Tuesday, April 26, 2011

Fwd: A Tale of Three Budgets

Historically, our economy could and cannot sustain anything greater than 20% spending as a share of GDP.

We're way over that now. I think all three budgets need to scale back to 21% by next year. All three stay at 24%, including the Ryan plan. It's just not sustainable.


Sometimes, a picture is worth a trillion words.

This chart from the 4/21 Wall Street Journal puts the budget battle in perspective. 

Budget plans compared (Obama 1 vs Obama 2 vs Ryan)

It's puzzling why President Obama even bothered to offer a second, revised budget plan (the one he announced in a campaign-style speech, with few details, at George Washington University on April 13th).

Like his first budget submission (of February 14th), his second version doesn't balance the budget, doesn't repeal the unaffordable new Obamacare entitlement, doesn't stop America's staggering debt buildup.  

What it does do is:

  1. Promise around $2 trillion in largely unspecified spending reductions (except Medicare: there, he would cut even more deeply than House Republicans over the coming decade) and
  2. Double the tax hikes from his first budget (i.e., $3 trillion in higher taxes instead of $1.5 trillion).  

In short, Mr. Obama is running for reelection on a platform of permanently higher taxes and spending, with deeper Medicare cuts than Republicans have proposed over 10 years, and trying to pass it all off as "fiscal prudence with compassion."  

True compassion (for future generations) would dictate that he offer a third budget at least as compassionate (for future generations) as the House-passed (Ryan) plan.  

For a more defailed comparison, see our handy one-page report card.


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