losing battle against the debt.

“There have been some problems with Republican budgets in the past. If we were to grade them, many might wind up in the ‘B-’ and even the ‘C’ range because many of them fail to address the primary drivers of cost growth, which is Social Security and Medicare in the federal budget. They’ve done some work on voucherization of Medicare and things like premium support. That’s encouraging,” Sepp said.

“But reforming Social Security remains something that neither political party seems to want to touch,” he said. “Of course, Republicans have not been forthright about the need to restrain military expenditures in the past. That is an important task that both parties have to undertake.”

Read more at http://www.wnd.com/2014/03/obamas-budget-exploding-with-eye-popping-tax-hikes/#aFpzY76bgSQVJZSs.99

Social Security and Medicare On the Chopping Block

For those senior citizens who voted for Obama, here is what you can look forward to. It is not pretty but hey, you lived your life, raised your kids, paid into Social Security and Medicare for all of your working life and now powers to be want to drastically cut the program! What about all those young people who thought that their parents could retire on Social Security? Mom and Dad are coming to live with you. We all are suckers if that happens!  Read more in the attached article.

Conservative Tom

Did Social Security and Medicare Crash the Economy?

By Yahoo! Finance | The Exchange – 14 hours ago

• Email
• Print

By Dean Baker, co-director of the Center for Economic and Policy Research

The talk in Washington these days might lead people to think that the main cause of the economic downturn is the Social Security and Medicare benefits being paid to retirees. After all, we have people from both parties giving us assurances that cuts to these programs are an essential part of any budget deal. This is the sort of topsy-turvy thinking that passes as conventional wisdom in Washington.

In case it's necessary to remind people, our economy plunged due to the collapse of a Wall Street fueled housing bubble. The loss of demand from the collapse of the housing bubble both led to a jump in the unemployment rate from which we have still not fully recovered and also the large deficits of the last five years.

Prior to collapse of the bubble, the budget deficits were quite modest. In 2007 the deficit was just 1.7 percent of GDP, a level that can be sustained indefinitely. Furthermore, the Congressional Budget Office projected that the deficits would remain small for the near future, with the scheduled expiration of the Bush tax cuts in 2011 projected to push the budget into surplus.

The Deficit and the Downturn

The reason that we suddenly got large deficits was the economic downturn which caused tax revenue to plummet and increased spending on programs like unemployment insurance. We also had temporary measures that included tax cuts like the payroll tax holiday and various spending programs that further raised the deficit.

However these stimulus measures were temporary and were quite explicitly designed to boost the economy. Had it not been for the downturn, they would not have occurred. There is very little by way of permanent changes from the pre-recession tax and spending policy that would raise the budget deficits from the low levels that had been projected in 2008. This means that the story of current deficits is the story of the collapsed housing bubble.

We Need a Speculation Tax

In a sane world we might be looking to square the deck with the folks who brought us the bubble. One obvious way would be a modest financial speculation tax like the one that the UK has had in effect on stock transfers for centuries. A modest tax on trades of stock, options, credit default swaps and other derivative instruments could raise enormous amounts of money while barely affecting normal investors.

The Joint Tax Committee estimated that a 0.03 percent speculation tax proposed by Senator Tom Harkin and Representative Peter Defazio would raise almost $40 billion a year. This bill would imply a tax of just $3 on $10,000 of trades. Since computerization has caused trading costs to plummet, this tax would just raise transaction costs back to where they were 10-15 years ago.

The big hit would be on the high speed traders and other fast turnover types who are flipping stock and other assets by the hour or even by the second. This trading is a drain on the economy and cutting it back would free up resources for productive activity.

But It Won't Happen

But in Washington policy circles, taxing Wall Street is off the agenda, cutting Social Security and Medicare is on the agenda. And, best of all, many of the people at the center of the housing crash are playing leading roles in this drive to cut retirees benefits.

Last week, many people might have seen Lloyd Blankfein, the CEO of Goldman Sachs, talking aboutthe need to cut Social Security benefits and raise the retirement age. The last time that Mr. Blankfein was very visible in policy debates he was desperately seeking a bailout for Goldman Sachs which was facing a bank run that pushed the company to the edge of bankruptcy.

It was granted special protection from the Federal Reserve Board and the Federal Deposit Insurance Corporation. This protection, coupled with tens of billions of dollars in loans at below market interest rates allowed Goldman Sachs to regain its health. Now its CEO wants to cut our Social Security.

An even more amazing apparition in this story is former Federal Reserve Board Chairman Alan Greenspan. More than anyone in the whole country, Greenspan deserves blame for the economic downturn. As the bubble was growing to ever more dangerous levels, Greenspan was cheering it on, insisting that there was no bubble, and that even if there was a housing bubble its collapse would pose no special problem for the economy.

In a sane world, Greenspan would be hiding away somewhere enjoying his high six-figure pension. But this isn't a sane world, this is Washington. Therefore we could find Greenspan telling us that another recession would be a price worth paying, if it led to cuts in Social Security and Medicare.

So welcome to the Washington policy world. Cuts to Social Security and Medicare are on the agenda and Wall Street speculation taxes are off the agenda. Don't we have much to be thankful for?

Dean Baker is an economist and co-director of the Center for Economic and Policy Research. He has written extensively on a wide range of topics, including the housing bubble. His most recent book is The End of Loser Liberalism: Making Markets Progressive (free download available here).