Monday, February 14, 2011

President Obama's Budget Loses the Future

President Obama released his FY2012 budget proposal yesterday. As Governor Palin pointed out, it is heavy on tax increases and low on the necessary serious cuts needed to address our nation's dire fiscal situation. In fact, his proposed budget includes 15 new tax hikes. Ever since the 2008 presidential campaign, President Obama has promised to not raise taxes on those making less than $250,000 a year. However, these proposed tax hikes could affect people making less than $250,000 a year, including increased capital gains taxes and death taxes, which includes decreasing the exemption amount for death taxes to $3.5 million. Ask any farm family in Illinois, that state President Obama once represented, how quickly their acreage (which provides their livelihood) adds up to a value of $3.5 million.

Beyond these things, one has to ask themselves, how does President Obama's budget truly win the future? While Obama's OMB director claims that his budget provides $1.1 trillion in deficit savings over the next decade, Republicans claim that the accounting gymnastics of the Obama administration really primarily indicate the $400 billion in reductions over 5 years of discretionary spending freezes at today's levels. However, as Governor Palin, as suggested in her Facebook post following President Obama's State of the Union address, spending cuts, not spending freezes, are needed (emphasis mine):
The President glossed over the most important issue he needed to address last night: spending. He touched on deficit reduction, but his proposals amount to merely a quarter of the cuts in discretionary spending proposed by his own Deficit Reduction Commission, not to mention the $2.5 trillion in cuts over ten years suggested by the Republican Study Committee. And while we appreciate hearing the same President who gave us the trillion dollar Stimulus Package boondoggle finally concede that we need to cut earmarks, keep in mind that earmarks are a $16 billion drop in the $1.5 trillion ocean that is the federal deficit. Budget cuts won’t be popular, but they are vitally necessary or we will soon be a bankrupt country. It’s the responsibility of a leader to make sure the American people fully understand this.
While the deficit may be reduced over the next decade, the overall debt will nearly double over the next decade to $7.2 trillion dollars and the deficit held in 2011 will reach a record high of $1.645 trillion, as stated by the Heritage Foundation assessment referenced in Governor Palin's note yesterday. Spending freezes, accounting gymnastics, tax increases, and record high deficits and debt do nothing to derail the bullet train to bankruptcy, but only stoke the fires of the train's engine.

President Obama's budget also does not address entitlement programs as his deficit commission, Congressman Ryan, and Governor Palin suggest. Governor Palin wrote following President Obama's State of the Union address:
On the crucial issue of entitlement reform, the President offered nothing. This is shocking, because as he himself explained back in April 2009, “if we want to get serious about fiscal discipline…we will have to get serious about entitlement reform.” Even though the Medicare Trust Fund will run out of funds a mere six years from now, and the Social Security Trust Fund is filled mainly with IOUs, the President opted to kick the can down the road yet again. And once again, he was disingenuous when he suggested that meaningful reform would automatically expose people’s Social Security savings to a possible stock market crash. As Rep. Paul Ryan showed in his proposed Roadmap, and others have explained, it’s possible to come up with meaningful reform proposals that tackle projected shortfalls and offer workers more options to invest our own savings while still guaranteeing invested funds so they won’t fall victim to sudden swings in the stock market.

President Obama's spending freezes and limited spending cuts, namely cuts to defense and some cuts to various government programs, only address discretionary spending. However, Presdient Obama's lack of both political courage and fiscal discipline in reforming non-discretionary entitlement programs indeed "kick the can down the road", as Governor Palin said. Instead of winning the future, President Obama is losing both the present and the future by ignoring the need to reform of the legislation of the past. How can the future be won if the present debt is equal to the present economy? How can the future be won if future generations are burdened with the cost of unreformed entitlement programs?

One area where President Obama has increased spending is education, to the tune of more than $77 billion, an 11% increase. Department of Education secretary Arne Duncan suggests that in order to win the future, America needs to "out-educate" other developed nations so children would be prepared for the "jobs of tomorrow" and this, of course, requires increased federal spending for education. However, as Governor Palin said:
Take education for example. It’s easy to declare the need for better education, but will throwing even more money at the issue really help? As the Cato Institute’s Michael Tanner notes, “the federal government has increased education spending by 188 percent in real terms since 1970 without seeing any substantial improvement in test scores.” If you want “innovation” and “competition,” then support school choice initiatives and less federal control over our state and local districts.
Governor Palin would know that state and local entities know best how to address education. As Governor of Alaska, she forward funded education on the state level so that districts at the local level could plan ahead appropriately for their own districts. She also recognized importance of more localized assessment and control by forgoing federal standards for the sake of Alaskan developed standards that had an emphasis on rural education, something that a federal standards would not appropriately address. In May of 2009, Governor Palin said:
The State of Alaska fully believes that schools must have high expectations of students. But high expectations are not always created by new, mandated federal standards written on paper. They are created in the home, the community and the classroom.
Governor Palin understands that more federal spending on education does not win the future for American children, but state and locally funded and controlled education is most responsive to America's future--children-- and most responsible of America's fiscal future. Allowing a massive debt to grow by selectively freezing spending does not win the future, but steals from the future. An unwillingness to reform entitlements does not win the future, but forces future generations to make tough decisions that the current generation should address. Governor Palin promotes sharing true American exceptionalism with future generations as the way to win the future, not passing on the financial burdens of larger government and greater spending.

Crossposted here, here, here, and here.

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