Our debt issue .. not worthy of Obama’s time

Out of the gate … let’s recognize the fact that South Carolina Democrat Representative James Clyburn is a loon. Over the years there has been no shortage of absurdities coming from this character. To know Clyburn and his district is to know that he was not elected on the basis of intellect or ability. Clyburn is in the news again because he is upset that Barack Obama is going to be wasting his valuable time this week in meetings over our national debt. Clyburn said over the weekend, “We can’t have the President sitting in these meetings, three and four hours every day, when all of these other things are happening around the world. The president has much more to do with his time, and that’s why you have a Vice President.”

Not important enough? Here’s an excerpt from a Weekly Standard article:

The [Congressional Budget Office] now says debt will be 101 percent of GDP in 2021—that is, a decade from now our debt will be larger than our economy, and still growing quickly. By 2030, CBO projects debt will top 150 percent of the economy, and by 2037 it will be 200 percent and growing. At that point, the federal government would be spending almost a tenth of the nation’s GDP on interest payments alone, up from 1 percent today.

Maybe it is just me, but this issue of our national debt is perhaps the second most important crisis facing our nation*. What is happening around the world that is so important that the president can’t spend his precious time negotiating the future of our Republic?

Apparently Obama thinks he has the time to at least direct some of his famed eloquence toward this issue. In his weekly radio address over the weekend, our Ruler’s script read: “there’s been a real debate about where to invest and where to cut.” Let’s stop right there to get a few things straight …. When Barack Obama or any Democrat talks about “investing,” what they are really talking about is spending money that the government doesn’t have. There’s another word in the Democrat budget debate that you need to be aware of … “new revenues.” This is also a fancy way of saying “tax increases.”

But now that we understand the language of the Democrat budget lexicon … let’s go back to Obama’s address over the weekend. He says that we must “invest” in education, infrastructure and new technologies. Let me just give you a few little reminders.

On education .. where is the statistical proof that “investing” in education will do anything to better our education system? Fact is, there is none. Take a look at this report from the Heritage Foundation, about government education from 1980-2001.

* Total expenditures by the U.S. Department of Education for all K-12 students have nearly doubled, in constant dollars, just since the 1980s, from $14.8 billion to $27.1 billion;, … but ….
* Reading and math scores on the National Assessment of Educational Progress (NAEP) have changed relatively little over that same period, despite the enormous increases in spending at the federal, state, and local levels. Last year, for example, some 68 percent of 4th graders still could not read at a proficient level.

On infrastructure spending .. are you telling me that $787 billion wasn’t enough? Since Barack Obama’s stimulus plan was enacted, there are 1.9 million fewer Americans working and our unemployment rate sits at 9.1%.

On investing in new technologies .. Barack Obama announced a new $500 million initiative “to join the federal government, universities and corporations and re-ignite American manufacturing with an emphasis on cutting-edge research and new technologies.” What happens when the government gets its money involved in specific industries? It crowds out the private sector and actually does more harm than good. Don’t believe me; believe this Harvard study, which looked at the effect of government stimulus spending over a 40-year period. The study essentially monitored companies within states that saw a targeted increase in federal funding. Here were the results:

In response, the average firm in the median state cut its employment growth rate by 3% to 13%, reduced capital expenditures by approximately 15% or $39 million, R&D expenditures by roughly 10% or $34 million and experienced a decline in sales. They also increased their dividend payouts by 13%, suggesting fewer investment opportunities. These results were even more pronounced for firms within industries targeted by the Federal spending and for firms that did not have overseas operations, and therefore were more exposed to the effects of the increase in Federal spending on their home state’s economy.

The hardest thing for Obama and the Democrats to realize is that they are not a part of the solution. Businesses do not want more government or its money .. they just want government to get the hell out of the way.

*Oh … so you noticed the asterisk, did you? I said that the second most important question facing this country might well be our national debt and the debate on raising the debt ceiling. What’s first? The most important crisis we face in America is that we have an electorate ignorant enough to put someone like Barack Obama in office in the first place. People are wondering if we can survive our debt crisis. I think it’s more important to ask whether or not we can survive these voters.

I know … let’s spend some more money!

Yesterday the CBO rocked the news cycle by releasing new estimates on our future fiscal situation. It wasn’t pretty, though that shouldn’t come as a shock to you. The CBO released what is being referred to as a more “politically-realistic alternative scenario.” So these numbers are based on what the CBO expects to happen in the future: the Bush tax cuts will be extended and Medicare spending will not be cut.

So what was the result of these new numbers?

Federal debt as a share of our GDP will be 109% by 2021. By the year 2035, it will be closer to 190% of GDP.

Wow. How in the world did we get to this point? Well Barack Obama surely didn’t help. His own stimulus plan managed to nearly DOUBLE our debt. The Washington Examiner reports:

The 2011 Long-Term Budget Outlook, released Wednesday morning, reports that the “the combination of automatic budgetary responses” and Obama’s stimulus “had a profound impact on the federal budget.” According to CBO projections, before Obama’s stimulus became law, federal debt equaled 36 percent of GDP and was projected to decline slightly over the next few years. Instead, thanks in large part to the stimulus, debt reached 62 percent of GDP by 2010.

So in the wake of this news about our debt, what are the Democrats planning to do? They have two ideas.

#1: Spend more money. No, this is not a joke. A headline from Reuters, not from the Onion, reads: Democrats call for new spending in US debt deal. Yesterday, Democrats in the Senate called on Joe Biden to include “new economic stimulus spending” in his deficit reduction talks. You just read the information above … Barack Obama’s grand stimulus plan nearly DOUBLED our debt, and what do we have to show for it?

#2: Increase taxes. Because the CBO numbers assume that the Bush tax cuts will be extended, the Democrats immediately claim that if it wasn’t for the Bush tax cuts, these CBO estimates wouldn’t be nearly as dire. Guess what, they would be. According to the CBO’s own alternative scenario, even if the Bush tax cuts are extended along with the Alternative Minimum Tax, “federal revenues as a share of GDP will still exceed the post-war average by the decade’s end.” Even if the Democrats managed to repeal the Bush tax cuts, therefore increasing taxes on millions of Americans … would that solve our debt crisis? Of course not!

‘Cut it or Shut it!’: Tea Party Says No to Budget Compromise at DC Rally Today

Jenny Beth Martin looked out on the rain-dampened crowd along Constitution Avenue and pointed over her shoulder at the Capitol.

“They heard us, but they’re not listening!” Martin, a tea party leader, told members of the movement that helped put Republicans in charge of the House last November.

The crowd booed.

Four months after the historic election, the populist force that helped drive Republicans to power is finding that its clout on Capitol Hill isn’t automatic.

What brings you out today, one tea party member was asked. “Saving our country, obviously.”

Sensitive talks over how many billions of dollars to cut from this year‘s federal budget have strayed far below the Republicans’ campaign promise to slash $100 billion. Rather than standing firm and allowing parts of the government to shut down until enough lawmakers came around, House Speaker John Boehner was doing exactly what the tea partiers thought they had elected Republicans to avoid: negotiating with President Barack Obama and Senate Democrats over spending cuts.

“Cut it or shut it!” chanted the crowd outside the Capitol on Thursday.

“I’m not talking about $5 billion or $6 billion or $10 billion. I’m talking about $100 billion,” said one tea party activist (seen in the picture above), speaking of the budget cuts. According to the AP, $10 billion has been cut so far.

Among those not balking were some of the 87 freshmen Republicans, who more than anyone in the House owe their seats to the tea party juggernaut.

Read more here.

Tea Party Movement Growing Weary of GOP Budget Plan

As U.S. lawmakers seek a compromise on how much federal spending to cut in order to avoid a government shutdown, Tea Party activists who helped propel Republicans back into power are growing impatient with the debate.

When Republicans captured the House in November, vowing to slash $100 billion in federal spending from the budget year ending in September, 76 percent of Tea Party activists supported their deficit-reduction plan, according to a new Pew Research poll released last week.

But after House Republicans approved a plan last month to cut federal spending by $61 billion, that Tea Party support fell to 52 percent.

Now Tea Party Nation founder Judson Phillips, arguably the most vocal critic of GOP leaders, is pushing for a primary opponent against House Speaker John Boehner in 2012 for breaking his campaign pledge to cut $100 billion and for what he sees as hints that he’s willing to cut less than $61 billion in a compromise with Senate Democrats.

“Charlie Sheen is now making more sense than John Boehner,” Phillips wrote in his blog earlier this month.

In an interview with FoxNews.com Thursday, Phillips said he stands by his comments and goal of seeking a primary challenger to Boehner.

“Charlie Sheen still makes more sense than John Boehner because at least Charlie Sheen is winning,” he said.

“This is the one message the Tea Party needs to be out there pushing,” he said. “If you don’t live up to your promise, we’re going to throw you out.”

Read more here.

Revolution is Here

How delicious is irony, how fickle fate?

Just a little more than two years ago, liberals were ecstatic about Barack Obama’s election and Democrats’ control of Congress. Liberal pundits were all atwitter about the brand new Democratic Era that voters had ushered in. America would finally become what America should have been years ago: a European-style social democracy.

Boy, did Democrats misread their mandate! With very little hindsight needed, it’s apparent to all but ideologically-blinkered liberals that the Democrats’ gross overreach isn’t what voters wanted or expected. Voters wanted a redo of the Clinton years. Instead, in the person of Barack Obama, voters got an amalgam of FDR and LBJ with a dash of Neville Chamberlin thrown in.

But here’s the real kicker. Two years of Obama-Reid-Pelosi overreach and excesses may have been the table-setter for the real revolution now unfolding. Voters and taxpayers first needed to see the irresponsibility and recklessness of unalloyed liberalism to appreciate that conservative government is far superior. Thank you, Barack Obama, Nancy Pelosi, and Harry Reid.

Of course, the real revolution began last year with the 2010 midterm elections. Yes, the GOP made the largest gains in U.S. House seats since 1948. But the underappreciated story is that the GOP racked up huge gains in state legislative contests, and further down ballot, Republicans swept plenty of local offices. State legislatures control congressional redistricting. Republicans now dominate enough key statehouses to lock-in GOP congressional electoral advantages for a decade.

Had voters limited their ballots to throwing out the rascals in Congress, a fair argument could be made that 2010 was just a protest vote — an attempt by voters to shake up the Democrats. But when voters drill down to change party control of legislatures, city halls, and county commissions, you can bet that they’re thoroughly repudiating the party in power. The 2010 repudiation of Democrats was a clear expression of what voters did and didn’t want from government.

Move now to the present time. Republicans are on the march in Congress. Late last week, House Republicans passed a budget bill containing $61 billion in cuts. It’s not the $100 billion that conservatives aimed for, but it’s substantial and can be considered a down payment. The House Republican proposal now goes to the Senate. The budget process wrangling is just in its first phase. Moving forward, the GOP will have multiple opportunities to push more cuts.

Read more here.

America is Flat Broke

The daunting tower of national, state and local debt in the United States will reach a level this year unmatched just after World War II and already exceeds the size of the entire economy, according to government estimates.

But any similarity between 1946 and now ends there. The U.S. debt levels tumbled in the years after World War II, but today they are still climbing and even deep cuts in spending won’t completely change that for several years.

As President Obama and Republicans squabble over whose programs to cut and which taxes to raise, slow growth and a rising tide of interest payments – largely beyond their control – are making the job of fixing the budget much harder than in the past. Statehouses and governors face similar challenges.

After World War II, the federal debt – including debt purchased by the Social Security Trust Fund – hit nearly 122 percent of gross domestic product. State and municipal debt back then was minimal. By the time Dwight Eisenhower was elected president six years later, the federal government’s debt had dipped to about three-fourths of GDP.

The key factor in the rapid drop in government debt, said Harvard University economist Kenneth Rogoff, was fast economic growth. Spurred by a young labor force, world-leading manufacturers, high personal savings rates, a pent-up demand for consumer goods after years of war and the Depression, and a bout of inflation, the economy grew 57 percent in six years. Thanks to sharp postwar cuts in defense outlays, federal government spending also tumbled for a couple of years.

But today the U.S. economy is in a polar opposite condition. The labor force is aging, U.S. manufacturing often lags behind Asian and European rivals, households are in hock up to their eyeballs, and consumer appetite for goods is tepid. In addition, inflation is tame and government spending locked into entitlement programs and debt service that will be hard or impossible to alter.

Read more here.

Debt now equals total U.S. economy

President Obama projects that the gross federal debt will top $15 trillion this year, officially equalling the size of the entire U.S. economy, and will jump to nearly than $21 trillion in five years’ time.

Amid the other staggering numbers in the budget Mr. Obama sent to Congress on Monday, the debt stands out — both because Congress will need to vote to raise the debt limit later this year, and because the numbers are so large.

Mr. Obama‘s budget said 2011 will see the biggest one-year jump in debt in history, or nearly $2 trillion in a single year. And the administration says it will reach $15.476 trillion by Sept. 30, the end of the fiscal year, to reach 102.6 percent of gross domestic product (GDP) — the first time since World War II that dubious figure has been reached.

In one often-cited study, two economists have argued that when gross debt passes 90 percent it hinders overall economic growth.

The president’s budget said debt as a percentage of GDP will top out at 106 percent in 2013, but only if the economy booms.

“I still don’t see a sense of urgency from the president about the massive federal debt,” said Sen. Lamar Alexander, Tennessee Republican. “His budget calls for too much government borrowing – even though the debt is already at a level that makes it harder to create private-sector jobs.”

Speaking on MSNBC on Monday, Jacob “Jack” Lew, the White House budget director, said their long-term plan to lower deficits will stabilize the debt.

Read more here.

Greek disease in the House

By: Larry Kudlow

One day Team Obama announces a plan for enhanced rescission authority to impound wasteful spending, and the next day the House surfaces a plan for $200 billion in “stimulus” spending on transfer payments for welfare, even more unemployment compensation, still more Medicaid and a bunch of special-interest subsidies.

So are we to believe that President Obama will rescind the excess appropriations? Hardly. And since pay-go is dead, most of this new spending will not be offset. It will add to deficits and debt.

It’s the Greek disease. The welfare state run amok. Right here at home.

And in true class-warfare style, a small portion of the $200 billion is supposed to be offset by jacking up capital-gains taxes for investment partnerships. If passed, this would reduce investment, jobs and economic growth, and enlarge the deficit. Higher spending and investment taxing is a true austerity trap.

This business of raising the tax rate on investment partnerships would be a particularly onerous burden on American entrepreneurs. And it would put this country at a decided disadvantage to our competitors in China and elsewhere in Asia (outside of Japan).

Increasing the tax rate on the investment portion of these partnerships (i.e., the capital gains) would boost the penalty rate from 15 percent to 38 percent — and that includes the Obamacare payroll tax on investment scheduled for 2013.

So, instead of keeping 85 cents on the extra dollar earned from high-risk investment, the House proposal would drop the return to only 62 cents — a whopping 27 percent incentive rollback. And by the same amount, it would raise the cost of new capital, draining investment liquidity from the private sector in order to finance government transfer payments.

Nothing could be worse. This is spread-the-wealth in its most crass form.

And if all that weren’t bad enough, the House proposal would tax the so-called enterprise value of these firms by applying the same penalty-rate structure on the sale of all or part of an investment partnership. In other words, it would make real-estate, venture-capital and private-equity firms the only businesses in the country that are ineligible for long-term capital-gains treatment when they are sold in full or part.

One private-equity partner tells me that this would “tear apart the incentives for innovation that have been at the foundation of American enterprise since 1921, when the capital-gains differential vis-a-vis ordinary personal tax rates was first created.”

Compounding matters, we read in USA Today this week that private-sector personal incomes are at an all-time low, while government benefits as a share of income stand at an all-time high. I believe this is called redistribution.

And then comes a study from the Harvard Business School that states: “Stimulus Surprise: Companies Retrench When Government Spends.” What a shocker. (Hat tip to economist Don Luskin.)

House Democrats apparently don’t read newspapers from Greece or the United States. And they sure don’t read Harvard B-School studies.

Examiner Columnist Larry Kudlow is nationally syndicated by Creators Syndicate.

Read more at the Washington Examiner: http://www.washingtonexaminer.com/opinion/columns/Greek-disease-in-the-House-95119989.html#ixzz0pFxlB7Mp

Is America Now A Welfare Nation?

In this photo taken Thursday, Feb. 4, 2010, Tina Tennyson sits with her grandson, Jamari, 3, while waiting to apply for food stamps at the Sacramento County Economic Development Department in Sacramento, Calif. (AP)

U.S. Spending on Food Stamps at All-Time High, Sparking Debate Over Welfare

By Jim Angle

The U.S. is now spending more on food assistance than at any time in its history
, sparking a debate over whether the roughly 40 million people now receiving the latest version of food stamps at a cost of $73 billion a year are a symptom of a weak economy or are part of a long-term expansion in welfare and related programs.

Food stamp supporters say the record-high spending is simply a reflection of the economic downturn over the last two years.

“The program is expanding because we are realizing a significant downturn in the economy,” said Ambassador Eric Bost, who ran the food stamps program in the first years under President George W. Bush. “The food stamp or the SNAP program, as it’s referred to now, responds to the changing economic conditions of the country.”

“Unemployment is the worst it’s been in over 30 years,” added Sheila Zedlewski, an expert on poverty policy at the left-leaning Urban Institute. “The poverty rate is rising. Some people project it will be 15 percent. That would be the highest it has been since the 1960’s.”

But critics say this and other welfare programs were growing long before the recession and that food stamp usage has exploded over the last decade.

“The number of food stamp recipients has more than doubled since 2000, and the cost of the program has more than tripled,” said Chris Edwards, an expert on federal and state tax issues at the libertarian Cato Institute.

Though no one quibbles about the need for more forms of assistance during times of high unemployment, Edwards fears there is more going on here, that there is an effort to just keep expanding such programs.

Some government figures show that only 10 million people have a serious problem with hunger, Edwards said.

“The number of people on food stamps is four times higher than the number of people with a serious hunger problem,” he said.

But Bost defended the food stamp program, saying it helps the most vulnerable.

“Forty nine percent of the people that are participating in this program are children,” he said. “Ten percent are elderly and a vast majority of the other persons that are participating in the program do work. They just don’t earn enough money to meet all of their nutritional needs.”

Melissa Boteach, a poverty policy expert at the liberal Center for American Progress, said that last year, nearly 1 in 4 children were in a household struggling against hunger.

“And nearly 50 million Americans overall lived in households struggling against hunger so this is a serious problem in this recession,” she said.

Bost, the food stamp administrator during the Bush administration, said the numbers should fall as the economy gets better.

“When there’s a significant downturn you see an increase in the number of people participating and enrolled in the program when the economy is strong and doing well you see fewer people,” he said.

But some critics are not so sure.

“You certainly expect the food stamp program to go up during a recession, that’s not a bad thing,” said Robert Rector, a poverty expert at the conservative Heritage Foundation. “What we should be concerned about is even before the recession the food stamp program was increasing dramatically, because the government was reaching out to bring people into the program and then make them dependent.”

If the program were to return to the levels of the early 2000’s, he said, that would be ok, but he fears that is not what’s going to happen.

Looking beyond just food assistance, Rector looks at some 70 programs aimed at assisting the poor and points to President Obama’s spending projections for them in the years to come.

“If you look at Obama’s own projections, he’s projecting to spend over $10 trillion on assistance to the poor over the next decade and that’s without the cost of Obamacare, the new health care program that he’s created,” he said. “This is something that the United States simply cannot afford.”

He argues that Obama has no intention of letting assistance to the poor shrink even when the economy is healthy again and says he intends to expand such spending by more than a third over usual levels.

“He’s creating a permanent spread-the-wealth-state funded through deficits and borrowing from the Chinese,” Rector said.

Despite Soaring National Debt, Congress Goes on Spending Spree

Tea Party protesters outside a San Francisco hotel where President Obama was speaking last night reflect the frustration over a growing debt crisis that's put every American in the hole for $42,000 — and counting.

FOXNews

As the national debt clock ticked past the ignominious $13 trillion mark overnight, Congress pressed to pass a host of supplemental spending bills to, among other things, fund the continuing wars in Afghanistan and Iraq, ramp up security on the U.S.-Mexico border and prevent teacher layoffs.

Taken together, the Democratic-led U.S. Congress is trying to find a way to pass about $300 billion more in unfunded spending before Memorial Day – a spending spree that rivals anything drunken sailors have been accused of.

The underlying war funding measure the congressional leaders hope to pass by the end of the week would bring the amount provided by Congress for the Iraq and Afghanistan war efforts to $1 trillion.

But lawmakers in both parties are using President Obama’s war funding request to advance unrelated pet initiatives like a $500 million administration request for border security and an Education Department request for a $23 billion teacher bailout.

In the House, Obama’s $63 billion request for war funding, disaster relief and aid to nations like earthquake-ravaged Haiti and war-torn Afghanistan has swelled to $84 billion under a draft measure being readied for a key panel vote on Thursday.

Democrats such as House Appropriations Committee Chairman David Obey, D-Wis., are pushing $23 billion to help school districts avoid teacher layoffs, along with $6 billion to make up for a funding shortfall in Pell grants for low-income college students and lesser amounts to hire border patrol agents and help Mexico fight drug cartels.

Meanwhile, Senate Republicans are using a sleaker $58.8 billion version of Obama’s war funding bill to try to add billions of dollars to boost security along the U.S.-Mexico border.

Since the war funding measure is the only appropriations bill likely to pass before fall, it’s being eyed by lawmakers in both parties seeking to deal now with violence along the southern border, the Gulf oil spill disaster and a variety of domestic programs. But the pressure for more spending is running into resistance from lawmakers worried about out-of-control deficits and Congress’ reputation for extravagant spending.

The Senate measure, currently being debated on the floor, blends about $30 billion for Obama’s 30,000-troop surge in Afghanistan with more than $5 billion to replenish disaster aid accounts, as well as funding for Haitian earthquake relief, and a down payment on aid to flood-drenched Tennessee and Rhode Island.

Because of the need to attract GOP votes, Democrats have kept the Senate bill fairly “clean,” at least as emergency spending bills go. The measure comes in under Obama’s requests and won unanimous support from the Appropriations panel this month.

Sen. John Cornyn of Texas is just one of several Republicans seeking to add money for border security. He’s offered a $2 billion amendment to award grants to state and local law enforcement agencies, provide new unmanned surveillance aircraft, and hire hundreds of immigration and border agents, among other steps.

Sen. John McCain, R-Ariz., offered an amendment to provide $250 million to send 6,000 National Guard troops to the Mexican border. Democrats will consider countering with a proposal of their own in the wake of a White House announcement that Obama would seek $500 million to send 1,200 guardsmen to the border and take other border security steps.

Lawmakers also have loaded up a separate bill that originally was intended to extend expired tax breaks and provide expanded unemployment benefits through the end of the year. The bill has grown into a nearly $200 billion grab bag of unfinished business that lawmakers hope to complete before Memorial Day.

The bill includes $1 billion for summer jobs programs, $1.5 billion in aid to farmers who had crops damaged by natural disasters and $4.6 billion to settle two long-running lawsuits against the government, one by black farmers claiming discrimination and one by American Indians over the government’s management of their land.

In all, the bill would add $134 billion to the federal budget deficit, drawing opposition from Republicans and some Democrats. House leaders said Tuesday they were determined to pass the bill this week to avoid allowing jobless benefits to expire for thousands of people.

But the measure has been delayed while House leaders round up support, which could mean the Senate might have too little time to act before next week’s Memorial Day recess.

The Associated Press contributed to this report.