February 8, 2010
With the financial mess that President Obama is trying to deal with, everyone and their brother (and sister) is coming out with ways for the President to cut spending. However, those with the “advice” are making sure their “goodies” are not included in the cuts. Obama has identified several items, but those cuts aren’t going to go very far in achieving the necessary goals. Two things have to happen: unimaginable spending cuts and sizable tax increases. Why the public is not accepting that already is very puzzling, other than the fact that partisan politics, the game of the century, is trumping the debt. The only real roadblock Obama is going to run in to is the Republicans sacred cow — corporate welfare. But that’s the very first thing that must go.
In spite of the monstrous Bush tax cuts over eight years, the country lost millions of jobs. That alone should be enough to open the eyes of those blind supporters who insist that anything the Republicans do is fine by them just as long as it’s anti-Democrat. But evidence is popping up that says corporations will spend money with or without tax cut — but only when the market demand is there.
Texas Instruments, Intel, Applied Materials, EMC, General Electric and Rockwell Automation are about to embark on a capital spending spree that will create jobs. Oracle also announced they are about to begin new hiring rounds, and Cisco said they had already been hiring and are about to hire another 2,000. And although hiring traders can only be loosely described as building the economy, Morgan Stanley said they will be hiring hundreds too. But every single one of them are quoting market demands as the reason. While the majority of the announcements are great for the economy, it doesn’t speak too well for the likes of Rep. John Boehner, who was on the cameras immediately after the budget release insisting that more corporate tax cuts was the magic fix-all for everything.
Regardless of the reason for the massive deficit and debt, it has to be reduced at any cost. However, even if the Obama administration had added no money to the debt, we’d still owe $11.5 trillion of the $12.5 trillion debt. In fact, an aggressive anti-Democrat news source, CNBC, is even admitting that the recession is the top factor in swelling the budget deficits.
There are many things that can be cut from the budget in an effort to bring the deficit under control and start paying down the debt. Not to bring up an old slogan, but a lot of hard choices have to be made, including by the taxpayer. Every American will have to sacrifice. The hard part will be getting our elected officials to give up what they want — “feeding” the taxpayer in order to get re-elected, and “feeding” the corporations in order to provide for their future once they’ve left office.
Although others have done so already, the Old Man is in the process of putting together a detailed report of the 2011 budget. It will be posted in a couple of days or so, separated into the 27 major departments just as the Congressional Budget Office publishes it. Once on line, a new post will be published with links to them.
Bill Clinton came into office with the debt and deficit mess that Ronald Reagan and George H.W. Bush left him and had to make some very unpopular decisions — which worked. Now Obama has been caught in the same trap, once again created by a Republican President. Of course, the Republicans have inadvertently discovered this as a way to kill any Democrat efforts — run up the debt and deficit like hell while in control, then, when they’re run out of office, embark on a campaign to “fix” the problem by blaming the Democrats. Great strategy if you can get away with it, and it certainly appears they are, as a major portion of the voters have bought into that strategy.
Never underestimate the difficulty of changing false beliefs [with] facts.
Economist Henry Rosovsky