PrintFebruary 4, 2010
What the Obama Budget Reveals
Obama's fiscal 2011 budget, totaling $3.834 trillion, provides more than just details about revenues, expenditures, and deficits. It offers the clearest road map yet as to where the president intends to lead America. What that road map reveals is not very reassuring to those who care about limited government.
The most striking fact about the 2011 budget is its sheer size. A budget of $3.834 trillion is over $12,500 for every human being, or $50,000 per family, in the country. This level of spending is nearly equal to all of the wages collected by American workers in 2010. These numbers prove that the federal government has become a monstrous beast feeding off the lives of the citizenry.
The 2011 budget also reveals Obama's thorough disdain for free-market capitalism. Given free rein, the Democratic administration would seize the profits of all public and private corporations, effectively nationalizing the economy in the way that Chávez has done in Venezuela. The 2011 budget actually goes a long way in this direction. Other than huge tax increases on individuals resulting from expiration of the Bush tax cuts, the largest increases in the Obama budget come from so-called reform of taxation on American corporations operating overseas. This, of course, includes nearly all large corporations. The annual tax increase would be $13.6 billion for this measure alone.
The administration freely admits that its proposed tax increases are "targeted." What it refuses to discuss is its rationale for deciding which groups or industries are to be hit with higher taxes and which are to see their taxes lowered.
An analysis of the proposed changes reveals their cunning and deceptive nature. As Obama has so often repeated, he proposes to limit tax increases on those earning more than $200,000 a year, though this does not rule out indirect taxation via new taxes and fees on goods and services, such as a "transaction tax" on investments. For those in upper brackets, marginal rates would increase by about 15% to 39.6%; capital gains, interest, and dividends would be taxed at a 20% rate rather than 15%; and deductions for home mortgage interest, charitable donations, and other itemized deductions would be reduced to 28%. This, however, is just the beginning. Obama would reinstate the death tax, seizing 45% of estates over $3.5 million. Obama's proposed tax increases average out to $200 billion per year for the foreseeable future, and these increases do not even address Social Security and Medicare.
So much for the upper-middle class. The middle class, for whom Obama claims to be constantly "fighting," won't find much to like in this budget, either.
So for whom was this deficit-rich budget concocted? Clearly, it was for those special-interest groups and lobbyists who supported Obama in the 2008 election. The wealth-envy crowd will applaud the $10-billion annual bank "responsibility fee." The environmental lobby will approve the $4 billion annual tax increase on oil and gas companies. Teachers' unions will appreciate the 9% increase in education funding. Low-income voters will enjoy the increase in child and earned income credits, along with extensions in unemployment benefits and an additional $100 billion in government make-work spending.
Unfortunately for the underclass and everyone else, the proposed new taxes and deficit spending increases will be passed along in the form of higher prices. If approved in anything like its current form, the 2011 budget will have increased federal spending by 30% over the 2008 figure. Obama would have us believe that this money will come right out of the pockets of "the rich." Some of it undoubtedly will, but the bulk of this spending is funded by tax increases on corporations and increases in the national debt. The cost of these tax increases will be passed down to everyone.
Obama's budgetary road map calls on spending $100 billion for new job creation, but the only significant jobs Obama has created so far are those in Washington. If $787 billion created only 65,000 jobs, how many will be created by another $100 billion? And how long will any of these make-work government jobs last? Even if Obama's massive spending were to create 100,000 jobs, what kind of jobs would these be? So far, most have been jobs within the federal bureaucracy. And what is it, exactly, that public-sector jobs produce? Lots more regulation, for one thing, and the result is a reduction of private-sector jobs that actually produce something of value.
The 2011 budget reveals just how little Obama knows about the private sector. Does the president actually believe that productive jobs can be created by federal diktat out of thin air? Obama's budget points to a dismal future in which half of the country subsists on welfare while the other half receives a paycheck for processing welfare claims in the federal bureaucracy.
Above all, the 2011 budget reveals just how reckless Obama has become. With its projected annual deficits of well over a trillion dollars, the current administration is risking a future economic meltdown for the sake of securing its own political power. Despite duplicitous talk of belt-tightening, Obama has rejected the prudent course of large spending cuts. Obama's road map points to a future in which America is overwhelmed by debt. At that point, the middle class will be working overtime just to pay interest on the national debt. None of the president's special interest groups will be faring so well, either.
Dr. Jeffrey Folks taught for thirty years in universities in Europe, America, and Japan. He has published many books and articles on American culture and politics.
