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Saturday, January 30, 2010

The Joker Is In DC

The Joker has taken over DC. Well, not really, it's just President Obama. He touted the {false} 5.7% increase in GDP last quarter as a good start to recovery. He failed to acknowledge that the growth occurred at the wholesale level, with manufacturers cleaning out their warehouses on the cheap to fatten their end of year bottom lines. Retail sales, and wages, housing sales and auto sales weren't up enough for the 5.7% to be a real indicator of recovery.

After talking about the increase in GDP he went into comedian mode, talking about how cutting the deficit was as important as growth in our recovery. He's correct, but what's funny is he's no proposing anything that will do it.

His first proposal, offered up right before the State of the Union address is a "discretionary spending" freeze that only affects about 1/2 of discretionary spending, and only adds up to about 1% of his projected budget deficit.

His second statement is that the 1990's "Pay-Go" program has to be brought back. Funny, Mr. President, but your party promised us that 3 years ago when they were sworn in as the leaders in Congress. It supposedly happened, too, except that it's got so many holes in it Swiss Cheese is jealous. Now evidently they really mean they are going to raise taxes cut some spending to pay for every new program. Starting in 2011, probably, with the programs passed in 2010.

Finally, the toothless "Presidential Commission" on spending cuts, that would come up with ways to trim the deficit and present them to Congress; where by law, they can have no force, and be ignored.

As Charlie Sykes often says, when you are a politician, and want to look like you are doing something about a problem, you appoint commission.

The original idea was a bipartisan Congressional group, that would have presented the cuts and taxes increases as an up or down vote bill to both chambers, with no changes. Like the base closing commissions of the 1990's. The problem was Democrats didn't want to go on record acknowledging that Social Security and Medicare are unsustainable, and the GOP didn't want to give bipartisan cover to huge tax increases. So that idea died in the Senate.

The truth is that if the deficit is to be reduced even to George W. Bush levels social programs are going to have to be part of the equation, they are the majority of the budget at this point. There will also have to some targeted tax increases, also. Who knows, maybe the 40% of filers who pay a negative income tax (they get more back than they pay) will have to see their tax refunds welfare checks reduced a little bit by trimming the generous Earned Income Tax Credit.
If the President is serious, he'll have to come up with a new budget for FY 2011, one without 1.4 trillion in red ink. At least if he wants anyone to believe he's serious. Because you have to ask yourself, if 2009's 1.3 trillion deficit was due to the $850 billion dollar stimulus, why does 2010, without a stimulus have a bigger deficit? Where'd all that money go this year?

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