Let's Cancel The Porkulus Before it Buries Us

The Pelosi-Obama Deficits - WSJ.com: "We've never fretted over budget deficits, at least if they finance tax cuts to promote growth or spending to win a war. But these deficit estimates are driven entirely by more domestic spending and already assume huge new tax increases. CBO predicts that debt held by the public as a share of GDP, which was 40.8% in 2008, will rise to 67.8% in 2019—and then keep climbing after that. CBO says this is 'unsustainable,' but even this forecast may be optimistic."

Here's why. Many of the current budget assumptions are laughably implausible.

Need a good belly laugh? Read the assumptions behind the conclusion that we will have ONLY $9 TRILLION in deficits over the coming decade.

It is amazing that Obama's economic advisors had the gall to get on TV yesterday and try and pin these deficits on George Bush. Shameful.

We are burying our children and their children in debt. Disgraceful.

Did Porkulus Turn The Economy Around?

IBDeditorials.com: Editorials, Political Cartoons, and Polls from Investor's Business Daily -- What's The Stimulus Have To Do With It?: "Claims that higher taxes and a total of $2 trillion in stimulus, TARP and bailout spending this year have turned the economy around are unconvincing. Indeed, they're farcical.

As economist Casey Mulligan noted on the New York Times blog after dissecting second-quarter GDP data, total stimulus at the state and federal levels amounted to about $12 per person. That's stimulus?"

Unprecedented, massive monetary stimulus by the Fed is what is bringing an end to the recession. And the wealth that has been restored in the stock market is going to encourage consumers, who feel wealthier to spend more generously going forward.

But regardless of what brought about this turnaround, since we are now on the mend, why don't we cancel the rest of the $700B+ of Porkulus that hasn't been spent and put a massive dent in the growing deficit/debt picture?

Here's What I Say About Porkulus II - Son of Sham

Democrats now say they underestimated the severity of the recession and that they need to double down on the stimulus. I think it was the Wall Street Journal that pointed out the absurdity of this claim, noting how many Democrats have since last fall been calling this the worst financial calamity to hit the US since the Great Depression.

Conservatives, including Gone2TX, have been saying since the outset that the $800B stimulus bill was a sham, containing very little true stimulus, with most of that occurring in the out years. Time and the facts on the ground have shown that we were right. Less than 10% of the stimulus has been spent, and the economy has declined far more than projected by Obama's economic team when they were selling us on the need for that enormous pork barrel spending bill. In fact, unemployment now exceeds what Obama's wiz kids said it would be WITHOUT the stimulus. So much for their credibility.

Isn't it just like the left? Whenever their policies fail it was because we just didn't implement the policy on a grand enough scale. They never consider that the policy itself might be flawed. Apparently, $787B is chump change these days, and no one can expect much to be accomplished with so little "investment." So now, like Einstein's definition of insane people, we are asked to keep doing the same thing over and over, expecting different results.

We must not acquiesce to this madness. Here's what we propose instead:

We agree that the Porkulus bill didn't work. It didn't work because it did not inject enough stimulus into the economy fast enough. That is because it is dominated by Democrat spending intitiatives that won't kick in for months and years - too late to provide a kickstart to the ecomony here and now - in 2009 . So, we are prepared to go back to the table with you and figure this out. Let's pass a bunch of new stimulus measures that immediately put more money in the hands of individuals and businesses. We can do so by declaring tax holidays (e.g. capital gains) or distributing stimulus checks. Because we are ALL very concerned about the burgeoning deficit, we will cancel out a corresponding amount of out year spending in the Porkulus bill. That way, we get the immediate stimulus we need without exceeding the original $800B price tag agreed to at the outset.

Chinese Students Know the Score Even if Mainstream Media Doesn't

UPDATE 3-Geithner tells China its dollar assets are safe | Reuters: "Chinese assets are very safe,' Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.His answer drew loud laughter from his student audience, reflecting scepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home." [italics mine]

First of all - I only learned of this startling event by reference made to it in a blog at NRO. Did anybody see this on the news or read about it in their newspapers? Had Geithner been a Bush cabinet member it certainly would have been all over the front pages.

Secondly, congratulations to Reuters for reporting it, but notice the words in italics. This is not an opinion piece, but supposedly a news report. Yet the reporter claims to know the motivation for the audience's laughter, and, what's more, his theory is ludicrous. Had Geithner just said, "China is wise to practice thrift, and invest in foreign bonds," perhaps this theory might have some credibility. But Geithner wasn't commenting on the wisdom of China stockpiling foreign reserves, he was commenting on the safety of the assets that had already been stockpiled (primarily in US Treasuries). It was the assertion that the already stockpiled debt was safe which prompted the loud laughter from the audience.

Slow Learners - But Not Brain Dead

IBDeditorials.com: Editorials, Political Cartoons, and Polls from Investor's Business Daily -- Europe's Lesson: "last weekend, a Gallup Poll showed most Americans for the first time view President Obama unfavorably when it comes to 'controlling federal spending.'"

Duh!

This Stimulus Plan Could Keep America Dependent on Washington For Years To Come

Tax Increases Could Kill the Recovery - WSJ.com: "The barrage of tax increases proposed in President Barack Obama's budget could, if enacted by Congress, kill any chance of an early and sustained recovery.

Historians and economists who've studied the 1930s conclude that the tax increases passed during that decade derailed the recovery and slowed the decline in unemployment. That was true of the 1935 tax on corporate earnings and of the 1937 introduction of the payroll tax. Japan did the same destructive thing by raising its value-added tax rate in 1997."

Much as the sainted FDR dragged out the Great Depression, President Obama is on course to make this downturn last 3 or more times longer than it should. I hate to be so cynical, but I am not sure the Democrats would mind such a scenario. It worked out pretty well for Roosevelt.

Keeping Repeating the Big Lies to a Lap Dog Press Corps and EventuallyThey Turn to Accepted Truth

Charles Krauthammer - Barack Obama's 'New Foundation' - a Sting in Four Parts - washingtonpost.com:

"The Whopper: The boast that he had 'identified $2 trillion in deficit reductions over the next decade.' It takes audacity to repeat this after it had been so widely exposed as transparently phony. Most of this $2 trillion is conjured up by refraining from spending $180 billion a year for 10 more years of surges in Iraq. Hell, why not make the 'deficit reductions' $10 trillion -- the extra $8 trillion coming from refraining from repeating the $787 billion stimulus package annually through 2019."

If you need any more evidence that the media are in the tank for Pres. Obama, the fact that these ridiculous claims are not met by derision in the press corps is all you need.

Insulting the Intelligence of the American People - .0028% !!!

IBDeditorials.com: Editorials, Political Cartoons, and Polls from Investor's Business Daily -- Fiscal Nanosurgery:

"When President Obama directed his Cabinet to cut $100 million out of the budget, it looked at first like a misprint. That's barely enough to count as a rounding error.

Indeed, the only hard part about meeting the president's goal will be finding programs small enough to fit under that bar. In making the announcement, Obama talked about earning the public's trust on spending. Apparently, he thinks people put a low value on trust.

Measured against the $3.6 trillion budget Obama issued weeks ago, the cuts amount to 0.0028%."

The President thinks you're stupid enough to take this seriously.

Mainstream Reporter With a Brain and Some Guts

The Weekly Standard:

"During a White House press briefing yesterday, ABC's Jake Tapper pointed out that unemployment is right about where an Obama economic adviser predicted it would be without the stimulus.

Tapper also noted that Obama had announced the 2,000th stimulus project the day before, but it turns out that this is the 2,000th planned project. Tapper asks Gibbs: How many projects have actually been started?

Gibbs will, uh, look into it: 'I can certainly look for a number."

Way to go, Jake Tapper! This exchange with Gibbs is a most effective exposé of the sham argument that the Democrat stimulus bill and massive budgets have anything to do with jumpstarting the economy in the short term.

Investments in a Mirage

IBDeditorials.com: Editorials, Political Cartoons, and Polls from Investor's Business Daily -- 'Vision Thing' Of Obama May Just Be Mirage:

"The president's policies might, as he says, create high-paying 'green' or medical jobs. But if so, they will destroy old jobs elsewhere. Think about it. If you spend more for gasoline or electricity — or for health insurance premiums — then you spend less on other things, from meals out to home repair. Jobs in those sectors suffer.
The prospect is that energy and health costs may rise without creating much gain in benefits. That's not economic 'progress.' To rebate households' higher energy costs (as some suggest) with tax cuts doesn't solve the problem of squeezed incomes. Given today's huge and unsustainable budget deficits, some other tax would have to be raised or some other program cut.
And collective benefits?
What defines the 'post-material economy' is a growing willingness to sacrifice money income for psychic income — 'feeling good.' Some people may gladly pay higher energy prices if they think they're 'saving the planet' from global warming. Some may accept higher taxes if they think they're improving the health or education of the poor. Unfortunately, these psychic benefits may be based on fantasies. What if U.S. cuts in greenhouse gases are offset by Chinese increases? What if more health insurance produces only modest gains in people's health?
Obama and his allies have glossed over these questions."

Class Warfare

Ari Fleischer Says It's Bad for Our Democracy to Exempt Half the Country From Income Taxes - WSJ.com:

"A very small number of taxpayers -- the 10% of the country that makes more than $92,400 a year -- pay 72.4% of the nation's income taxes. They're the tip of the triangle that's supporting virtually everyone and everything. Their burden keeps getting heavier.

President Obama says they aren't paying their share. Question, Mr. President, can we put a number on what their "fair share" should be?

Open, Honest, and Transparent Budgeting

Michael Boskin Says Barack Obama's Trillion-Dollar Deficit Budget Will Impede Economic Growth - WSJ.com:

"The claim to reduce the deficit by half compares this year's immense (mostly inherited) deficit to the projected fiscal year 2013 deficit, the last of his current term. While it is technically correct that the deficit would be less than half this year's engorged level, a do-nothing budget would reduce it by 84%. Compared to do-nothing, Mr. Obama's deficit is more than two and a half times larger in fiscal year 2013."

I'm starting to miss the straight-talk of Bill Clinton. This is a great column explaining all the chicanery around Pres. Obama's budget claims.

...what is not just worrisome but dangerous are the growing trillion dollar deficits in the latter years of the Obama budget. These deficits are so large for a prosperous nation in peacetime -- three times safe levels -- that they would cause the debt burden to soar toward banana republic levels.

When Bush Did It, It Was Bad

Peggy Noonan Says Barack Obama's Domestic Policy Gains Definition - WSJ.com:

"I happened to be rereading the economics section of Mr. Obama's second book, 'The Audacity of Hope,' when I read the Bloomberg story. He scores President Bush for contributing to a national debt that amounted to a $30,000 bill for each American. Those were the days!"

Obama has already piled up $42,000 debt per capita in just a couple of months. Audacity in deed.

Pay No Attention to All Those Red Lines - After All I Inherited a Deficit

Projected Deficit - washingtonpost.com
http://www.washingtonpost.com/wp-dyn/content/graphic/2009/03/21/GR2009032100104.html

At his press conference, the President repeatedly evaded answering questions about whether he was sticking our children with paying for our overspending. As I recall, his arguments were:

1) I inherited a big deficit. How that justifies going on to triple the deficit you inherited totally escapes me.

2) It's either do what I propose or do nothing. STRAW MAN ALERT. There really is no course of action somewhere between doing nothing and running up $9.3 TRILLION in deficits?

3) If we don't spend all this money on education and healthcare, there's no way our economy is going to grow at even 2% HUH? Which economy has been the growth engine of the world, the US, or the European socialist states Pres Obama wants to turn us into? And how does throwing more money at our woefully inefficient education system, without reforming it, promise to generate any return on our "investment?" Thus far, federal spending on education has been pretty much inversely related to the global competitiveness of our education system.

Europeans to America - You're Spending Like Drunken Europeans

EU presidency: US and UK economic recovery plans are 'a way to hell' - Telegraph:

"Mr Topolanek warned the European Parliament that the Obama administration's stimulus package and financial bail-out 'will undermine the stability of the global financial market'.

”All of these steps, these combinations and permanency is the way to hell,” he told Euro-MPs in Strasbourg

”We need to read the history books and the lessons of history and the biggest success of the EU is the refusal to go this way.”"

I think the Europeans are getting really freaked. For decades its been the hard-charging capitalist economy of the US that has been the growth engine of the world. Who's going to take over that role if Pres Obama turns us into a pseudo-european social democratic welfare state?

Another Slow Learner Is Catching On to the Implications of the Obama Agenda

Bonfire of the Inanities - The Daily Beast:

"In the midst of this bonfire of inanities, President Obama
is pressing ahead with a $3.6 trillion budget, predicated on utterly unrealistic
economic growth, even as the Congressional Budget Office is now projecting that
this year’s deficit will soar past $1.8 trillion, 13 percent of the US economy.
This would amount, as the Washington Post reports, to “the deepest well of red
ink since the end of World War II.” According to the Post, the CBO is warning,
ominously, that the result of this kind of borrowing and spending could lead to
an exponentially expanding national debt that would “exceed 82 percent of the
overall economy by 2019.”"

Chris Buckley was one of the marquee name "conservatives" who broke for Barack Obama during the presidential campaign. Obviously, he is having second thoughts.

Lest you take any comfort that these deficits have a precedent in the WWII era, remember, when WWII ended, we stopped spending money on it. There is no end in sight to the spending Pres. Obama is piling on in the stimulus plan and the FY2009 and FY2010 budgets. The expansions of government programs and entitlements enacted today will be nearly impossible to pare back down the road.

Votes of No Confidence Coming From the Left As Well As The Right

Despair over financial policy - Paul Krugman Blog - NYTimes.com:

"This plan will produce big gains for banks that didn’t actually need any help; it will, however, do little to reassure the public about banks that are seriously ndercapitalized. And I fear that when the plan fails, as it almost surely will, the administration will have shot its bolt: it won’t be able to come back to Congress for a plan that might actually work.

What an awful mess."

The erosion of confidence in the administration continues.

How Long Before the Purge at the CBO?

News Headlines - $1 trillion deficits seen for next 10 years : Townhall.com:

"President Barack Obama's budget would generate deficits averaging almost $1
trillion a year over the next decade, according to the latest congressional
estimates, significantly worse than predicted by the White House just last
month.
The Congressional Budget Office figures, obtained by The Associated
Press Friday, predict Obama's budget will produce $9.3 trillion worth of red ink
over 2010-2019. That's $2.3 trillion worse than the White House predicted in its
budget.
Worst of all, CBO says the deficit under Obama's policies would
never go below 4 percent of the size of the economy, figures that economists
agree are unsustainable. By the end of the decade, the deficit would exceed 5
percent of gross domestic product, a dangerously high level."

The only surprise here is that the CBO is still free to make and publicly release honest analysis of government economic policy.

Friendly Fire Shows Obama Losing Focus

IBDeditorials.com: Editorials, Political Cartoons, and Polls from Investor's Business Daily -- Friendly Fire Shows Obama Losing Focus: by Michael Barone

"We did not have a housing bubble collapse because we don't have a national health insurance program. We don't have toxic waste clogging the balance sheets of the banks and other financial institutions because of carbon emissions. The Bush tax cuts were not a proximate cause of the giant public debt being run up under the Toxic Assets Relief Program or the 2009 stimulus package.

And, as Galston points out, the New Deal doesn't provide a precedent for the Obama budget. In his first months in office, Franklin Roosevelt concentrated on repairing a financial system that was in much worse shape than ours is today, with most banks closed. Roosevelt got most of them open and running again.

It was a couple of years later that the programs we remember the New Deal for were passed —"

We must begin to explain to Obama supporters and on-the-fencers that this guy is playing a shell game with the American people.

The Indispensible Man Gets It Wrong Again

Geithner Cool to Suspending Mark-to-Market - WSJ.com:

"WASHINGTON -- U.S. Treasury Secretary Timothy Geithner said Thursday that some proposals to temporarily suspend mark-to-market accounting rules could lead to an erosion of the market's ability to assess risks at banks.

The comments would seem to suggest that Mr. Geithner would be opposed to a suspension of those rules, although he wouldn't expressly say so, noting it would be the decision of the U.S. Securities and Exchange Commission to do so."

We pour money into banks, who can't lend it out because mark-to-market rules make them hoard it. So then the banks come back to us for more money...

De-linking mark-to-market from reserve requirements (allowing them to lend based on a more reasonable estimate of the value of their assets) doesn't preclude us from requiring the banks to provide us with mark-to-market accounting of their assets as yet another means to evaluate their health.