Archive for the ‘Fixing America’ Category

5 Questions I’d Ask President Obama

Wednesday, October 3rd, 2012

President ObamaThe debates are about to begin. I wish I could ask the President the questions the media will refuse to ask.

Q1: The size of the government is typically stated as a share of the economy. In modern history, the size of the federal government has averaged approximately 20% of GDP. What is your vision for the right size of government over the next five, ten and twenty years?

Q2: You have not released a federal budget since 2010, and it’s been even longer since democrats in the Senate have released a budget. What is your specific budget plan for the next ten years? (UPDATE: I provided misinformation here. See note at the bottom of the post.)

Q3: You have passed a series of short-term tax cuts that are about to expire. The Bush-era tax cuts are ready to expire. What is your long-term tax plan?

Q4: Medicare and Social Security are on a path towards insolvency. You have said that Medicare is “unsustainable”. What is your plan to reform Medicare and Social Security?

Q5: In what year do your plans achieve a balanced budget?

You’ll notice a theme among these questions. Many, including myself, have accused the administration of not having plans to deal with our most significant structural problems. Even the President’s treasury secretary Tim Geithner said to Paul Ryan and Congress: “We’re not coming before you to say we have a definitive solution to our long-term [debt] problem. What we do know is that we don’t like yours.”

But to say that the President doesn’t have a plan is probably incorrect. He just hasn’t shared it with the American people.

Size of Government
As far as I know, the President has never said what the size of government should be. Not only is this a fair question, but it gets directly to the point of the President’s vision for the country, and the role of government. Paul Ryan passed a budget in the House that restrained government spending to the traditional average of 20% of GDP and was labeled a radical by the left. The Simpson-Bowles debt commission recommended restraining government to 21% of GDP and was ignored by the President.

So what does the President believe? Larry Summers, who was the Director of the President’s Economic Council, has released a series of articles and comments that last couple of years about the size of government. He believes that the government will need to be bigger. Significantly bigger. Here’s his article in the Washington Post from August of this year (click here). And here’s an excerpt from it:

But there is a widespread view in both parties that it is feasible and desirable that in the future the federal government should be no larger as a share of the overall economy than it has been historically. Unfortunately, this is unlikely to be achieved. For structural reasons, even preserving the amount of government functions that predated the financial crisis will require substantial increases in the share of the U.S. economy devoted to the public sector.

I added the bold for emphasis. He goes on to say:

But for the next three decades the United States will confront the reality that major structural changes in its economy will compel an increase in the public sector’s fraction of the total economy…

What are “substantial increases” in the size of government? Does the President agree with this? We deserve to know.

Federal Budget
It is appalling to me that the President has not presented a budget since 2010, and that the democrats in the Senate have not presented a budget in more than three years. The last time the President released a budget it was basically laughed out of Washington as un-serious. Why has he not presented a budget? Because he has no intention of restraining government spending. (UPDATE: I provided misinformation here. See note at the bottom of the post.)

Tax Reform
I’ve been on the tax reform bandwagon for decades. Seriously. Decades. Our tax code is a complete mess. I have visited the President’s website. His ONLY mention of tax reform is the Buffet Rule. But the Buffet Rule is only a drop in the bucket. From Forbes:

The Joint Committee on Taxation (JCT) says that the Buffett Rule as proposed by Senator Sheldon Whitehouse (D-CT) would increase revenues by $47 billion over the coming decade, assuming that the 2001-2010 tax cuts (on the rich) expire as scheduled.

We’re running trillion dollar yearly deficits, and the President’s solution is to generate an additional $4.7 billion per year from the Buffet Rule. We need real and significant tax reform in this country. And we need it now.

But the real reason the President hasn’t presented a tax plan? If your intent is to “significantly increase” the size of government, eventually you will also have to significantly increase tax revenues. And it’s impossible to tax the rich enough to make up the difference. Taxes are going up on the middle class, and probably significantly. When? Obama’s planning for that to be the next President’s problem. He just wants to push us down the path towards a significantly larger federal government.

Entitlements
It’s impossible to achieve long-term financial stability, and eventually balanced budgets, without tackling our toughest problems — Medicare and Social Security. The President has put forth no plan to fix either of these programs. Why? Because I don’t believe he has any interest in changing the programs. If left as they are today, they will soon make the federal government significantly larger.

Balanced Budgets
All of these issues tie together. Our country spends more money every year that it collects in revenues. Even the Clinton surpluses were illusory, and created by payroll tax revenues that exceeded expenditures on Medicare and Social Security. I think you probably know my thoughts on this one. The President has no intention of putting together a plan to get us to balanced budgets. He’s counting on a significantly larger government necessitating significant tax increases in the future.

So where does the President stand on these issues? I think I know. I’d just like to hear him say it.

UPDATE: Just saw this in the USA Today of all places. Seems like we’re pretty much on the same page, though the President has already answered the first question on multiple occasions, stating that the situation was much worse than they expected. Read it here.

UPDATE 2: Made a mistake on this one. The President DID propose a budget this year. You can read it here. I had it in my mind that it was just a budget framework, but it is an actual, scorable budget. It should be noted that it was voted on in the House, and lost 414-0. And it was voted on in the Senate, and lost 99-0. Not a single democrat voted for it.

Solutions Looking for Problems

Tuesday, September 13th, 2011

President ObamaToday is going to be a rant. My apologies.

I’m not a hater, but what I deeply dislike is when politicians offer solutions that have little to do with the problems at hand. You see, I’m a problem solver. You should study a problem, and develop a solution that fixes the problem. Then implement the solution. It’s really not as tough as it sounds. And when you explain it like this, it doesn’t even sound very tough.

Example 1: In 2000, candidate George W. Bush ran on a platform of tax cuts. Why? Because at the time the federal government was running a surplus (though the surplus was created by social security payments, a topic we’ll get around to soon). Bush wanted to give this money back to the people who had earned it. Then to pull us out of recession, President Bush pushed through these very seem tax cuts and tax reforms in an effort to stimulate the economy.

Did the Bush administration study the recession and develop a solution for the problem? No. For the right, tax cuts are always the solution.

Example 2: Most liberals in this country want a single-payer, government run health care system. Is the cost of health care going up? Are people struggling to afford it? Are there problems with the current system? Then we need universal health care.

Did the Democrats in Congress and the Obama administration study the problems with our health care system and develop a strategy to fix the problems? No. For the left, universal health care is always the solution. And since they couldn’t get universal health care, we got ObamaCare. A system designed to push us towards universal health care in the future.

So here we are today. Unemployment remains above 9%. Economic growth is stagnant at best. The economy appears headed towards a double dip recession. But the President has a plan. Stimulus four! Or is this stimulus five? Six? I’ve lost count.

For the President, he has two solutions looking for problems. How convenient.

One, the President wants to spend more money on creating jobs. He refuses to call it economic stimulus because that wouldn’t be politically popular. This time he wants to spend approximately $450 billion. How will he spend it? Sending money to the states to help pay for teachers. More infrastructure investment — though this time he wouldn’t call them shovel ready jobs. Extend unemployment benefits and the temporary payroll tax reductions. And some targeted tax cuts and tax credits for small businesses that will do little to create jobs.

How will he pay for it? That’s easy. Another solution looking for a problem. Tax increases. The administration has proposed that we’ll raise the $450 billion in tax revenues by cutting oil subsidies, and closing loopholes so that the rich “pay their fair share”.

Spend now and raise taxes later to pay for it. Solutions looking for problems.

The President has repeatedly said that his bill should be passed “now” because these are ideas that Democrats and Republicans have agreed upon in the past. And if the bill is not passed, it’s because the GOP is putting party before the economy.

He’s partially right. These are ideas that politicians have agreed upon and tried before. That doesn’t make them the right thing to do. Matter of fact, we have already tried most of these recommendations before. It was supposed to prevent us from exceeding 8% unemployment. It didn’t work then, and it won’t work now. We had the first stimulus of more than $800 billion. We’ve printed money with QE1 and QE2 to the tune of about $2.3 trillion. The President and Congress have already passed cuts in payroll taxes and extensions to unemployment. Through tax cuts, stimulus spending and monetary policy, we have injected trillions into the economy. It hasn’t worked. Keynesian economics has failed.

Why? Because it doesn’t fix the problems at hand.

We have long-term systemic problems that the President has failed to offer solutions to fix. And many of his own policies have actually exasperated these problems.

We badly need tax reform in this country. The President has discussed cutting loopholes on corporate taxes and lowering the corporate tax rate which is among the highest in the world, but has never actually submitted a plan that does this. His own deficit commission recommended this same approach for corporate AND personal incomes taxes — closing loopholes and lowering tax rates. The President won’t do it. Why? Because you can’t play the class warfare card if you fix the tax system.

We badly need entitlement reform in this country. The President has discussed that Medicare is a long-term financial problem that needs to be fixed. It’s unsustainable in its current form. He’s right. But where is his plan? I can’t find it. And he won’t even discuss fixing social security which is every bit as unsustainable as Medicare.

We badly need regulation reform in this country. The President has said that he agrees, even writing an op-ed in the Wall Street Journal discussing his plan to cut needless regulations. He named Cass Sunstein as his regulation czar, spent months evaluating government departments, and has come up with $10 billion in savings over the next five years. It has been estimated that government rules and regulations cost the economy approximately $1.75 trillion per year. Not to mention the mountains of new regulations being written by the EPA, and implemented by ObamaCare and the Dodd-Frank banking reform legislation.

We badly need a balanced budget in this country. It’s not all Obama’s fault, but in the last few years our national debt has jumped by trillions of dollars, and our debt-to-GDP ratio has jumped to almost 100%. This is a bad number. Really bad. When you see the economies failing in Europe, that’s because their debt-to-GDP ratios have exceeded 100%. Spending is on an unsustainable path. The credit ratings agencies have warned that we must stabilize our debt-to-GDP, and that a $4 trillion deficit reduction plan is only a “good down payment”. Where is the administration’s plan to stabilize debt-to-GDP? I can’t find it.

Well, I’ll take that one back. The President’s debt commission put together a plan to stabilize debt-to-GDP. The administration just ignored it.

It has been estimated that big business has somewhere between $2-3 trillion sitting on the sidelines, much of it kept overseas. How do we get this money back in play in our own economy? By fixing our long-term systemic problems. Only then will this money be invested into our economy. And only then, will we once again be headed in the right direction.