The President's so called fiscal policy

This week President Obama decided to finally attempt to get serious about reducing the staggering US federal budget deficit and debt. After his ridiculous, insincere FY 2012 budget proposal this past February that was panned by basically everyone, the President gave a speech at George Washington University where he was to reveal his plan for reducing the deficit and debt.

Why did the President give the speech? Maybe because every credible political consultant and media organization had basically dismissed his original proposal as a farce and that Republican Representative Paul Ryan had produced a significant budget proposal that would reduce the deficit by $6.2 trillion over the next ten years. The Ryan plan begins to look at entitlement programs that are one of the biggest contributors to both the current deficit and debt but also to the long term debt the country faces. The Ryan plan does not impact anyone currently receiving retirement benefits, or for that matter those close to retirement, those 55 and older. By taking the courageous step of at least looking at ways to reform entitlement spending, Rep. Ryan has put the President on the defensive and made him debate the issue on the Republicans terms.

The speech that the President gave, turned out to be basically just the President’s kickoff speech for his 2012 campaign. It demonized the Republicans for basically wanting to kill any senior and to give huge tax breaks to only the rich in this country. There were a few really important issues with the President’s speech that need to be examined if people are going to take the President seriously.

First, the President’s proposal reduces the federal deficit by $4.2 trillion over the next twelve years. Why does the President’s plan cover twelve years as opposed to the Ryan plan that reduces the deficit by $6.2 trillion over ten years? Basically the answer is that it delays most of the cuts so far into the future that no one voting today will likely be impacted by his proposal, at least for a longer term. By delaying any significant cuts, the President can also demonize the Republican plan by stating that they want to take away benefits from our parents and grandparents. By extending the time period for implementing his proposed “cuts”, the President believes that it will lessen the pain anyone feels.

However, most of the President’s so called cuts are actually tax increases or assumptions that are unlikely to occur. First, the President continues to believe that ObamaCare will reduce the deficit by $1 trillion. No one outside the Obama Administration actually believes this, but he is continuing the charade. The President stated that another pillar of his plan, “is to reduce spending in the tax code, so-called tax expenditures.” So now tax reductions are actually tax expenditures. Basically, what this means is that the President believes that it is not our money we earn by going to work each day, but rather it is the government’s money and we are only able to keep a small part of it. By increasing tax rates, the government is going to be able to “save” money because it won’t be paying us as much. Another big part of the President’s plan is based upon the assumption that the economy will grow at an increased rate from what we have seen the past few years. Estimates of growth in excess of five percent are the baseline projections for the President’s plan. What happens if, as is likely, the economy doesn’t grow that fast?

Rep. Ryan’s plan was passed earlier today in basically a straight party line vote. The bill now heads to the Senate where it likely won’t move forward. Will Senate Majority Leader Harry Reid actually pass a budget this year? It is likely that just like last year, he won’t move anything forward. The President was late to the discussion on the deficit and debt and his plan will likely not improve our long-term economic future.

March Madness

With the start of the NCAA basketball tournament, there has been a lot of focus placed on the yearly basketball tournament. Terms like brackets, upsets and seeding are thrown around offices as folks try to win their tournaments and have bragging rights for the next year.

In Washington, DC March Madness seems to be taking on a different tack. While the Verizon Center is hosting some of the first round match-ups, other situations around the world seem to be giving the term March Madness new relevancy. The budget battle continues on Capital Hill. Earlier this week, both Houses of Congress passed a three-week continuing resolution to keep the federal government funded. In the debate related to the continuing resolution, Senate Majority Leader Harry Reid basically laid down some markers as to what might be acceptable for any rest of the year budget. Off the table were cuts to federal funding of Planned Parenthood, the Corporation for Public Broadcasting as well as Social Security. The first two areas are minimal in the overall budget battle. They are however examples of what a lot of folks believe is wasteful Washington spending. Why is the federal government funding a media organization? Why is the federal government funding an organization that provides abortions? Social Security and the other two main entitlements, Medicare and Medicaid are bankrupting the country. Social Security is basically a ponzi scheme at this point in that folks pay into the “fund” today with no hope of getting any of the payments tomorrow, unless the system is updated. The biggest issue related to the budget battle currently going on is that it was all avoidable. The Democrats had huge majorities in both Houses of Congress last year as well as the White House and yet they refused to even propose a budget. Why? Because they knew that if they proposed a budget with the cuts needed to satisfy the increasingly skeptical American public, they would anger there most loyal supporters. If they proposed a budget that didn’t include the necessary budget cuts, they would have likely lost more than the 63 seats in the House and 7 Senate seats. So they abdicated their leadership and punted until the next Congress was elected. The Republicans are also experiencing internal fighting. The freshmen House members want cuts much more substantive than those proposed by longer serving members. They ran on balancing the budget and are unwilling to accept a budget that doesn’t at least reduce the deficit in a meaningful manner. The President has basically sat out the discussion. The Administration tried to state that there proposed budget was almost as much as the proposed Republican budget, but that line was basically laughed at by everyone. It will be interesting to see what happens over the net few weeks as both sides try to reach an agreement.

Japan’s earthquake and resulting tsunami has caused the environmental community to scream that the world is falling. Reporters and commentators are projecting that the west coast of the US will basically see a mushroom cloud of radioactive material within the next few weeks. The situation in Japan is a tragedy and should not be taken lightly. However, the fact that there has not been too much of a radioactive fallout so far, shows that nuclear energy must be part of a comprehensive energy plan that reduces the US’s dependence on foreign oil. According to reports all four reactors have experienced explosions over the past week, yet there still has only been limited radioactive fallout so far. Many commentators compare this situation with Three Mile Island. The big misnomer with Three Mile Island is that no one died in that situation and that there are folks who live within site of Three Mile Island still today. Nuclear energy is a lot “greener” than oil and coal and if the US is trying to reduce its environmental impact, nuclear has to be part of the solution. Hopefully, as a result of the situation in Japan, the proposed nuclear facilities throughout the US will take a second look at how they would react to different natural disasters so that they will be prepared for anything that might happen.

The situation in the Middle East has also gotten much worse over the past few days. Libya is basically in the midst of a civil war. Saudi Arabia recently sent in troops to assist the leadership of Bahrain. Egypt has seen a change in its leadership. The situation across the Middle East is unstable and is having an impact on the US economy. The price of oil has risen over the past month with the increase in violence and protests. The price at the pump for a gallon of gas has risen to nearly $4. Should gas stay at $4 or rise even higher, there will be a huge impact on the US economy that the Obama Administration likely can’t afford. With independents only supporting the President at 37%, any additional economic issues will likely add to the problems facing the President and his administration. Yesterday, the Administration seemed to get a win at the UN Security Council with the passage of a “No Fly Zone” in Libya. The only issue related to the passage is was its passage too late? Has the dictator Gaddafi already basically won the civil war in Libya? Doesn’t the US typically stand with those who search for freedom and a say in the operation of their governments? Why is it that the Obama Administration seems to always be sitting on the sidelines when folks rise up against brutal dictators? The US didn’t help when students in Iran rose up against the tyrants. They didn’t do too much in Egypt when the protestors rose up against Mubarak. And they have refused to get involved with the protests against Gaddafi. Didn’t the President run his campaign on the theme that everyone would like us more if he were President? Unfortunately, it looks like the President’s self belief in his ability to “charm” other world leaders has fallen short and we are now taking a back seat to Italy and France in world leadership. I bet no Americans thought that was the likely outcome of the elections in 2008.

There are always a ton of issues facing the President. The decisions that he is forced to make are likely some of the most difficult and whatever the decision, its implications are felt across the world. The inability of the Obama Administration to come up with an adequate strategy for dealing with some of the world crisis has put the US in a bad spot. We are no longer thought of as the world’s lone superpower. Other countries have taken a larger leadership role in the ways of the world. This truly is March Madness and unfortunately it isn’t related to a college basketball game…

Budget 2.0

Early yesterday morning, the US House of Representatives, under the leadership of new Speaker of the House John Boehner, passed a FY2011 budget that cut approximately $61 billion in federal spending. Democrats across the government decried this budget as “draconian” stating that the cuts would negatively impact the US economy and its citizens. Why are we even having this debate?

Last year, Democrats in both the House and Senate refused to even propose a budget for FY 2011. Why? Because they were afraid of the political impact in last years elections should they proposed a budget that either cut certain discretionary spending that the public opposed or a budget that kept on spending money that the government doesn’t have. Realizing the huge political implications in an election year where the American public were angry at the way the Washington, DC continually operates, Democrats realized that their position related to the budget and the US debt were causing a huge surge towards the Republican party and away from the Democrats. Independents, Republicans and Democrats across the country were angry that unlike everyone else, the US government decided that it didn’t need to limit spending in an economic downturn and instead dramatically increased spending by nearly 25% since FY 2008. No business or family could afford to increase spending at such a rate when revenues decrease.

So instead of doing their job last year and at least proposing a budget, the Democrats decided to do nothing and just implement a continuing resolution that maintained spending at FY 2010 levels. Fearful of the political implications of actually doing their jobs, Democrats decided to just maintain spending at FY 2010 levels. That certainly isn’t leadership. That certainly isn’t doing the job that they were elected to do. And they wonder why they were thrown out of office at such a large rate last November and why they could be in for more losses in next year’s election should they once again refuse to seriously address the fiscal problems facing America.

Another result of the budget crisis/debate going on in DC is the impact it has on state and local budgets. Two years ago, with the passage of the “stimulus bill”, many states put off making the necessary tough decisions to remodel their state budgets. They used stimulus money to offset budget deficits that many were required to balance. Now that there is no additional stimulus money coming into the states, many are faced with severe budget deficits. Much has been made regarding Wisconsin’s proposal to ensure that state government employees start contributing to their own pensions and to pay a small portion of their health benefits. Schools across the state were closed Thursday and Friday when teachers called in “sick” in order to protest in Madison against these reasonable proposals that almost everyone outside of government employees already pays into, usually at a much higher rate. Teachers, who typically cry out that their job is to help develop the children of our country, decided that the best way to teach our children is to walk off their job to protest having to do what everyone else does. Governor Scott Walker told the residents of Wisconsin during the campaign that he would propose these agenda items and would fight certain collective bargaining rights of state workers. All the Wisconsin plan entailed was eliminating collective bargaining with respect to pay, not benefits and to have elections every year to make sure that the employees still want to have unions represent them. As President Obama stated two years ago in one of his few meetings with Republican leaders, “elections have consequences.” Republicans won across the country, except possibly in California, and have committed to reigning in spending and it seems that the Democrats are too afraid, or just hoping to use this issue as a political tool to try and minimize their losses in future elections.

Not a serious proposal

President Obama released his FY2012 budget earlier this week. The Administration proclaimed that they were being fiscally responsible by projecting that their budget would reduce the deficit by $1.1 trillion over the next ten years. This projection makes a number of assumptions. First, it expects that the US economy will grow faster than any reasonable economist has projected. The budget also includes reductions in spending based upon cuts that were already budgeted for with respect to spending in the war on terror. It assumes budget cuts based upon a higher current spending level then includes cuts that were already assumed to provide a majority of the $1.1 trillion cuts. What the budget also projects is a deficit for FY 2012 of $1.3 trillion.

The budget proposal submitted by the Obama Administration is not a serious proposal. Media organizations across the country have stated everything from the Administration “punting” on a serious budget to “not being serious.” The major causes of the federal deficit are entitlement programs: Social Security, Medicare and Medicaid. The Obama Administration did not even attempt to look at any ideas to reduce the costs associated with any of these problems. House Republicans currently are debating the FY2011 budget that the Democrats refused to even start working on before last years election. The current proposal includes nearly $61 billion in budget cuts for the budget that ends at the end of September. While the Senate is unlikely to approve the House bill, and the President has stated that he would veto the bill, at least the House is trying to be realistic with respect to the budget. In households and in every business across the country, budgets are determined on projections of anticipated revenues and expenditures. If the expected revenues decline, reductions in spending must be implemented so that the budget remains balanced. The House seems to realize that expanding the federal deficit is a recipe for disaster and reductions in spending must be made today in order to survive tomorrow. As the House starts to prepare their FY2012 budget, they have stated that entitlements will be addressed. The Administration seems to be more interested in politics and blaming the Republicans for proposed “cuts” that will hurt Americans. Instead of having the “adult conversation” about the budget, the Administration and the Democrats are going back to the only thing they seem to know, make it a political argument and blame the Republicans for eliminating police and emergency responders, teachers and so forth and of course, hurting our seniors with the potential changes to our entitlement programs. Typical Democrats and not a good situation, neither short term or long term, for America. You know it is a strange situation when ever the liberal main stream media is calling out the Democrats and Administration for not being serious about the budget situation.

The lack of US intelligence

Yesterday was a tough day for American Intelligence agencies. At an open hearing before the House Intelligence Committee, two rather strange statements were provided by CIA head Leon Panetta and Director of National Intelligence James Clapper. Director Panetta stated that he anticipated that Egypt’s President, Hosni Mubarack would resign his position by the end of the day. DNI Clapper stated that the Muslim Brotherhood was “largely secular” and has “eschewed violence.” Both of these statements seem to defy logic and bring into question how reliable our intelligence services are. While Panetta was only a day off, it still shows how important having credible and reliable intelligence is to the operation of the US government. Both of these statements provided our allies and enemies across the world a rare glimpse into exactly how bad our intelligence situation is. Our government relies on the intelligence briefings it receives. These briefings help our government make its decisions. With faulty, mistaken, or flat out wrong intelligence, the actions of our government are severely hindered.

The residents of Egypt were able to finally get what they have been protesting for the past eighteen days for, a removal of the reign of 30 year leader/dictator Hosni Mubarack. This change in power can lead to a lot of uncertainty in the Middle East. What type of government is going to take hold in Egypt? For now, the military is taking over. Is that same military going to still be an ally of the US? While they get $1.3 billion in US aid each year, no one knows for certain what the future holds for Egypt and our relationship with its new government. While the will of the people seem to have taken hold, one can only hope that the new government in Egypt provides a model for other countries in the region by providing a democracy for its citizens. Maybe this change in government in Egypt will provoke a change in government in countries like Iran. However, we are unlikely to be able to rely on our intelligence services to provide adequate predictions for when or if such a change would happen.

Happy Birthday Mr. President

One hundred years ago today, Ronald Reagan, a historic figure, was born. Today across multiple media sources you will likely see columns written describing the former President and his role and impact in the course of the United States.

Recently, even Time magazine included President Reagan on its cover, including him with his arm around current President Obama with the headline, “Why Obama loves Reagan.” This cover along with multiple political pundits who in the aftermath of the recent State of the Union address, proclaimed how Obama is today’s generation Reagan. Reagan was proclaimed the “Great Communicator” and President Obama has also drawn comparisons to the former President’s ability to connect with the American public. His oratory skills likely helped him become President.

I am one who completely disagrees with the assessment that Obama is today’s Reagan.
While the two politicians represent different political parties and therefore have a different set of beliefs on the role of government. That isn’t the only big difference between the two. President Reagan was the eternal optimist, proudly proclaiming that America is that “shining city on a hill.” His campaigns brought a new group of voters into the American public, “Reagan Democrats.” These voters, personified by the voters in suburban Detroit, were working class individuals who cared deeply about America but were worried about the direction of the country, both economically and globally, under the leadership of President Carter. These voters are still the most sought after voters today, the classic independent voters that win national elections.

While President Obama’s 2008 campaign for President brought him a large number of independents into the Democratic side, most of those independents now have a negative impression of him. President Obama also seems to have a negative impression of America and its role in the world and global economy. All to often it seems as if he is embarrassed about the role of America and seems to always apologize for America being the world leader. He doesn’t see America as the shining city on the hill but rather as the shining example of how a country has fallen due to the advancements of some of its citizens and businesses at the expense of the overall collective. He doesn’t exude the sense of optimism that Reagan always seemed to do.

The belief that Obama is today’s Reagan is completely off the mark. While it is true that Obama has the ability to really connect with the American public through his communication, he has not embraced the positive, hopeful, optimistic message that Reagan stood for. America will celebrate President Reagan today and for a long time as those of us who grew up under his leadership and long for a return to the policy agenda that he promoted. Today it is way too early to even think about comparing President Obama to the legend of the Gipper. He can only pray that in two years, the American public provide him the opportunity to continue to serve the American public as its President.

The situation in Egypt

Following the uprising in Tunisia, Egypt has become the center of uprisings and protests against the Mubarak government. Egypt, I believe is the recipient of the second most US aid at around $1.5 billion per year. Moments ago, Fox News reported that the Obama government was considering suspending its financial support of Egypt in the wake of the uprising and the lack of any contact with President Mubarak. As the press secretary Robert Gibbs stated, "Grievances in Egypt have to be addresses by the government."

The situation in Egypt could be a huge problem for the Middle East and the world. Egypt has typically been one of the US's best allies in the region, outside of Israel. If Egypt's government is to fall and be replaced by a islamic govern run by a group such as the Muslim Brotherhood, many other countries in the Middle East might also run into many problems. Countries, such as Kuwait, Bahrain, UAE and Oman might also become the targets of radical islamic protestors hoping to overthrow the governments. The US can not allow that to happen. The US must stand with its allies. We can not accept a radical islamic takeover of the Middle East.

This situation is a huge issue for the Obama Administration and we can only hope that they understand that this protest could lead to additional situations throughout the region. The fact that President Obama has not reached out to President Mubarak so far sends a pretty strong signal that the administration either doesn't feel that the situation is all that bad or that they believe that Mubarak is no longer in control of the country, or in the worst case scenario that they have no idea what to do. This sounds a lot like the 2008 campaign where then Senator Clinton ran the ad referring to the 2:00am phone call stating a diplomatic crisis breaking out and who do you want to take that call? We can only hope that a peaceful resolution is found and a non-radical islamic government does not take over...