Posted by
Andrews on Thursday, February 26, 2009 11:52:37 AM
Obama seems to be promising the moon in his recent pronouncements, and not just promising the moon, but promising the American people they can have their cake and eat it too.
His big proposal of the moment is trillions in stimulus, a massive environmental intrusion, and government health care for everyone. Those almost guarantee hundreds of billions, of not trillions, of new bureaucratic costs and entitlements. However, he is also promising to cut the deficit in half. And finally, he will do it all without taxing those making less than $250,000 a year.
The numbers just don't work. Our current budget is a hair over $2.5 trillion (not counting social security, more on that later). As Obama promises $1-2 trillion extra this year and probably the next, that will double the budget. However, more damaging are the permanent costs of new bureaucracies, expanded budgets and the rest. So, let us figure there will probably be $0.5 trillion in permanent new yearly spending (maybe it will be higher, but for now, let's stick with that). On top of that, he promises health care, claiming it will cost $100 billion. Since the prescription coverage cost about 3-4 times what was projected, and this is even more ambitious, I think $500 billion is probably a conservative estimate (especially if the
private providers jump ship, or
the rolls increase as I expect). And the new eco-laws will not come without massive bureaucracies (and economic losses, but we are ignoring those here). Add to that Obama's plans to generally expand welfare back to pre-Gingrich levels, "encouraging" "alternative energies"* and all his other liberal agenda items, and we are looking at a $4 trillion budget at the least. Since the official deficit is $500 billion in 2008, that would mean he would have to make $2 trillion in cuts, four fifths of our present budget.
That doesn't work. At least not for a man who is not going to touch entitlements or unions. The military, even if he eliminated it entirely is under $500 billion. So where is he finding this addition $1.5 trillion?
Actually, I have a thought. As he is likely to fund his bailouts through inflationary means, and since continued, expected inflation has an impact out of proportion to its size (the early stages of hyperinflation), his 30% increase of the money supply over 2 years could cause costs to rise 100% or more. However, that would mean that $250,000 a year could be equivalent to $125,000 today or even less. So he could keep his promise to tax only those making $250,000 or more and yet eventually include the whole middle class in that figure. In fact, as the AMT is not indexed, inflation could serve to subject all taxpayers to the AMT and thus raise his revenues.
Other than that, I really see no way to make his insane plans work.
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* Is it just me, or does writing about Obama require far too many quotes? Almost every term he uses means something different than he says.
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POSTSCRIPT
I can't believe I forgot to mention it in the body of my post, but how exactly will Obama begin to deal with the slowly growing Social Security burden while increasing spending and cutting taxes? Again, the obvious answer is inflation. Make money so worthless that the fixed benefits of recipients are pocket change. Granted, it will impoverish the elderly, but what can they do? The courts have ruled you ahve no ownership vested in the supposed "insurance", so the government could just stop it if they wished. So how can anyone argue that failing to adjust benefits to keep pace with inflation is not allowed?