Posted on 11/27/2009 6:39:38 AM PST by Oldeconomybuyer
Double-digit. That hyphenated adjective has been used most often recently to describe October's 10.2 percent unemployment rate. But it can also be used to describe the federal budget deficit as a percentage of the gross domestic product. That precise number is not yet known, but it may turn out to have a more dire effect on our national life than October's unemployment rate.
In the fiscal year just ended, federal spending was nearly 25 percent of GDP, while federal revenues slipped below 15 percent because of the financial crisis and recession. We have not seen a budget deficit of this magnitude since World War II, which surely was a greater challenge than recent economic troubles.
Apologists for the Obama administration argue that some 2009 spending, like that on financial bailouts, is nonrecurring. True, but as the Congressional Budget Office has reported, the trajectory of administration spending and revenue is pushing the annual deficit toward $1,000,000,000,000 -- that's $1 trillion -- for the next decade.
Congressional Democrats' health care bills threaten to add to that. The bill currently before the Senate is advertised as costing less than $1 trillion. But significant spending doesn't kick in till 2014 and over the ensuing 10 years adds up to $1.8 trillion, nearly double that.
Thanks to current low interest rates, servicing the debt costs the government only $200 million this year. But the White House estimates that debt service will exceed $700 billion in 2019. "In a few years," editorializes the Economist, "the AAA rating of Treasury bonds, the world's most important security, could be in jeopardy."
It's not only Republicans who decry this prospect. Examining the Democrats' health care proposals, William Galston, domestic policy adviser in the Clinton White House, writes, "We're already facing an unsustainable fiscal future."
Looking farther ahead, Scott Winship notes in the Progressive Policy Institute's progressivefix.com blog that federal spending is on course to exceed 40 percent of GDP because of scheduled spending on entitlements -- Social Security, Medicare, Medicaid -- within the lifetime of today's children.
Yet the congressional Democrats who are pressing to expand federal health care spending do not seem much fazed by the prospect that, as Winship writes, "the level of taxation it would require to meet projected spending needs is far higher than anything the country has ever seen-slash-tolerated."
That suggests that, at least for some Democrats, huge looming budget deficits are not a bug but a feature. Just as Ronald Reagan hoped that cutting taxes would force politicians to cut spending, these Democrats hope that increasing spending will force politicians to increase taxes to levels common in Western Europe. Never mind that those economies have proved more sluggish and less creative than ours over the long haul.
The instrument they may have in mind is the value added tax, which operates as an invisible sales tax on goods and services. Back in May, Budget Director Peter Orszag's spokesman mentioned the VAT as a "credible idea" that he did not want to rule out. In June, House Ways and Means Chairman Charles Rangel suggested a VAT as "a point of discussion."
In September, John Podesta, head of the Obama transition team, spoke of how a VAT would "create a balance" with other economies, and White House adviser Paul Volcker cited a carbon tax and a VAT as ways to raise lots of revenue. In October, Speaker Nancy Pelosi said, "Somewhere along the way, a value-added tax plays into this."
These statements are noteworthy, since American politicians are ordinarily skittish about saying we should imitate Europe's high-tax and high-spending policies. These policies seem more unpopular than ever 10 months into the Obama presidency. Pollster Scott Rasmussen reports that 53 percent of voters worry that the federal government will do too much in response to economic problems, while only 37 percent worry it will do too little.
That mirrors voters' current opposition to Democratic health care bills. Democratic leaders nonetheless want to jam one through before their current majorities are eroded, as they seem likely to be, in the 2010 elections. This is politically risky, but makes sense if your goal is to expand government.
So the battle over health care is not just about health care. It's about whether government will permanently gobble up more of the private-sector economy -- and slow it down in the process.
HealthCare is MengeleCare is Holocaust II brought to you by Zero, Reid, Pelosi and the other sewer RATs in the US Congress.
We are truly living in the Twilight Zone.
Even the Chinese can clearly see Obama naked as a as a j-bird.
I guess the good news is, the democrat are shwoing their willingness to use their ideology to destroy the economy, when times are already tough and the effects of their arrogance and incompetence are starkly evident even without notice or report by the major media
Yesterday a report said that 1 in 7 Americans is seeking food aid this holiday season.
Imagine that. In America. As congress dines on luxury foods and guzzles fine wine on the lawn of the White House in a luxury prefab whose heating and lighting bill must have rolled the PEPCO meters for days
Yesterday a report said that 1 in 7 Americans is seeking food aid this holiday season.
Imagine that. In America. As congress dines on luxury foods and guzzles fine wine on the lawn of the White House in a luxury prefab whose heating and lighting bill must have rolled the PEPCO meters for days
Speaking of Rasmussen, is he taking the whole Turkey Day weekend off? I haven’t seen an Obama negative reading in a couple days. :)
Does Obama know something that we don’t know?
Any chance that Obama/Dems have struck a deal with China and the global central banks for debt forgiveness under the condition that we enact climate changes and literally destroy our military? And become uncompetitive?
Politicians love the idea of VAT because it is a hidden tax.
The consumer looks at the higher price of goods and gets mad at those wicked capitalists who are ripping them off. Thus the politicians can raise the tax and escape criticism.
On the other hand, a sales tax is that next to the bottom line on your sales receipt, there for all to see.
Nothing makes the consumer madder than any suggestion that the sales tax be raised.
We are not men. Afraid to organize and stand up to these
comunist in washington. Let’s grow some balls PATRIOTS.
No. I don’t think BO has gotten debt forgiveness for climate change. BO will push climate change regardless, he couldn’t care less about prosperity or freedom or liberty.
He already has on his agenda an uncompetitive America.
This is about stealing our money to enrich themselves; not health care.
http://www.youtube.com/watch?v=S3zyyLiUsF8
[Already has its own thread, but after listening, please pass to your Congresscritters, news organizations and anyone else it’ll educate or piss off.]
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