I watched President Obama’s speech last night and came away thinking it ws a good speech, but I don’t believe the promises. According to Reuters, President Obama said he had identified $2 trillion in budget cuts over the next decade. This is an amazing statement from someone who signed a bill last week that (including interest) will cost over $1 trillion dollars.
President Obama submits his first budget proposal on Thursday; he has vowed to halve the $1 trillion-plus annual deficit he inherited from Bush by the end of his term. He has inherited a $1 trillion annual deficit, but he just doubled it last week, and there is more to come.
President Obama has promised to let the Bush tax cuts expire and to raise taxes on only the top 2 per cent of Americans. I have a few problems with this concept. First, the Bush tax cuts were what kept the economy growning during the majority of the Bush administration. If you remember, the tech bubble burst and 911 happened early in the Bush Presidency. Either one of these events had the potential to wreck the economy–the tax cuts prevented that from happening. Second, the tax increases will only apply to people making more than $250,000 a year. Who are those people? For the most part they are small businees owners (the people who create the majority of new jobs) who report their company earnings as their income–it’s not real personal income. The people who have inherited money and put it in tax shelters–the Kennedys, the Kerrys, etc.–will not be effected by this. Only the people who actually work for their income will be effected. That is a tax increase that has a direct negative effect on job growth, and actually does not increase tax revenue. Please check out the Laffer Curve at Heritage.org to see the impact of raising taxes on tax revenue.
According to , AP News Bobby Jindal stated in his response to Obama’s speech:
“The way to lead is not to raise taxes and put more money and power in hands of Washington politicians,” Louisiana Gov. Bobby Jindal, who gave the Republican Party’s official response, said in excerpts released early. The massive economic stimulus bill recently enacted by Obama and congressional Democrats, Jindal said, will expand the government, “increase our taxes down the line, and saddle future generations with debt.”
It is not possible to grow government, cut taxes, and grow the economy at the same time. Putting more money in government is taking more money out of the private sector. This limits the ability of the economy to grow. This may (or may not) work in the short term, but our children will wonder why their employment and business opportunities are not what they were for their parents. The Obama fiscal policies are designed to appeal to the selfishness of those people who expect the government to take care of them at the expense of those of us who choose to work for a living and live responsibly.