Posted on 04/18/2011 7:28:07 AM PDT by SeekAndFind
Your average poorly informed lefty (but I repeat myself) will reliably tell you that our current fiscal straits are the result of three things: 1. Bush’s wars; 2. Bush’s tax cuts for the rich; 3. Bush’s bank bailouts.
That is not true, of course: The main bank bailouts (odious as they were) have been paid back, often at a profit. The money-losing parts (and the likely money-losing parts) are the ones insisted upon by Barack Obama and his Democratic colleagues: the foreclosure-prevention programs, the endless maintenance of Fannie Mae and Freddie Mac, etc.
The Iraq War, in its most expensive year, cost $140 billion, according to the Congressional Budget Office. Its total cost over the years is estimated at about $700 billion — a good deal less spending than, say, Obama’s stimulus package. It is not, and has not been, an exceptionally large driver of our deficit spending.
Our deficit is running around $1.6 trillion. If we took all military spending — not just the Iraq and Afghanistan wars, but the whole shebang — and cut it to $0.00, we’d save about $664 billion a year. Iraq and Afghanistan will cost about $170 billion combined in FY2011. Ending the Bush tax cuts for “the rich” — for the $250,000-and-up crowd, in Obama’s formulation — would put on average about another $80 billion a year into Treasury coffers. (CBO estimates the ten-year cost of those tax cuts at $800 billion.) The spending on the wars and the forgone revenue from the Bush tax cuts do not add up to much of that $1.6 trillion deficit: a little less than 16 percent.
The tax cuts for the unrich were a good deal more expensive, which is why Obama’s rhetoric on the tax cuts sort of makes my head hurt: The president says he agreed to tax cuts for “the rich” only to preserve tax cuts for “the middle class” — which is to say, he agreed to a mere $800 billion in tax cuts that he didn’t want in order to preserve a considerable $2.2 trillion in tax cuts that he did want — and then argues that our problem is too many tax cuts, two-thirds of which he was so intent on keeping that he took the other third, too. But even that $2.2 trillion over ten years would not make much of a dent in our $1.6 trillion annual deficit.
And just who are these “rich”? Under Obama’s arbitrary, politically minded cutoffs ($200,000 for an individual, $250,000 for a couple), a public-school administrator earning $130,000 a year married to a pharmacist earning $125,000 a year and raising four kids is rhetorically lumped in with “millionaires and billionaires,” as the president put it, and desperately in need of a tax hike — but a single guy earning $198,000 a year is in the middle class, and his $2.2 trillion in tax cuts must be protected.
Definitional quibbles aside, the war spending and the Bush tax cuts don’t add up to a whole lot in the context of the $1.6 trillion deficit. What does?
The Department of Health and Human Services will see more than $900 billion in outlays in FY2011. About $83 billion of that is discretionary spending on things like the Centers for Disease Control. Almost all of the rest is Medicare and Medicaid — the two programs that President Obama has vowed to shield from substantial reform of the sort envisioned by Rep. Paul Ryan. The other big driver of spending, as the president himself acknowledged yesterday, is Social Security, meaningful reform of which he also promises to resist.
Obama’s big plan for the health-care entitlements is appointing a committee, called the Independent Payment Advisory Board (IPAB). This committee will be composed of experts. (Really.) And they will, the president promises, expertly discover ways to reduce Medicare spending. At the end of that sentence is an invisible asterisk: The committee is forbidden to change anything about the structure of Medicare, to increase premiums, to change cost-sharing arrangements, etc.
It is also forbidden, on paper, to ration care. That is because it does not need to ration care: What it can do is cut payments to doctors, pharmacies, hospitals, etc., which simply pushes the dirty work of rationing and denying care off on them. If it costs X to provide a particular service, and IPAB sets the price at We have tried a similar approach before, with legislation that requires cuts in Medicare reimbursement rates. Congress simply votes to suspend the law when the cuts come due. Congress can vote to ignore IPAB’s cuts, too, though it is procedurally harder to do.
None of which matters very much in the context of a $1.6 trillion deficit and a $14 trillion–plus national debt. Current CBO estimates of the savings to be realized from IPAB range from a high of $28 billion over ten years to a low of $0.00 over the same period of time. If IPAB performs to perfection — if it performs twice as well as CBO expects — it still will not make much of a dent in things.
A study from Credit Suisse puts the net value of all the financial assets in the world (excluding real estate) at about $80 trillion ($117 trillion in financial assets minus $37 trillion in household debt). Our unfunded entitlement liabilities are about $100 trillion. Given that they exceed world financial wealth, I suspect that those liabilities are not going to be met. Crazy hunch I have.
As I have argued before, what we are really negotiating about at this point is not how we are going to go about paying for these things, but how we are going to go about not paying for these things. Paul Ryan’s plan for Medicare is to let Americans shop for health-care coverage and then have the government pay the first $15,000 in premiums — a reasonably generous deal. (And even more generous for the very poor.) That premium support would grow relatively slowly, putting pressure on both consumers and providers of health-care to reduce costs. This is eminently sensible — critical, in fact: The reason that cellphones and computers don’t cost $10,000 isn’t that Motorola and Apple love us: It’s that consumers spending their own money are cost-conscious, so everybody has to compete on both price and quality. The only important products in the United States that do not get better and cheaper every year are K–12 education and health care, which are about 97 percent and 55 percent dominated by the government, respectively, and therefore have little consumer-price pressure.
Obama’s alternative is another magical committee of wise men, no doubt drawn from the same stale bowl of political Froot Loops from which he spooned up his various czars and advisers, from Marxist nut cutlet Van Jones to tax-dodging Treasury boss Tim Geithner. Markets aren’t perfect, but I trust consumers to make their own decisions better than I trust Obama and these jokers to make them on our behalf. Either way, cuts are coming, and the main question now is what shape they will take and who gets to make the final choice about health-care decisions: consumers and providers, or Obama and his experts.
— Kevin D. Williamson is a deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism
The big mess is that Bush was listening to Rove.
It's no coincidence that this country's economy began to see the first signs of some serious turbulence back in the mid-2000s when the Federal government stopped reporting one of the key indicators of our nation's money supply (M3).
You listening Ben Stein
The reason that cellphones and computers don’t cost $10,000 isn’t that Motorola and Apple love us: It’s that consumers spending their own money are cost-conscious, so everybody has to compete on both price and quality. The only important products in the United States that do not get better and cheaper every year are K–12 education and health care, which are about 97 percent and 55 percent dominated by the government, respectively, and therefore have little consumer-price pressure.
Mark Levin articulated this fact on his radio show last week -- it's a damned shame that there are no prominent GOP elected officials making the same point everytime the 'Rats demagogue about 'tax cuts for the rich' being a 'cost'.
HW Bush. “Read my lips, no new taxes”
GW Bush. “Compassionate Conservative”, i.e., ‘I can do big gov socialism better!’
Rove’s first job out of school was working for Pappy Bush. He’s always been at the pig trough, and with the big gov, big tax, elitist Bush family.
LBJ’s Great Society got us into this mess.
Actually it goes back a bit further...try Teddy Roosevelt, Woodrow Wilson and others of that era.
bttt
I didn’t know that. It makes a lot of sense though.
Folks talk about egos. Rove has an ego which can’t be matched.
Thank you for that information of which I was not aware.
A majority of Democrats (incuding Obama as Senator)in a majority Dem Congress voted for the intial bank bailouts (TARP).
A minority of Republicans voted for TARP.
A majority of Democrats (incuding Obama as Senator)in a majority Dem Congress voted for the intial bank bailouts (TARP).
A minority of Republicans voted for TARP.
I stopped reading here. Because of the Laffer curve, I would argue that the tax cuts put more money into the Treasury rather than taking from it.
Obama is well aware of the Laffer curve, but prefers to hurt the country so that he can really stick it to those who provide jobs.
Your average poorly informed righty (the willfully blind-types like the author of this article) will reliably tell you that our current fiscal straits are the result of "anyone and everyone but Bush".
It's funny how these willfully-blind neo-cons always ignore Bush's actions upon taking office in 2000 and their effects on the US economy.
They never mention the Partnership for Prosperity, signed on September 6, 2001.
Nor do they mention the provision in the USA PATRIOT Act of 2001 that allowed banks to accept the Mexican Matricula Consular card as valid ID to open US bank accounts, while allowed Mexican illegal aliens to obtain US credit cards, auto, home and business loans.
Prior to Bush, this was illegal by law in the US.
They never mention the New Alliance Task Force, formed in 2003.
The NATF is a broad-based coalition of 62 members, including the FDIC, Mexican Consulate, 34 banks, community-based organizations, federal bank regulatory agencies, government agencies, and representatives from the secondary market and private mortgage insurance (PMI) companies.
Their goal was to open the Mexican illegal alien market to US banks and visa-versa using low-cost remittances as the bait. As Bush's 2002 speeches show he was talking about hundreds of billions of U.S. tax dollars going to directly benefit millions of Mexican illegal aliens.
The NATF was organized into four working groups that were tasked with the following goals:
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They never mention the American Dream Downpayment Act which gives Mexican illegal aliens US taxpayer dollars for them to use as the down-payment for the houses Bush's Wall Street banker buddies were financing through sub-prime loans.
They never mention Bush hobbling border and interior immigration enforcement.
Worksite arrests of illegal aliens fell some 97 percent, from 2,859 in 1999 to 159 in 2004. Investigations targeting employers of illegal immigrants fell more than 70 percent, from 7,637 in 1997 to 2,194 in 2003. Arrests on job sites fell—precipitously, from 17,554 in 1997 to 445 in 2003. Fines levied for immigration-law violations fell from 778 in 1997 to 124 in 2003. Notices of intent to fine employers fell from 865 in 1997 to just 3 in 2004.
Nor do they mention Bush signing the Social Security Totalization Agreement with Mexico in 2004, which would have allowed Mexican illegal aliens to collect US Social Security benefits for the time they worked illegally in the US. Not only for themselves, but also for their families back home in Mexico, even if they had never stepped foot in America.
Of course, given Bush's record, if I were a Bush lick-spittle, I too, would do everything in my power to blame "anyone and everyone but Bush".
and it still won’t change there minds...
While the items you cite comprise the worst of Bush's presidency, their impact on (a) unemployment, (b) overall federal tax revenues, and (c) overall federal spending are minor.
When it comes to the current fiscal situation of the federal government, most of the blame falls on the massive increases in entitlement spending (Bush is complicit with Kennedy and the democrats that he embraced even while they were stabbing him in the back and screaming that the massive increases were draconian in their cruel inadequacy, and simultaneously savaging him for ballooning the deficit) in the areas of medicare/prescription drug benefits, federal education spending, and other programs.
Tax revenues increased as the economy grew for the first six years of Bush's term in office, but deficits grew because of bipartisan lust for even greater spending growth. Once the Pelosi/Reid congress took the reins in 2007, the economic growth stopped and the wheels predictably came off. The media, also predictably, covered for the democrats and blamed Bush.
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