The People's Budget: The Progressive take on debt reduction

Ever since Paul Ryan released the GOP's budget plan the left have been howling at the moon.  They have been going overboard with their screams of calamity to the middle class.  As a political tactic, this can be helpful in the short term, but sooner or later someone is going to tell the left to put up or shut up.


To save themselves from that fate, the  Congressional Progressive Caucus have put together a budget plan of their own, they call it The People's Budget.  Phil Klein from the Washington Examiner gives us a sneak peek at what the left's has in store for America.

Next week, the group of progressives plans to introduce its alternative to Ryan's proposal, called "The People's Budget." Based on an advanced peek provided by a senior Democratic aide, it promises to return the nation to surpluses by the end of the decade and reduce the debt, only with a much different approach from Ryan's.

To extend the long-term solvency of Social Security, it would propose dramatically increasing payroll taxes on both the employer and employee side, and funneling the money into even more generous benefits.

Payroll taxes are economically destructive, because they make it more expensive for employers to hire new workers, meaning lower real wages and higher unemployment.

Yet the tax increases wouldn't end there. The People's Budget would rescind last year's tax deal to raise rates on higher income levels, boost taxes on capital gains and dividends, increase the estate tax, institute three "millionaire tax rates," with the highest reaching 47 percent, tax corporate foreign income, impose a "financial crisis responsibility fee," and institute a "financial speculation tax."

Overall, taxes would rise to 22.3 percent of the economy, compared with 18.3 percent under the Ryan proposal.

The plan would also build on Obama's most notable initiatives. It includes an additional $1.45 trillion in economic stimulus spending. On health care, the plan would add a government-run plan, or "public option," to Obamacare and have the government negotiate drug prices.

Yet while other parts of government would grow, the defense budget would be gutted. The proposal would "reduce baseline defense spending by reducing strategic capabilities, conventional forces, procurement, and R&D programs."

The left loves to say the Republicans have no new ideas, but this is nothing new at all. All this budget is is good old fashion Tax and Spend, but done on a grand scale.  


What I find completely galling about it is that Democrats ran up the credit card with things many Americans objected to in the first place (the bailouts, the stimulus and ObamaCare) and now want to tax us to death to pay for it all.


Megan McArdle from the Atlantic points out the obvious conclusion to all this new spending:

I actually think it's remarkable that the percentage is so low. A 47% federal tax rate on top incomes, plus increases on estates, capital gains, and dividends, and all you get is . . . 22.3% of GDP? A bare 1.3% above the collections envisioned by Simpson-Bowles? [...]

No, if you want to get the budget under control without meaningfully cutting into entitlements, you're going to need to hike taxes substantially on the middle class. I'm waiting for the first politician to say this out loud.

I don't think McArdle will have to wait too long. The shrinking of the Nanny State is inevitable and that is a threat to the lefts' endless quest for power and control. Faced with that scenario, Democrats will peel away their phony veneer of compassion and someone will say "tax the middle class".

Given how much of the public has grown quite tired of all the big spending in Washington, it will be fun to watch Democrats try to sell this plan as an alternative to Paul Ryan's.


Via: Memeorandum
Via: The Washington Examiner
Via: The Atlantic

Let the squealing begin: The GOP Path to Prosperity

That squealing noise you hear this morning are Democrats beginning their collective whine over Paul Ryan's proposed budget plan. On Fox News Sunday Paul Ryan told Chris Wallace that the plan would have over $4 trillion in cuts, he wasn't kidding. The plan has over $6 trillion in cuts and puts practically everything on the table from defense spending,Medicaid, domestic spending, tax reform and even spending caps. Only Social Security is not fully addressed.

Wall Street Journal: The president's recent budget proposal would accelerate America's descent into a debt crisis. It doubles debt held by the public by the end of his first term and triples it by 2021. It imposes $1.5 trillion in new taxes, with spending that never falls below 23% of the economy. His budget permanently enlarges the size of government. It offers no reforms to save government health and retirement programs, and no leadership.

Our budget, which we call The Path to Prosperity, is very different. For starters, it cuts $6.2 trillion in spending from the president's budget over the next 10 years, reduces the debt as a percentage of the economy, and puts the nation on a path to actually pay off our national debt. Our proposal brings federal spending to below 20% of gross domestic product (GDP), consistent with the postwar average, and reduces deficits by $4.4 trillion.

A study just released by the Heritage Center for Data Analysis projects that The Path to Prosperity will help create nearly one million new private-sector jobs next year, bring the unemployment rate down to 4% by 2015, and result in 2.5 million additional private-sector jobs in the last year of the decade. It spurs economic growth, with $1.5 trillion in additional real GDP over the decade. According to Heritage's analysis, it would result in $1.1 trillion in higher wages and an average of $1,000 in additional family income each year.

Despite these massive cuts, keep in mind that at the end of ten years, the debt still is not paid off. This should prove to be a very valuable fact for Republicans as Democrats will undoubtedly trot out their favorite buzz words like "radical", "draconian" and Chucky's favorite "extreme". This fact should also help the public begin to understand just how much bigger cuts must be if we really want to pay off our debt.

National Review has this video up and Paul Ryan does a very good job explaining our debt problem.

Via: Memeorandum

Via: The Wall Street Journal
Via: National Review

Republican budget plan to cut over $4 trillion over 10 years

Fox News: The Republican chairman of the House Budget Committee said his party's budget proposal for 2012 would cut deficits by more than $4 trillion over the next decade, vowing to tackle costly entitlements like Medicare and Medicaid.

The proposal, set to be unveiled Tuesday, would serve as the Republicans' official response to President Obama's proposed $3.7 trillion budget for 2012. The White House claims its plan would cut deficits by $1.1 trillion over a decade.

But Ryan, R-Wis., in an interview with "Fox News Sunday," accused Obama of "punting" and said Republicans' plan would exceed the fiscal goals set by the president's fiscal commission -- which issued a report calling for $4 trillion in cuts. That report never made it out of committee.

"We can't keep kicking this can down the road," Ryan said. "The president has punted. We're not going to follow suit."

While these numbers are more in line with what needs to be done to save our financial house, I don't think Republicans have done their homework on educating the public on how dire our financial picture is. Recent Gallup polls on spending cuts shows that the public is still in denial about what needs to be done. Furthermore, I think Republicans may have shot themselves in the foot by playing political parlor games when it came to cuts in the Continuing Resolution (CR).

How do you go to the public and say we need to make these big cuts and reforms after offering up puny cuts of $2 billion, $4 billion and $61 billion? Democrats are already trying to makes these puny numbers sound "extreme" and draconian. I think the Republican leadership has given up much of the fire they rode in on in 2010. I pray I am wrong.

Here is Paul Ryan explaining the plan in with a little more detail

Via: Memeorandum
Via: Fox News
Via: Gallup
Video h/t: Maggie's Notebook

Reid to Boehner - Ditch the TEA Party

The Hill: Senate Majority Leader Harry Reid (D-Nev.) on Monday urged Speaker John Boehner (R-Ohio) to ditch members of the Tea Party and cut a deal with Democrats to avert a government shutdown.

Reid insisted it is those GOP internal divisions that are threatening to shut down the government after April 8, in less than two weeks.

“For the sake of our economy, it’s time for mainstream Republicans to stand up to the Tea Party and rejoin Democrats at the table to negotiate a responsible solution that cuts spending while protecting jobs," he said.

Last week Reid put $7.5 billion in discretionary cuts and $3.5 billion in mandatory savings on the table as a counteroffer to the $51 billion in additional cuts the GOP is seeking.

This week Democrats are mulling raising the offer to $20 billion. But Democratic aides insist it is the divided GOP that must make the next move and come back to the negotiating table, not Democrats who must continue to negotiate with themselves and up their offer. [MORE]

Reid is trying to use the TEA Party as the reason for a government shut down. It won't work. Anyone with two eyes can see that the piddly little cuts Democrats and the Republican leadership are playing with are completely inadequate for tackling the deficit. So pretending that "progress" could be made if Boenher abandon the more sizable (but still inadequate) cuts the TEA Party wants is absurd.

The fact that Democrats have gone from zero cuts to a possible $20 billion, pretty much tells us that they are finding it harder and harder to resist spending cuts. Had the Republican leadership not been so "compromising" about cuts, Reid would probably be negotiating much more sizable cuts by now.

Via: Memeorandum
Via: The Hill

Truth Alert! Obama's OMB nominee admits that Obama's 2012 budget doesn't pay down the debt

In the teeniest and tiniest way I kind of feel sorry for Obama's Office of Management and Budget (OMB) nominee. Clearly she isn't a bold face liar, yet she was sent out there to defend the indefensible. Even the most expert BS artist would find it impossible to prove Obama's budget doesn't add to the debt when anyone with two eyes can see deficits all over the place.

The Daily Caller: President Obama’s nominee for deputy director of the Office of Management and Budget (OMB) tried, but failed to defend the proposed budget for fiscal year 2012 in a Senate Budget Committee hearing Thursday afternoon.
Obama’s nominee, Heather Higginbottom, crumbled under questioning from Republican Sen. Jeff Sessions of Alabama, ranking member of the committee, about the accuracy of statements the president and OMB Director Jacob Lew have made that the proposed budget will not add to the national debt.

Sessions: Did Mr. Lew or the President of the United States, when they made that statement “we will not be adding to the debt,” did they say, “by the way American people, what we really mean is some arcane idea about not counting interest payments the United States must make as part of our debt?” Did they say that?

Higginbottom: I’m not sure exactly what they did say.

Sessions: Well if they didn’t say that, would that be an accurate statement?

Higginbottom: The interest costs on what we’re borrowing add to the debt…

Obama's 2012 budget is a complete farce. If the media in this country wasn't a pack of left wing activists, Obama would have been laughed off the stage for even attempting to say his budget does anything but add to the debt. Hopefully more people will wake up to this farce before 2012.

Via: Memeorandum
Via: The Daily Caller

House passed two week spending bill

Fox News: WASHINGTON -- The House passed a stopgap two-week spending bill with $4 billion in cuts Tuesday, sending the measure on for likely passage in the Senate as Congress tries to avert a partial shutdown of government.

The House voted 335-91 in favor of the measure. Senate Majority Leader Harry Reid said it would pass "in the next 48 hours." The current stopgap bill expires on Friday.

Democrats preferred a 30-day spending bill but Republicans rejected that idea.

Republicans would not have to have played this silly game if back in November they started to loudly and consistently beat the drum that We're Broke!

Democrats will happily accept the minuscule $4 billion in cuts and then use the two weeks to portray it as $4 trillion in cuts. Any further attempt by Republicans to cut more will allow the Democrats to return to their "draconian" nonsense.

Thankfully the Republicans have another quiver for their bow, the General Accounting Office's new report detailing waste in duplicate government programs.

Even during the State of the Union address Obama made note of getting ride of such waste. I doubt Obama could be hypocritical enough to deny cutting such programs in such a short amount of time.

Via: Memeorandum

Via: Fox News

Via: Wall Street Journal

America's debt problem at a glance

Click to enlarge

Business Insider: This is the "income statement" of the United States in 2010.  "Revenue" is on the left.  "Expenses" are on the right.

Note a few things...

First, "Revenue" is tiny relative to "Expenses."

Second, most of the expense is entitlement programs, not defense, education, or any of the other line items that most budget crusaders normally howl about.

Third, as horrifying as these charts are, they don't even show the trends of these two pies: The "expense" pie is growing like gangbusters, driven by the explosive growth of the entitlement programs that no one in government even has the balls to talk about. "Revenue" is barely growing at all.

This is the sad state of America;s economic affairs.  I am sure our friends on the left will look at this chart and say we can easily balance the equation by raising taxes, especially corporate taxes which only account for 9% of the government's revenue.  But here is the rub, when it come to raising taxes the law of physics apply; for every action there is an equal yet opposite reaction. Raise the corporate tax rate and corporations will do one of two things a) pass on the tax to consumers with higher prices or b) flee to countries with lower tax rates (and take their jobs with them). Try raising personal income tax and you end up with less revenue in other areas (e.g. cigarette and gas taxes) because individuals have less money to spend.  Therefore, cutting spending becomes the logical thing to do.

From the chart on the right it is clear that entitlements is where the real money is.  Defense spending at 20% is nothing when compared to the combined 58% of entitlements.  Add to the fact that entitlement are growing at a much more rapid rate than defense, entitlements becomes the focal point for spending cuts.  The problem is that politicians have made entitlements into a sacred cow.  The other problem is that too many politicians (both right and left) have used growing entitlements as an election tool. By promising all sorts of "free" goodies, like "free" healthcare for kids or "free" prescription drugs for seniors, politicians have been exasperating the problem.

What is needed starting 2012 and forward, are politicians who have the guts to tell Americans that the "free" ride is over.  We need politicians who are adult enough to lay before us the stark choices to bring our financial house in order and that means a) start taxing more people (bye-bye progressive tax, hello flat tax), b) cut entitlements (good bye free rides) or c). a combination of both.

I invite you to see where Business Insider got the chart from it is Mary Meeker's presentation of America's financial statements called USA, Inc.

Via: Memeorandum

Via: Business Insider

Via: BusinessWeek

VIDEO:What could you buy with $3.73 trillion?

I like this video because it really helps to give you the size and scope of the money we are spending.  When I hear the left whine and whine over the $60 billion in cuts Republicans have passed, I have to ask myself if these lefties realize just how minuscule $60 billion is when compared to $3.73 trillion.


Via: The Blaze

Obama threatens to veto Republican cuts

Someone is itching for a showdown.

The Hill: The Obama administration on Tuesday threatened to veto the House GOP's measure funding the federal government. In a statement of administration policy, the Office of Management and Budget said cuts included in the Republican continuing resolution would hamstring the U.S. economy and compromise national security.

"If the president is presented with a bill that undermines critical priorities or national security through funding levels or restrictions, contains earmarks or curtails the drivers of long-term economic growth and job creation while continuing to burden future generations with deficits, the president will veto the bill," the statement said. 

The White House said the cuts in the GOP plan "will undermine our ability to out-educate, out-build, and out-innovate the rest of the world."

The statement said the GOP proposal goes too far and "proposes cuts that would sharply undermine core government functions and investments key to economic growth and job creation, and would reduce funding for the Department of Defense to a level that would leave the department without the resources and flexibility needed to meet vital military requirements."

Are you kidding me? Does anyone in their right mind thinks that $61 billion in cuts from a $3 trillion + dollar budget would even be noticed?  The only people who will fall for this BS are Kool Aid guzzlers, the mathematically challenged and the mentally retarded.  There simply isn't anyway to take the administration's line of thinking seriously.

Now is the time for Republicans to skip the polite parlor talk.  If Obama is hell bent of spending money we don't have, then it is time for Republicans to channel their inner Alan Grayson and simply say: "Obama wants to bankrupt the nation".  There is little reason to be coy about it.  Something tells me that someone on Facebook will say it pretty soon.

Via: Memeorandum

Via: The Hill

Andrew Sullivan sees the light

Just how bad is Obama's new budget?  So bad that Hope Dope Andrew Sullivan tore himself away from Sarah Palin's reproductive history to pen this scathing critique.

They[Senators]  have to lead, because this president is too weak, too cautious, too beholden to politics over policy to lead. In this budget, in his refusal to do anything concrete to tackle the looming entitlement debt, in his failure to address the generational injustice, in his blithe indifference to the increasing danger of default, he has betrayed those of us who took him to be a serious president prepared to put the good of the country before his short term political interests. Like his State of the Union, this budget is good short term politics but such a massive pile of fiscal bullshit it makes it perfectly clear that Obama is kicking this vital issue down the road.

To all those under 30 who worked so hard to get this man elected, know this: he just screwed you over. He thinks you're fools. Either the US will go into default because of Obama's cowardice, or you will be paying far far more for far far less because this president has no courage when it counts. He let you down. On the critical issue of America's fiscal crisis, he represents no hope and no change. Just the same old Washington politics he once promised to end.

If Obama's budget is so bad it makes Andrew Sullivan wake up and take notice, then there is hope that Congressional Democrats will see the light too.

Via: Memeorandum

Via: The Atlantic

Irresponsibility run amok: Obama's budget $1.6 Trillion in new deficts

Obama released his new budget today and it is clearly irresponsible foolishness. Despite his own big talk about "tough choices and sacrifices" government grows everywhere as far as the eye can see.

Associated Press: WASHINGTON – Putting on the brakes after two years of big spending increases, President Barack Obama unveiled a $3.7 trillion budget plan Monday that would freeze or reduce some safety-net programs for the nation's poor but turn aside Republican demands for more drastic cuts to shrink the government to where it was before he took office.

The 10-year blueprint makes "tough choices and sacrifices," Obama said in his official budget message. Yet the plan, which sets the stage for this week's nasty congressional fight over cuts in the budget year that's already more than one-third over, steers clear of deeply controversial long-term problem areas such as Social Security andMedicare.

The budget relies heavily on the recovering economy, tax increases and rosy economic assumptions to estimate that the federal deficit would drop from this year's record $1.6 trillion — an astronomical figure that requires the government to borrow 43 cents out of every dollar it spends — to about $600 billion after five years.[...]

Despite his spending cuts and tax increases, the government's total debt would still mushroom from $14.2 trillion now to almost $21 trillion by 2016. Republicans assailed his blueprint for failing to take the lead on the nation's daunting fiscal problems.

There are no serious cuts here, there is no serious attempt to cut spending and there is no serious attempt to shrink government.  What Obama has put forth is a very transparent attempt to play politics.

Power Line: Obama's game is transparent, isn't it? He is playing a game of chicken. He puts forward a series of proposals that he knows are more or less insane; but he also believes that Republicans will come to his rescue. They, not being wholly irresponsible, will come up with plans to reform entitlements--like, for example, the Ryan Roadmap. Ultimately, some combination of those plans will be implemented because the alternative is the collapse, not just of the government of the United States, but of the country itself. But Obama thinks the GOP's reforms will be unpopular, and he will be able to demagogue them, thus having his cake and eating it too. Is that leadership? Of course not. But it is the very essence of Barack Obama.

If Republicans are smart, they will make sure to demagogue Obama good and plenty for his irresponsibility  before coming to the rescue with a much saner plan. Many Americans are finally coming around to the idea that America is on the edge of collapse. Now is the time to make sure they know exactly who is driving us there.

Via: Memeorandum

Via: Associated Press

Via: Power Line

Video h/t: The Washington Post