Obama's Fuzzy Math

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Be afraid …. be very afraid!



Obama's Fuzzy Math

A trillion here, a trillion there . . .


by Stephen Moore
04/06/2009


In his press conference last Tuesday, Barack Obama said that America must reject the "borrow and spend" policies of the past in favor of a strategy of "save and invest." Sounds good. So why is Obama proposing to borrow and spend more than any president in the history of the republic?

Already in the first 45 days of his administration, the federal government has authorized more debt spending than Ronald Reagan did in eight years in office.

Then last week the Democrats' own Congressional Budget Office found that the ten-year deficits of the Obama plan will be about $2.3 trillion higher than the $6.97 trillion the White House is projecting. This is the policy of the party that was swept back into power in 2006 and 2008 promising a return to an era of fiscal responsibility.

Welcome to the Obama doctrine. It is built on the high stakes economic gamble that the public and the bond markets will tolerate trillions of dollars of borrowing to pay for massive expansions in government spending on popular income transfer programs. The corollary to this doctrine is that the left will create a political imperative to jack up tax rates to pay for higher spending commitments made today.

But the news on the red ink front is much worse than the president or even the CBO's budget report suggests. If all of Obama's "transformational" policy objectives--from global warming taxes to universal health care to doubling the Department of Energy's budget--are enacted, the debt is likely
to increase from about 40 percent of GDP today to close to 100 percent of GDP by 2018. The ten-year debt is likely to be at least $6 trillion higher--or more than one-half trillion of higher deficits a year from now until forever--than the Obama budget projects.


These are uncharted levels of debt for the United States--though not for such high-flying nations as Argentina, Bolivia, and Mexico. This hemorrhaging of U.S. government debt will be happening at precisely the time when, in a rational world, the government would be running surpluses, in anticipation of the retirement of some 80 million baby boomers who will soon collect multiple trillions of dollars of government benefits from Medicare and Social Security.

There are three ways that the Obama administration is understating the spending and debt levels embedded in the president's budget policies.

First, Obama uses highly optimistic assumptions on how fast the economy is going to grow and how many jobs are going to be created over the next five years. I've worked in a presidential budget office before.

Believe me: If you manipulate the economic assumptions on unemployment and GDP growth, you can make the budget deficit in the future be whatever you want it to be. You can even, as Obama claims to do, magically cut a deficit in half without cutting a single program.

From 2010-13, the head of the OMB, Peter Orszag, predicts that the U.S. economy will grow at a 4 percent annual pace, when the blue chip-economic forecast is closer to 2.7 percent. Of the 51 blue chip-economic forecasters, the OMB's forecast is more optimistic than all but two.

Liberals used to lampoon Ronald Reagan's budgets--sometimes with merit--for relying on a "rosy economic scenario," but even the Gipper's sunny optimism never led to economic predictions that departed so radically from independent forecasts.

It turns out that about 75 percent of the celebrated halving of the deficit that Obama claims in his budget is purely a result of an irrationally exuberant economic model that almost no one believes is very likely.

The Republicans on the Senate Budget Committee recalculated the OMB budget deficit assuming the average blue chip-economic forecast. It found that the Obama deficit will be $2.2 trillion higher over ten years.

Next is the hard-to-swallow assumption in the budget that all of the new spending in the $800 billion democratic "stimulus" bill that Obama signed in February will expire after 2011.

"We are supposed to believe," says Paul Ryan, the ranking House Republican on the Budget Committee, that "Nancy Pelosi, Charlie Rangel, Henry Waxman, and Ted Kennedy are going to allow spending for programs ranging from education for disabled kids, to Pell Grants, to Head Start, to child nutrition programs to fall off a cliff two years from now." Not likely. When Ryan asked the Congressional Budget Office what happens if the spending for about two dozen of the most politically popular programs is continued, not cancelled, the CBO reported back that the deficit and federal outlays would be $3.27 trillion higher over the next ten years.

Finally, there is the crown jewel of the Obama-Pelosi-Reid domestic agenda: universal health care.

This is at the top of the "to do" list of the Obama administration and is unlikely to get pulled back or postponed, as the president made clear in his press conference. Obama has not been specific about what plan he favors or about how much a national health care system will cost, but his budget allocates a $634 billion "placeholder" for that purpose.

The consensus opinion, though, is that the lowest possible cost of universal health care is $1.2 trillion, with many estimating closer to $1.5 trillion. So team Obama is off by roughly $600 billion over ten years to cover all of America's uninsured. Obama says he will find ways to reduce health care costs at the same time, and I wish him well, but this is a promise that every president since Jimmy Carter has made and failed to keep.

Incidentally, almost all analysts also believe that the Obama price tag for his global warming program is too low.

Jason Furman, the deputy director of the president's National Economic Council, says the cost is likely to be "two to three times higher" than the $646 billion estimate in the president's budget.

Most independent analyses agree with Furman's figure. But we will leave this out of our calculations for now, because the debt and spending numbers are ruinous enough without them.

Here are the unhappy totals: the debt is $6 trillion higher from 2010 to 2019 than Obama's forecast. In no single year over the next decade, even when counting the Social Security trust fund surpluses, does the budget deficit fall below $800 billion. The interest on the national debt rises to $850 billion a year by the middle of the next decade, which will be the largest single expenditure item in the budget--eight times more than we now spend on education and four times more than we spend on homeland security. Federal spending remains well over 25 percent of GDP and in some years creeps closer to 28 percent of GDP under the Obama budget, which ironically enough is entitled "A New Era of Responsibility."

We are closing in on stagnant Western European levels of government intrusion into the economy. That economic model, by the way, which the left in the United States openly wants to emulate, has created half the jobs that the United States has over the past two decades and generated half the growth rates. Is it any wonder that the Chinese want an extra guarantee on U.S. Treasury debt and say it might be time for a new reserve currency?

I have never been a fear monger when it comes to deficits and debt. If the economy grows faster than the debt, as occurred in the 1980s and 1990s then the nation's burden of financing government borrowing becomes smaller over time. Incurring debt is legitimate, moreover, if the borrowing is paying for future prosperity.

The 1980s deficits were probably one of the highest-return investments in American history. We bought a victory over the Evil Empire in the Cold War and borrowed to finance reductions in tax rates that launched America's greatest ever period of wealth and prosperity: 1982-2007. The national debt grew by about $6 trillion while U.S. net wealth grew by $40 trillion. A pretty good trade.

This debt we are now incurring is paying for windmills, unemployment benefits, new cars for federal employees, weatherizing homes, high-speed trains to nowhere, and the like.

It buys almost nothing of long-term economic benefit. Most of the money that has been borrowed since September 2008 has been used to bail out irresponsible borrowers, failed financial institutions and car companies, and for expansions of welfare programs.

The three biggest areas of government expenditure increases sought by the Obama budget are education, energy, and health care. Any unbiased assessment of the return on investment--to use an Obama term--for these programs would find dismally low payoffs for taxpayers. Government programs are the only things in the world that when they yield failing results, we reward them with more money.

Some five years ago Tom -Daschle and many other leading liberals cursed George W. Bush as "the most fiscally irresponsible president in history." He may have been. But he isn't anymore.

Stephen Moore is senior economics writer for the Wall Street Journal editorial page and coauthor of The End of Prosperity.
 

ViRedd

New Member
What I find amusing is all of the dupes who still have their Obama bumper stickers on their cars.

Vi
 

FLoJo

Well-Known Member
we are pretty much fucked.. economy is going down the toilet, our rights are going down the toilet, along with the rest of the country.. wonder what wonder boy obama has in store for us next
 

ViRedd

New Member
Unemployment is pushing 10% now. I remember when unemployment was a little over 5% when Bush was in office and the libbies in the forum were going ballistic over it. Where are they now?

Vi
 

medicineman

New Member
Unemployment is pushing 10% now. I remember when unemployment was a little over 5% when Bush was in office and the libbies in the forum were going ballistic over it. Where are they now?

Vi
The unemployment we are seeing now is a direct result of the bush unregulation and economic policies.
 

TheBrutalTruth

Well-Known Member
Unemployment is pushing 10% now. I remember when unemployment was a little over 5% when Bush was in office and the libbies in the forum were going ballistic over it. Where are they now?

Vi
At a guess, unemployed...

No paycheck, no cable, no liberal internet stupidity
 

TheBrutalTruth

Well-Known Member
Oh, its that evil "Bush Unregulation!" Thanks for clearing that up, Med. :lol:

Vi
Yeah, you know, unregulated bush is quite delicious actually...

Though I don't get liberals. There's nothing wrong with their women, who all hate bush, but their men, I believe are all queer as they all hate bush, too.
 

ViRedd

New Member
Yeah, you know, unregulated bush is quite delicious actually...

Though I don't get liberals. There's nothing wrong with their women, who all hate bush, but their men, I believe are all queer as they all hate bush, too.

I'm presently dating a very liberal woman. She's totally clueless. Must be that morning issue of the Los Angeles Times she has delivered every morning. I'm not kidding ... she "LOVES" Obama, but can't tell me what it is that she loves about the guy.

Vi
 

stinkbudd1

Well-Known Member
wow i see that there are more pot growing pot smoking religious right wing gun toten bigots everywhere. as for the unemployment at 5% in the bush years you are rights the very first year that he came into office which in turn is the same thing you have now obama has inherited a hell of a mess for us all and if you think that you can fix it by not emplimenting some of the things he's doing you are about as stupid as the birthers and the you lie guy who was actually talking to himself in the third person because he was the one who lied..the last eight years in this country has been death destruction and hard times not just for the poor but the middle class as well i do look for better yet you quote bush after his failure i have two family members dead now from iraq and the whole war was a joke. as my dad would say this country under bush was going to hell in a hand basket..at least let obama finish what ever terms he get and then judge him thats only fair if you all were economic or any other professionals that know what you are talking about than fix it..if you can stop smokin yourself into a stupper.....
 

Iron Lion Zion

Well-Known Member
wow i see that there are more pot growing pot smoking religious right wing gun toten bigots everywhere. as for the unemployment at 5% in the bush years you are rights the very first year that he came into office which in turn is the same thing you have now obama has inherited a hell of a mess for us all and if you think that you can fix it by not emplimenting some of the things he's doing you are about as stupid as the birthers and the you lie guy who was actually talking to himself in the third person because he was the one who lied..the last eight years in this country has been death destruction and hard times not just for the poor but the middle class as well i do look for better yet you quote bush after his failure i have two family members dead now from iraq and the whole war was a joke. as my dad would say this country under bush was going to hell in a hand basket..at least let obama finish what ever terms he get and then judge him thats only fair if you all were economic or any other professionals that know what you are talking about than fix it..if you can stop smokin yourself into a stupper.....
Wow... :wall:
 

perocles

Member
Say what you will but for the first time in my lifetime I watched a reality star born - of the media and ascended into a one of the most prestigious spots in the world - president of the united states. Something you should know about all politicians though, they are good talkers - but thats about it. We might as well of brought Clinton, or John Kerry back if we had known we would of elected this greenhorn. Obama didn't help the gays, clean up the environment, or even stop drilling (he started to drill just of my coast right before the gulf spill). In fact his pockets have been lined so deep by the banks that he won't let some of them just fail! Meanwhile the banks give themselves million dollar bonuses while they take your house and fire most of their employees. The reality is it may take quite a while to fix the Obama mess. Atleast the Republicans are the devils we know, and they actually are a lot more charitable than you might think. I wasn't holding my breath for him to do anything extraordinary but now I have to pay for this forced healthcare? My state probably won't allow it, but he'll push it through anyway. If you haven't noticed ladies and gentlemen the bubble has burst, and i'm taking steps to move to Canada before the real depression comes - they won't tell you its coming because then you'd just take all the money out of the banks and it would fall apart even quicker.
 

redivider

Well-Known Member
i would just like to know how high you must have been to dig so deep into the politics forum you felt that it was necessary to respond to posts made over 2 years ago by members who haven't been back in god knows how long....

and just for kicks, you want fuzzy math??

here's some for ya:

the GOP is screaming and yelling at the top of their lungs that the health care overhaul will result in "650,000 jobs lost".

They are misquoting a CBO study that said that with health reform, the labor supply may decrease by 1/2 percent. but it's not because companies aren't hiring 650,000 people. it's not because 650,000 positions will cease to exist, as the GOPwants you to believe.

it's because of other reasons and more than 1 economist has called out their bullshit.

you want some other fuzzy math???

some GOP piece of shit said that the health care overhaul really won't reduce the deficit, like the CBO said.

he said "when you remove the smoke and mirrors, you see what really happens", but he doesn't explain what smoke and mirrors he's talking about, he just blames some double counting that happens during the course of the study which is then corrected to arrive at the results.... apparantely the concept of incremental analysis is waaay to hard for him, the theory and math behind it is completely out of his range of intelligence, and yet he is hell bent on 'schooling' us with what can only be called: FUZZY MATH.

let the mudslinging begin!!!
 
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