Let’s not mince words. President Obama’s nearly $4 trillion, big-spending budget is dead on arrival.
No president in the history of our country has called for more spending or for taking on greater debt. His plan would result in a monstrous $744 billion budget deficit in 2014. It projects the national debt would grow to an unprecedented $25 trillion over the next decade from today’s $16.8 trillion. That will further threaten the government’s shaky solvency and undermine our economic future.
Despite a weak economy that grew by only 0.6 percent in the fourth quarter of 2012, and the snail’s-pace job growth that slowed sharply last month, his budget calls for nearly $700 billion in new taxes on businesses, investors and households in the highest tax brackets. Even smokers would have to pay nearly $1 more for a pack of cigarettes.
If you thought Mr. Obama’s class warfare stopped with his 2012 re-election campaign, think again. In addition to tax increases on just about anything that moves, he wants to impose a new minimum tax rate of 30 percent on people who make more than $1 million a year.
Brace yourself, because he says he’s not budging this time from his demand for higher tax rates. Any budget deal later this year, he said Wednesday in the White House Rose Garden, must raise new tax revenue from “the wealthiest individuals and biggest corporations.”
That’s on top of the $600 billion he has previously approved in higher income-tax rates on Americans earning more than $400,000 a year. In the space of two years, he is squeezing $1.3 trillion more out of a very sluggish, overtaxed, underinvested economy when millions of struggling employers are hiring less and too many Americans cannot find full-time jobs.
This is an economy that cries out for bold, new initiatives to boost venture-capital investment for business expansion and new startups to put people back to work. Mr. Obama’s budget doesn’t offer one substantive initiative that would do this.
Instead, he wants hundreds of billions in more spending at least $300 billion more just for additional public works jobs on top of the nearly $800 billion he poured into similar projects in 2009. That spending had little lasting impact on the economy or the real unemployment rate, estimated to be nearly 14 percent if you add part-timers who need full-time jobs and discouraged adults who stopped looking for work.
His budget plan is filled with additional new spending for a laundry list of initiatives he spelled out in his expensive State of the Union address, including a major $77 billion expansion of preschool education.
There’s more money for his green-energy boondoggles that have led to embarrassing bankruptcies and relatively few jobs. There’s $100 billion for roads and railways, $1 billion for 15 new federal institutes to teach innovation to manufacturers, and $8 billion for community colleges to help students obtain jobs. The spending list is seemingly endless.
Ask economists what is driving the government’s higher deficits besides entitlements and discretionary spending and they’ll point to weak economic growth and the high unemployment rates that have squeezed government tax revenues. Mr. Obama’s anti-job-growth budget is Exhibit A in both cases.
The budget also calls for modest cuts in Social Security benefits by curbing the way annual cost-of-living increases are measured. There is no way, though, that Democrats will vote for slowing down the growth in entitlements.
When Mr. Obama took office, he promised to cut the deficit in half by the end of his first term. He’s never come close. His record-shattering deficits since he took office: $1.4 trillion in 2009; $1.3 trillion in 2010; $1.3 trillion in 2011; and $1.2 trillion in 2012, according to the nonpartisan Congressional Budget Office.
Unprecedented federal spending levels, far in excess of the government’s income, are also fattening the publicly held debt as a percentage of the U.S. economy. In 2010, that debt rose to more than 50 percent of the economy.
Under Mr. Obama’s budget it would get worse a lot worse. According to CBO, the ballooning debt will be 87.4 percent of the economy by 2021 if steps are not taken to slow the rate of spending and strengthen the economy.