Comments (0) Megan McCardle has something constructive to say about Obama’s budget. As I read it, I couldn’t help thinking of Herman Cain’s Tweet: “I told y’all I don’t have any tricks up my sleeve.” I’m not sure how many more President Obama has left after this budget.
The New York Times editorial board opined on Obama’s new budget today. In the following paragraph, you can get it flavor of how they think it stacks up against the one proposed by House Republicans:
The questions are whether [the Obama budget’s] tough choices are also wise choices and whether it stands a chance in a Congress in which Republicans, who now dominate the House, are obsessed with making indiscriminate short-term cuts in programs they never liked anyway. The Republican cuts would eviscerate vital government functions while not having any lasting impact on the deficit. (emphasis supplied here and below)
Pay attention to that word vital as we proceed, but first, let’s allow the Times to give Obama a hall pass:
What Mr. Obama’s budget is most definitely not is a blueprint for dealing with the real long-term problems that feed the budget deficit: rising health care costs, an aging population and a refusal by lawmakers to face the inescapable need to raise taxes at some point. Rather, it defers those critical issues, in hopes, we assume, that both the economy and the political environment will improve in the future.
That’s a nice–and a fair–assumption, one you won’t see the Times granting those nasty Republicans.
For the most part, Mr. Obama has managed to cut spending while preserving important [read vital] government duties. That approach is in stark contrast to Congressional Republicans, who are determined to cut spending deeply, no matter the consequences.
Again, Obama gets a pass. Not so the Republicans. And let’s see what important government duties Obama preserves.
A case in point: the Obama budget’s main cut — $400 billion over 10 years — is the result of a five-year freeze in nonsecurity discretionary programs, a slice of the budget that contains programs that are central to the quality of American lives, including education, environment and financial regulation.
Got that? Obama’s main cut is not a cut at all. It’s a five-year freeze for Hell’s sake!
But the cuts are not haphazard. The budget boosts education spending by 11 percent over one year and retains the current maximum level of college Pell grants — up to $5,500 a year. To offset some of the costs, the budget would eliminate Pell grants for summer school and let interest accrue during school on federal loans for graduate students, rather than starting the interest meter after graduation.
Cuts and boosts spending within spitting distance of each other. This is rich. And then another hall pass: “To offset some of the costs.” Some? Compare that with what the Times dishes out to the Republicans: “Republicans are determined not to raise any taxes . . .” And Obama is? Remember, he “offset some of the costs” of his changes in Pell grants, not by raising taxes, but by diddling with summer school and student loan interest.
The laugh track continues:
[Republicans refuse to raise taxes] even though
investingspending for the future and taming the deficit are impossible without more money.(correction my doing)
Okay, having slapped Republicans up side the head about their refusal to raise taxes, the Times writes–immediately after, and I do mean immediately,
The budget would also increase transportation spending by $242 billion over 10 years. It does not specifically call for an increased gas tax to cover the new costs, though it calls on Congress to come up with new revenues to offset the new spending.
This is a truly cynical editorial about a truly cynical budget. The Republicans refuse to raise taxes, while Obama boldly goes where no man has gone before and passes the buck to Congress? Oh the humanity!
Remember that word vital? Here’s a whiff of what it means:
Republicans want to eliminate forward-looking programs like high-speed rail.
In other words, vital means boondoggle. Amtrack is doing so well, we just have to have a faster version of it.
I have to go, so let’s jump to the end:
Real deficit reduction will require grappling with rising health care costs and an aging population, which means reforms in Medicare, Medicaid and Social Security, as well as tax increases to bring revenues in line with obligations.
Mr. Obama’s budget does not directly address those big issues, but doing so would require a negotiating partner, and Mr. Obama, at present, does not have one among the Republican leaders in Congress. His latest budget is a good starting point for a discussion — and a budget deal — but only if Republicans are willing participants in the process.
Okay, as if to help me prove my point, the Times editorial ends the fact that Obama hasn’t proposed any tax increases either, he hasn’t addressed the big issues–either. Yet he gets a pat on the back, and the Republicans get chided for not wanting to cross the aisle and stand foursquare on his side. Quien es mas macho? Why Obama, of course.
The two key statments:
To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011.
and
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.
All emphasis mine.
Today, I begin watching the Fed. The FOMC began its January meeting yesterday and ends today. According to Bloomberg,
The FOMC announcement for the January 25-26 FOMC policy meeting is expected to leave the fed funds target rate unchanged at a range of 0 to 0.25 percent. Market focus will be on any update on the current round of quantitative easing and if there are any upgrades on the economy.
The announcement should come later today. Then we’ll see how the consensus holds up.
This morning, as I drove to meet my brother and sister-in-law for breakfast, NPR’s Morning Edition treated me to a teaser lead-in to a story that taxpayers were soon going to get back all the money the government had invested in AIG during the bailout. The actual story (which I cannot find online) confirmed the headline, though it sort of hedged with words like “depending on stock performance” and such.
I own shares in AIG. Prior to the bailout, I owned 20 Xs more shares–but that’s another story. Point is, I watch the stock and news about the stock. And I watched recently as the share price climbed above $52 a share on January 7 (I bought those shares at the reverse split-adjusted price of $43.60 on 9/18/08). Since that high, the share price has fallen precipitously to just over $42.00 as I write, almost a 20% decline in two weeks. In other words, I’m worse off than when I bought the shares over three years ago. So exactly how are the taxpayers getting paid back–soon–if the market value of AIG has decreased? I understand that the government and/or AIG may sell off operating companies and repay the debt from the proceeds. Do the value of the parts exceed the value of the whole?
Or is this more Prava-like reporting of the sort that the Seattle Times debunked this morning? Referring to the White House’s recent announcement of $19 billion in new Boeing jet orders, an announcement timed to coincide with the visit of Chinese President Hu Jintao, reporter Dominic Gates writes,
The deal President Hu signed does not include any new jet orders.
Delivering the formal approval during Hu’s visit is designed to make the Chinese government appear responsive to U.S. concerns about the balance of trade.
However, all of the airplanes in the sale were announced and booked by Boeing as firm orders over the past four years. Chinese airlines had already paid nonrefundable deposits and signed contracts for the jets, most of them as far back as 2007.
Gates continues,
The White House announcement said the total value of the orders was $19 billion.
But that’s the list price, which airline customers never pay.
Based on market data from aircraft-valuation consultancy Avitas, the actual price for those 200 planes is about $11 billion.
To be fair, Gates points out that Boeing says that the Chinese government’s approval is important, but . . .
Summing up the deal, Gates closes with,
Our verdict: The Chinese orders are real and will help keep Boeing workers busy here through 2013. Still, the White House announcement, while technically true, left a completely false impression.
The orders weren’t new. They weren’t really worth $19 billion. And Boeing isn’t soaring ahead of its big global rival with this deal.
An accurate headline for the news might have said: Hu finally signs off on old orders for U.S. jets, but Boeing still lags Airbus in China.
Likewise, an accurate lead-in for the AIG story on NPR might have said: Taxpayers will recoup their investment in AIG if the stars align and the stock price ever gets high enough, but that’s far off in the future.
Update: I found a Reuters story that I think the NPR story was based on. The three nut paragraphs:
In its third report on the bailout of AIG, the GAO said U.S. taxpayers’ risk exposure to the insurer increasingly is expected to be tied to the success of AIG and its value as seen by investors in the company’s common stock.
“The government’s ability to fully recoup the federal assistance will be determined by the long-term health of AIG,” the report said.
A Treasury official said taxpayers were in a strong position to recover “every dollar put into AIG.” (emphasis supplied)
I’m virtually certain the two quotes appeared in the NPR story. The second quote resembles the NPR headline. Alert readers will notice that the first quote basically takes all the zing out of the second, and thus the headline of the NPR story.
Apparently, I’m a Libertarian:
I agree with the Cato Institute:
We will not get federal spending under control unless we begin a national discussion about specific cuts. And we won’t get that discussion unless enough members of Congress start pushing for specific cuts.
I’ve created a page to keep track of that conversation online.
Let the conversation begin.
Maybe Santyana looked into the past to predict the future. Maybe he read that
. . . in the twenty-nice years since the conclusion of the Revolutionary War, Americans had already risen in revolt three times, and on each occasion over taxation (A Darn Good History of the United States, 161).
Maybe Congress and the President should read a little history.
Last night my wife and I were watching the talking heads–can’t remember who–and someone quoted someone else about how we need to raise taxes to pay for the war in Afghanistan, and my wife says, and I quote (loosely):
I am so sick of this! How dare they! Why should they raise taxes on us to pay for the one thing that our Constitution very clearly says our government is supposed to do? The tax revenue they already have should pay for the common defense first. So cut other programs if you have to, but don’t tell me you have to raise my already-high taxes to do the one thing the Constitution says our government is supposed to do.
Hard to argue with that, especially if the person saying it is a babe–my wife.
Panorama Theme by 
Themocracy
