Alan Reynolds On Obama's $4.3Trillion Spending Plans

Last week Alan Reynolds wrote an excellent editorial in the Wall Street Journal entitled, "How's Obama Going to Raise $4.3Trillion?"

Reynolds notes the incredible sloppiness attending the Illinois freshman Senator's promises, and the media's fact checking thereon.

For example, he writes,

"A trillion here, a trillion there, and pretty soon you're talking about real money. Altogether, Mr. Obama is promising at least $4.3 trillion of increased spending and reduced tax revenue from 2009 to 2018 -- roughly an extra $430 billion a year by 2012-2013.

How is he going to pay for it?

Raising the tax rates on the salaries, dividends and capital gains of those making more than $200,000-$250,000, and phasing out their exemptions and deductions, can raise only a small fraction of the amount. Even if we have a strong economy, Mr. Obama's proposed tax hikes on the dwindling ranks of high earners would be unlikely to raise much more than $30 billion-$35 billion a year by 2012.

In his acceptance speech at the Democratic convention on Aug. 28, Mr. Obama said, "I've laid out how I'll pay for every dime -- by closing corporate loopholes and tax havens." That comment refers to $924.1 billion over 10 years from what the TPC wisely labels "unverifiable revenue raisers." To put that huge figure in perspective, the Congressional Budget Office optimistically expects a total of $3.7 trillion from corporate taxes over that period. In other words, Mr. Obama is counting on increasing corporate tax collections by more than 25% simply by closing "loopholes" and complaining about foreign "tax havens."

When it comes to direct spending -- as opposed to handing out "refund" checks through the tax code -- Mr. Obama claims he won't need more revenue because there will be no more spending. He even claims to be proposing to cut more spending ending up with a "net spending cut." That was Mr. Obama's most direct answer to Bob Schieffer, the moderator of the last debate, right after Mr. Schieffer said "The nonpartisan Committee for a Responsible Federal Budget (CFARB) ran the numbers" and found otherwise.

When CFARB "ran the numbers," they relied almost entirely on unverifiable numbers eagerly provided to them by the Obama campaign. That explains why their list of Mr. Obama's new spending plans is so much shorter than the National Taxpayers Union fully documented list.

Mr. Obama is thus credited with saving $50 billion in a single year (2013) by reducing "wasteful spending" and unnamed "obsolete programs." He is said to save Medicare $43 billion a year by importing foreign drugs and negotiating bargains from drug companies. Yet even proponents of that approach such as the Lewin Group find that cannot save more than $6 billion a year. So the remaining $37 billion turns out to depend on what the Obama campaign refers to as undertaking "additional measures as necessary" (more taxes?).

Straining to add credibility to Mr. Obama's fantasy about discovering $75 billion in 2013 from "closing corporate loopholes and tax havens," CFARB assures us that "the campaign has said that an Obama administration would look for other sources of revenue." Indeed they would.

The Joint Tax Committee reports that the bottom 60% of taxpayers with incomes below $50,000 paid less than 1% of the federal income tax in 2006, while the 3.3% with incomes above $200,000 paid more than 58%. Most of Mr. Obama's tax rebates go to the bottom 60%. They can't possibly be financed by shifting an even larger share of the tax burden to the top 3.3%.

Mr. Obama has offered no clue as to how he intends to pay for his health-insurance plans, or doubling foreign aid, or any of the other 175 programs he's promised to expand. Although he may hope to collect an even larger share of loot from the top of the heap, the harsh reality is that this Democrat's quest for hundreds of billions more revenue each year would have to reach deep into the pockets of the people much lower on the economic ladder. Even then he'd come up short."

To me, the most crucial paragraph is the second to the last one. Reynolds clearly demonstrates the folly of anyone believing that you can continue to tax the American "rich," as defined by the Democratic candidate as earning north of $200,000, and extract enough money to afford everything he promises, including tax-based welfare and all his new programs.

Thanks to Mr. Reynolds, we have a more clear sense of how many lies Obama is telling when he lays out his economic plans and asserts spending will not rise, and taxes will be cut.

Both huge lies.

Two Of My Friends Are Voting For The Wrong Candidate

It's incredible to me that two friends of mine, both now living in Chicagoland, are voting for their rookie Senator in this Presidential campaign.

There reasons have floored me.

One of them sees the past eight years as disastrous, and simply ignores his home state Senator's lack of any meaningful life accomplishment.

Being in advertising, he is, it seems, all too close to the mainstream liberal media, as well as the sense that nothing in politics really matters.

When I told him that the looming Frisco Nan-Harry Reid-Obama troika would make FDR look like a conservative, he didn't really get it.

I think he's going to get it, financially, sooner than he realizes. His own impending, rising tax liability escaped him.

My other Chicago-area friend's main grip against McCain is that he is a Republican. She blames that party for having a stance on religion and abortion, i.e., for tending to express a belief in God, and being pro-life, rather than advocating the murder of unborn children.

From this basis, she reasons that no Republican is worthy of her vote. Yet, ironically, she claims to be for smaller government.

She reconciles her vote for the junior Illinois Senator as voting against the guy whose party is willing to speak out on religion, morals and abortion.

When I explained to her how liberal the unholy troika will be, she surprised me. First, she expressed her distaste for Frisco Nan. Then for Reid.

Then she told me I was wrong, and everything would be okay. The three liberals together would be centrist. She's certain of it.

Oy!

How can America function as a reasoned Republic when educated, otherwise-intelligent people like these two friends of mine simply take leave of their senses and plan to vote for idiocy?

McCain & Palin On CNBC Today

John McCain and Sarah Palin gave a live interview this morning to CNBC's dimwitted on-air personality Maria Bartiromo.


For me, this campaign is about which candidate will do the least long term harm to the country.


It's very clear to me that means John McCain, despite my basic distrust of his conservative credentials and lack of respect for his intellect.


Thus, this morning's interview did not exactly display McCain's greatest strengths. He's really a little fuzzy on detailed economics. Sarah Palin, on the other hand, is razor sharp.


The CNBC on-air head asked the two directly, 'what would you do, if elected, about the country's current financial and economic situation,' or a question to that effect.


What McCain said was not memorable. And, honestly, that's inexcusable. To sit down for a live interview with a self-proclaimed, if not actually competent, business correspondent, on a business entertainment channel, and not have that answer canned and ready, is just jaw-droppingly inexcusable.

Especially at this late date in the campaign.


Instead of McCain's meandering reply, here is how I think he should have responded,


"Maria, I've thought about this question a lot. It's got to be one of the most important ones on the minds of most Americans this fall.

First, let's understand that in America, government does not create lasting, meaningful jobs in a direct fashion. Government sets terms and conditions for how business operates, it manages the money supply and overall environment of laws and regulation.

But we, as a society, must live with our mistakes. Just because the economic and financial aspects of our society became carried away with risk-taking, risky borrowing for unaffordable homes, and spending, does not mean that the same society, through our government, can wave a magic wand and make all the subsequent pain simply vanish.

The best thing that government can do in this situation- and what Sarah Palin and I will do when elected- is to lower taxes and cut non-essential spending while stabilizing the financial system and softening the effects of unavoidable job losses in the coming recession.

Now, I know my opponent is promising all sorts of new spending to solve all of our economic ills. I also know that your network, Maria, is a subsidiary of a very liberal, left-leaning network, NBC, which by its nature expects socialistic and big-government answers from Presidential candidates. Even your network's own 'political correspondent,' John Harwood, is also a writer for the very-liberal New York Times.

So the very nature of your opening question suggests that government must 'do something' to solve our current economic ills.

How can one person- any one person- simply 'solve' an entire society's and culture's dive into the deep end of the pool of risk-taking and financial excess?

It can't.

In fact, your own Congress- Republicans and Democrats, but mostly Democrats- have fostered a culture of risk-taking and entitlement in our federal government that makes it harder for individual citizens to take responsibility for their own actions.

What will Sarah and I do when elected to remedy the nation's economic and financial ills?

In short, we'll focus on our entire society's- government, businesses and individuals- spree of over-spending, reckless opportunism, over-borrowing and dependence upon government assistance.

And I will, although it should have been done in August of last year, sign an executive order modifying 'mark to market' rules so that performing structured securities can be valued for their long term economic potential, rather than at any particular moment's market- or lack thereof- value.

I will also immediately move to close or completely privatize Fannie and Freddie,. I will also sign an executive order suspending the CRA.

Government should not be telling banks which loans to make, nor using taxpayer money to subsidize bad mortgage loans and then securitize them to the rest of the world.

We can't simply spend or regulate our way to a magic, painless solution. But we can- and will- lead our nation to more reasonable, sane and responsible behavior.

Frankly, economies go through booms and busts, growth and recession. That was going to happen even before the current financial crisis first broke into view with the failure of the two Bear Stearns hedge funds in the summer of 2007.

Sarah and I will work to reform and moderate our recent culture of overly-opportunistic behavior, part of which has shown itself in the current economic ills of our nation."

Such an answer would have shown McCain to comprehend the totality of the current mess, while clearly distinguishing himself from his opponent by not promising that he, alone, could somehow fix it and remove all painful consequences of the past few years' mistakes.

Obama's Socialist & Marxist Plans for US

The last two days have seen Obama's campaign ducking for deep cover and enlisting every Democratic spinmeister available to attempt to deflect honest questions about the rookie Illinois Senator's socialist and Marxist economic comments and plans.

On Sunday, Biden was interviewed by a Florida TV reporter. Here's the YouTube video.



Obama's campaign has now cut off this large central Florida TV station from any further campaign contact for asking about the candidate's clearly socialist remarks.

Yesterday, an interview with the Illinois freshman Senator from 2001 has him regretting that the 1960s civil rights movement focused on courts, when it could have made progress on 'redistributive' economics through community organizing.

In effect, the Democratic candidate clearly lamented that socialist economic policies were not implemented within and because of civil rights activities.

Later that afternoon, Chuck Schumer, New York's mediocre, not-too-bright senior Senator, was on Fox News doing damage control. He refused to admit Obama's socialist comments were just that.

Instead, he chalked it up to "gotcha" journalism and campaigning, waving off any admission of the truth of the content of his candidate's remarks.

It's truly a sad moment, when legitimate questions about a Presidential candidate's explicitly socialist and Marxist economic policies draw punitive reaction from the campaign, and then are ignored by the candidate and his handlers.

Anchorage Daily News Loses Its Mind

You've probably heard, by now, that the Anchorage Daily News endorsed the rookie Senator from Illinois for President.

It's fair to say that this is probably the first time such a small newspaper has been nationally showcased for its Presidential endorsement.

Being that Sarah Palin is the nation's most popular, highly-rated governor of any state in the Union, it bears reading some of the ADN's endorsement text.

Here are some sample paragraphs,

"Sen. Barack Obama, the Democratic nominee, brings far more promise to the office. In a time of grave economic crisis, he displays thoughtful analysis, enlists wise counsel and operates with a cool, steady hand. The same cannot be said of Sen. McCain.

Of the two candidates, Sen. Obama better understands the mortgage meltdown's root causes and has the judgment and intelligence to shape a solution, as well as the leadership to rally the country behind it. It is easy to look at Sen. Obama and see a return to the smart, bipartisan economic policies of the last Democratic administration in Washington, which left the country with the momentum of growth and a budget surplus that President George Bush has squandered.

Gov. Palin has shown the country why she has been so successful in her young political career. Passionate, charismatic and indefatigable, she draws huge crowds and sows excitement in her wake. She has made it clear she's a force to be reckoned with, and you can be sure politicians and political professionals across the country have taken note. Her future, in Alaska and on the national stage, seems certain to be played out in the limelight.

Yet despite her formidable gifts, few who have worked closely with the governor would argue she is truly ready to assume command of the most important, powerful nation on earth. To step in and juggle the demands of an economic meltdown, two deadly wars and a deteriorating climate crisis would stretch the governor beyond her range."

Not once did the editorial endorsing the freshman Democratic Senator provide any reference to his experience, accomplishments, or demonstrated ability to do anything that anyone else with intellect and an education could also do.

He "brings.....promise," "enlists wise counsel," "operates with a cool, steady hand" and allegedly (without substantiation) "better understands" the economic situation.

Really? Promise is just that- promise. No substance. What wise counsel? Joe Biden?

Paul Volcker would undoubtedly aid whomever next occupied the Oval Office, but his current client has shown absolutely no grasp of the current economic dilemma.

The only thing Obama has "operated with a cool, steady hand" is his ever-changing image and stances in his primary and general election campaigns.

How odd that the ADN overlooks its own state's governors actual accomplishments. Both as an oil board member, and governor. Even as a municipal mayor.

If a sitting governor with Palin's experience merits the verdict "few....would argue she is truly ready to assume command of the most important, powerful nation on earth," from the ADN, how can an unaccomplished freshman Senator possibly earn the paper's endorsement?

The ADN's endorsement of the Democratic candidate is just the latest and most egregious example of how people seem to take leave of their senses when expressing their preference for the junior Illinois Senator, and the bases for that preference.