An article in Monday's Wall Street Journal opened with 'President Barack Obama's $3.8 trillion budget for fiscal 2011 raises $2 trillion in taxes, cuts spending on programs with considerable political support and still leaves the nation with $8.5 trillion in additional debt over the next decade.'
Obama's administration has failed in many respects in what he promised the American people during his campaign.
He has failed to cut the deficit by half, the health care bill remains unresolved and the economy hasn't recovered. Many of these problems cannot be blamed on Obama or his administration; however, they are accountable for how they handled these circumstances.
Obama's staff is projecting a 2011 $1.51 trillion deficient, compared to the record-shattering $1.41 trillion deficient this year. How can the government conceivably ever get smaller when we take the one-time gigantic deficient of last year and increase it by over 7 percent? The reality is that government by its very nature expands, expands, expands.
Of course Obama's continued spending spree is supposedly justified under the guise of 'helping the American people get back to work.'
That is what he says, but Obama has a habit of saying one thing and doing another. For example, why say you want to help Americans get back to work and turn around and propose significant tax increases on businesses that would employ these people? Another example, why bail out 'too big to fail banks' then turn around and charge them additional fees and taxes for being profitable? Why bailout the American car industry and then undermine hundreds of years of history, business and law and outright steal from bondholders?
Most people listen to what's said but don't look at what's done.
Obama's deficit is comparable to Ball State's upcoming revenue shortage. The difference is Ball State is taking steps to balance its budget whereas the government is passing the problem on to others. A few weeks ago I proposed solutions for Ball State to use in order to meet its cost reductions, so now I'll give my advice to Obama and the federal government. By following these steps the United States could end its deficits and begin to pay down the national debt.
1. Keep Bush's tax cuts - Obama is planning to let Bush's tax cuts expire, therefore increasing the tax rate on businesses and the wealthy. This would also increase taxes on dividends and capital gains, hurting investors (e.g., every American: this affects our retirement funds). Following the Laffer Curve, lower taxes can actually increase tax revenue. Besides that, lower taxes lead to more profitable businesses, which can expand and hire more people.
2. Stop the bailout - The justification for a lot of the discretionary spending is to spur job growth. Unemployment is a lagged indicator. Let me say that again, unemployment is a lagged indicator. The spending we do now won't show up for six months to a year. It's likely we are already out of the recession. Jobs will come back on their own. Further stimulus spending will likely destabilize the economy further. The bailout funds will now likely lead to high inflation, devaluing everything in the country ... all supposedly for a few hundred thousand to get jobs. Here the minority benefits from the majority.
3. Actually address Medicare, Medicaid and Social Security - Economist Milton Friedman spent a great deal of time and energy articulating the very problems we're having with these social programs, and that was back in 1980. Thirty years later and we've solved nothing. The problems with these programs won't go away. The solution involves one thing: pain. Someone has to pay, be it through lower benefits, higher premiums or other restrictions. Everyone can't have what they've been promised and it's better to face that sooner than later.
So if America follows my 3-step plan, we'll all be better off. The free riders and beneficiaries of government programs will suffer, but they can breathe the fresh air and know they are no longer slaves to the government. The more self-reliant and independent Americans are, the stronger our country will be.
The recession is ending and the economy is recovering; therefore, further government intervention will only continue to destabilize the economy. Lower taxes and lower government spending equals a smaller government. A smaller government means a bigger pie for everyone and a bigger piece of that pie.
Seems like a win-win to me.
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