Skip to comments.Obama’s Little Plan (Short Summary: Spend More, Slash Defense, Increase Taxes)
Posted on 10/24/2012 5:17:30 PM PDT by SeekAndFind
Under pressure from Mitt Romney, President Obama has finally released his own policy vision for a second term. And yes, its the same old, same old. Some are calling it a second first term.
There isnt a single true economic-growth incentive in this scant plan. Theres no serious spending, deficit, and debt reduction, and no attempt to solve the Social Security and health-entitlement problems, which are moving us toward bankruptcy.
But before getting into the details of this little plan, my basic conclusion is this: Mr. Obama wants to slash defense spending, raise all other spending, and hike taxes to finance the largest government size he can possibly get.
In fact, if he had his way, I believe he would allow all the Bush tax cuts to expire in order to generate as many revenues as possible to increase the size of government. He might even propose a value-added tax (VAT) for an additional revenue grab for government unions and green energy.
And hes already stated that across-the-board, budget-cutting sequestration will not happen. In other words, a mini-stimulus plan, like the one that didnt work in 2009.
I think this view surfaced during the three debates. And because Mitt Romney calmly, coolly, and presidentially set forth his contrasting agenda of smaller government, lower debt and deficits, pro-growth tax reform, and an entitlement fix, he is now riding a popular polling wave toward victory.
The two economic visions couldnt be more different.
Romney has shown more than 70 million TV viewers that hes not an evil plutocrat robbing the middle class, that he wont kill women whose health-care insurance may have run out, and that hes not the man pushing granny over the cliff. People have listened carefully to his pro-growth, free-enterprise, increase-take-home-pay vision for our anemic economy, which is growing at the slowest pace in modern times going back to 1947. And theyve learned about his deal-making experience in the business sector, and can see him reaching across the aisle to find common ground with Democrats in Congress and elsewhere. A huge point.
On the other hand, if you take a look at Obamas so-called second-term vision, with more spending on teachers and government unions, more ineffectual job training, more green-energy cronyism, more temporary tax credits (which have no economic-growth consequences at all), and more Obamacare, its a pretty safe assumption that he will seek to keep government around the 25 percent of GDP that he achieved in his first two years and would take that number higher if he could. In contrast, Mitt Romney has stated time and again that he wants to lower spending to 20 percent of GDP.
Outside of already counted savings from Afghanistan and Iraq and the sequestration that Obama now opposes, you cant find any specific spending cuts anywhere in the presidents plan.
Using CBO assumptions of both future GDP and 18.5 percent of GDP revenues over the next ten years, the Obama plan would increase publicly held debt from todays 73 percent of GDP to 99 percent of GDP. That comes to an increase of about $13 trillion in debt. Romney, by comparison, would reduce the debt to 58 percent of GDP over the next ten years, which is a reduction of $10.1 trillion from the current debt baseline. That implies the lowest spending rate of the Romney plan would be $23 trillion less in terms of debt than Obamas high-spend approach.
And Romneys 58 percent debt-to-GDP ratio would not impede economic growth, according to most economists, whereas nearly 100 percent of GDP debt from Obama certainly would.
These are all back-of-the-envelope calculations, but I think they tell an important story. And Mitt Romney has brought that story to light, even during the last debate on foreign policy. In that round, Romney borrowed two key thoughts from Ronald Reagan: First, a strong foreign policy to achieve American leadership around the world requires a strong domestic economy. Second, lower marginal tax rates, especially for the middle class, will significantly increase take-home pay, in addition to adding much-needed incentives for the investment and entrepreneurial classes.
I have argued this year that Mitt Romney is the most conservative Republican standard-bearer since Reagan. I have also argued that hes the most underrated politician in the country. Nobody is perfect. Nobody gets it right on everything all the time. But with two weeks to go, Romney is on a roll.
Larry Kudlow, NROs economics editor, is host of CNBCs The Kudlow Report and author of the daily web log, Kudlows Money Politic$.
Even the booklet is spineless. Either that or it is a new toilet paper delivery system, 20 sheets at a time.
This was the sea change of 2006 and the deranged crazy mad Democratic party getting control over an equally deranged crazy mad Fed.
Before then, they would raise taxes in order to spend more.
Since then, they’ve spent more in order to raise taxes.
The image of Obama waving his 20 page manual with large pictures and 16px font to take up maximum space was his Dukakis moment.
The view of him wavy this flimsy pamphlet in the wind during one of his tour stops made him look week. It also made me think of someone who didn’t realize they had to have a plan, so they threw one together over the weekend like a last minute homework assignment.
So in the spirit of his faux academic history, Little Barry is cramming for his big final exam, praying for a favorable grading curve.