The State of the Union
I listened to most of Barack Obama’s State of the Union address last night while driving home from the airport. I felt like Rep. Joe Wilson on steriods, saying out loud (though not shouting in my car), “You lie” more than once.
There are dozens or hundreds of reactions to the speech available for you to find on the web, but just a couple of points which I want to emphasize:
Obama’s “spending freeze” is a joke. He massively increased “discretionary” spending over the past couple of years and now wants to “freeze” it at that level. It’s as if you went from buying wine in a box to buying expensive Barolo and now claim savings by saying you won’t move up from there to Lafite Rothschild. (I guess that analogy tells you what I enjoy in life…)
Furthermore, he plans to insulate from spending cuts those parts of the budget which are actually bankrupting the country.
Ed Lazear explains the reality of Obama’s claims and our nation’s fiscal situation in an important piece for the WSJ. Here’s a taste:
Despite all the talk about deficits, the irony is that we are in little danger of eliminating or reducing the federal deficit. Mr. Obama’s target is to lower the deficit to 4% of GDP by 2013. That is twice the level of the Bush deficit in the average year and larger than any Bush-year deficit. During President George W. Bush’s term, the ratio of federal spending to GDP averaged 20%. Mr. Obama’s budget aspires to reduce the spending ratio to 23% by 2013 from 24% today.
It is true that Mr. Obama inherited much from his predecessor, as the president and his surrogates are wont to remind us. There is no doubt that when the new team came in, the economy was in a deep recession and job losses were large. He inherited an unemployment rate that was over 7%. It now stands at 10%. The job growth that was the promised outcome of the $787 billion stimulus bill has not materialized. And when job growth returns and unemployment falls, it will owe little to the stimulus.
Consider the legacies Mr. Obama will leave his successor. He grew the deficit that he inherited. He grew the government spending ratio that he inherited. And he has already promised to repeal the low tax rates that he inherited. At this point, the question is how much and what form the tax increases will take. Part of the Bush legacy includes low personal tax rates, an average ratio of taxes-to-GDP of about 18%, low rates on capital gains, and a period of low estate taxes.
Obama also spoke of openness and transparency. This is the guy who promised health care negotiations on C-SPAN as part of promising the most transparent administration in history. Instead, he permitted and encouraged Harry Reid and Nancy Pelosi to negotiate behind closed doors, out of the view of Republicans or the public.
Obama spent a lot of time talking about “green energy” or “clean energy". These are businesses that would not exist without transfering money to them from taxpayers. As I’ve written about before, a major study in Spain argues that each “green job” created destroys two private sector jobs because of the tax hikes required to subsidize those politically correct “green jobs". It was somewhere between brave and stupid for Obama to mention the “settled science” of climate change after many weeks of news regarding lies, exaggerations, and possibly even crimes committed by global warming alarmists. Never forget that “cap and trade” is nothing more than the left’s way to get government’s hands on every aspect of our economy. Nothing less, nothing more.
Obama continues to attack banks in a way which would make Saul Alinsky proud…and make a logician pull his hair out. Obama said that banks should pay a new tax because taxpayers bailed out the banks. But the banks have already paid back the bail-out money with dividends/interest, and many of the banks didn’t want the money to begin with. So, on one hand, Obama lies when he suggests that banks still owe taxpayers money but then he goes on to day he wants to divert some of the money which banks have repaid in order to fund a new “jobs bill". Obama is trying to make voters think that once he’s taken money out of our wallets, that money is permanently available for the government to use even though he told us it was a loan, not a tax or theft, when he took taxpayer money the first time.
I would also point out that this is basically an increase in the corporate income tax (on one type of corporation). There are few taxes as economically destructive as corporate income taxes. Obama’s attack on banks is a boneheaded but utterly predictable ploy for a disciple of Saul Alinsky.
Obama said he understands that the private sector is where jobs are created and then spent too long touting more lies about how many jobs the “stimulus” bill created. It’s worth noting that even if he were close to correct, almost all the jobs “created or saved” were government jobs, either temporary or permanent, which will add to the long-run cost of government and the tax burden on our children and grandchildren.
I was pleased to hear Obama call for a single web page repository for all earmarks. I doubt Congress will go along, but it’s a good (even if not a new) idea.
I was pleased to hear Obama mention offshore drilling and nuclear power, but again I doubt Congress will go along, at least not until we see $4 or $5 gasoline again.
If we learned anything from last night, it’s that I was right a few days ago when I said that Obama is not and will not be a “triangulator". He believes in his radical agenda and in aggressive take-no-prisoners tactics to achieve it. He will not give up on his dreams of a society utterly dependent on government until his last breath, and he will personally be comfortable losing his election for his second term much in the same way that a jihadist is comfortable with the idea of martyrdom for their own radical beliefs.
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