Obama’s Budget Blame Game Covers Up a Middle Class Tax Hike

April 22, 2011

Obama Continues to Lay Blame for the Deficits He Helped Create, Even As Democrats’ Plan “Falls Short” and Paves the Way For Middle Class Tax Hikes

Among the many curious accusations in Obama’s so-called deficit reduction speech last Wednesday was his portrayal of the nation’s current fiscal predicament as owing solely to spending policies under the Bush administration:


OBAMA: “But after Democrats and Republicans committed to fiscal discipline during the 1990s, we lost our way in the decade that followed.  Weincreased spending dramatically for two wars and an expensive prescription drug program -– but we didn’t pay for any of this new spending.  Instead, we made the problem worse with trillions of dollars in unpaid-for tax cuts -– tax cuts that went to every millionaire and billionaire in the country; tax cuts that will force us to borrow an average of $500 billion every year over the next decade.” (President Barack Obama, “Remarks by the President on Fiscal Policy,” The White House, 4/13/2011)


Upon even the mildest scrutiny, however, this absurd line of argument crumbles. After Democrats rammed through one out-of-control government spending bill after another, Obama’s attempt to blame Republicans for the budget deficit is transparently revisionist:


STANDARD AND POOR’S FACT-CHECKS OBAMA DEFICIT CLAIM: “S&P’s analysis also discussed fiscal conditions, most notably the scale of the deficit problem before and after 2008: ‘[I]n 2003-2008, the U.S.’s general (total) government deficit fluctuated between 2% and 5% of GDP. Already larger than that of most ‘AAA’ rated sovereigns, it ballooned to more than 11% in 2009 and has yet to recover.‘ This surely is one Bush comparison that the Obama team wishes to bury.” (Editorial, “The Obama Speech Downgrade,” The Wall Street Journal, 4/19/2011)

OBAMA INCREASED DEBT BY $3.6 TRILLION IN TWO YEARS: “In January 2009, the national debt stood at $10.6 trillion. Fueled by the so-called stimulus, this debt grew by $3.6 trillion in just two years. The magnitude of this amount is difficult to grasp without a comparison. Under Mr. Obama, government has been borrowing $4.6 billion each and every day. That’s more than it cost to construct the world’s tallest building, Dubai’s Burj Khalifa. In other words, the amount of future productivity being sapped from the American economy would be sufficient to construct a new 160-story skyscraper every day of the year.”(Editorial, “Obama Spending Hits New Records,” The Washington Times, 3/8/2011)


AND OBAMA HAS INCREASED DEFICIT SPENDING AT MORE THAN THREE TIMES THE RATE BUSH DID: “During Obama’s presidency to date, the national debt has risen by an average of $1.723 trillion a year — or by a jaw-dropping $1.116 trillion more, per year, than it rose even under Bush. … In his first two fiscal years, Obama will run up a total of $2.826 trillion in deficit spending ($1.294 trillion in 2010, an estimated $1.267 trillion in 2011 (p. 23), and the $265 billion in “stimulus” money that was spent in 2009). Thus, Bush ran up an average of $410 billion in deficit spending per year, while Obama is running up an average of $1.413 trillion in deficit spending per year — or $1.003 trillion a year more than Bush.” (Jeffrey H. Anderson, “The Weekly Standard: Obama Vs. Bush on Debt,” NPR, 1/25/2011)
MEANWHILE, S&P DID NOT CALL FOR JOB-DESTROYING TAX INCREASES:“Notably, there was no call in the S&P note for closing the deficit with tax increases, a staple of ratings-agency fiscal fixes. We hope this neutrality reflects some recognition of the way countries like Greece, pressed to cut spending while raising taxes, descend into an endless downward growth spiralThat’s how a nation’s outlook becomes truly ‘negative.’


The Obama fiscal policy since 2009 has been to explode the U.S. balance sheet with ever-greater spending financed by monetary reflation—which the President in his speech euphemized as ‘emergency steps.’ The result after more than two years is what scares S&P and more than a few Americans: a historically subpar recovery, unprecedented deficits, persistently high unemployment, commodity inflation and now growing anxiety over U.S. creditworthiness.” (Editorial, “The Obama Speech Downgrade,” The Wall Street Journal, 4/19/2011)


Although Obama has been far from honest about what his deficit reduction plan really involves, a new independent analysis put out Thursday is quite clear. It reports that Obama’s plan “falls short” of his own fiscal commission’s deficit reduction targets while borrowing $7 trillion more from countries like China:


INDEPENDENT ANALYSIS: OBAMA “FRAMEWORK” ON DEFICIT “FALLS SHORT,” REQUIRES $7 TRILLION IN NEW BORROWING: President Obama’s deficit-reduction plan ‘falls short’ of targets set by House Republicans and Obama’s own fiscal commission and would be unlikely to stabilize borrowing, according to a new independent analysis.


“The analysis, by the bipartisan Committee for a Responsible Federal Budget, found that the plan Obama unveiled in a speech last week would require the nation to borrow another $7 trillion during the next decade, compared with about $5.4 trillion under the House Republican budget and about $5.3 trillion under the recommendations offered in December by Obama’s fiscal commission.” (Lori Montgomery, “Report: Obama Deficit Plan Falls Short of Deficit Commission, House GOP Targets,” The Washington Post, 4/21/2011)


Rep. Gerry Connolly (D-VA) admitted as much Thursday as well, arguing that the Democrat plan will have to increase taxes on the middle class. When will Obama admit that his irresponsible deficit framework paves the way to middle class tax hikes?:


REP. GERRY CONNOLY (D-VA): MIDDLE CLASS TAX HIKES NEXT: ” ‘I do not favor the permanent extension of that tax cut [for the wealthy], and frankly I think we’ve got to look at whether we can afford the middle-class tax cut permanently,’ Connolly said.


” ‘Between the two of them, that’s $3.3 trillion we can’t afford. And so if we decide we’re going to go with one or the other or both, somebody’s going to have to figure out how to pay for it…’ (Rick Klein, “Dem. Rep. Connolly: ‘Got to Look at’ Ending Tax Cuts for Middle Class,” ABC News’ The Note, 4/21/2011)


THE WALL STREET JOURNAL: OBAMA “PRETEND[S] NOT TO INCREASE TAXES FOR MIDDLE CLASS VOTERS WHILE LOOKING FOR SNEAKY WAYS TO DO IT”:“So who else is there to tax? Well, in 2008, there was about $5.65 trillion in total taxable income from all individual taxpayers, and most of that came from middle income earners. …


“This is politically risky, however, so Mr. Obama’s game has always been to pretend not to increase taxes for middle class voters while looking for sneaky ways to do it.” (Editorial, “Where The Tax Money Is,” The Wall Street Journal, 4/18/2011)