Obama's Two-Faced Poisonous Plan Sure To Please No One

Talk coming from the White House is rather amazing. On one hand Obama chastises Congress for not being fiscally prudent, on the other hand he wants Congress to approve still more funding for his pet ideas. Such talks is bound to win few fans on either side of the aisle.

Please consider the Obama Budget: Record Spending, Record Deficit

Spelling out painful priorities, President Barack Obama urged Congress on Monday to quickly approve a huge new shot of spending for recession relief and job creation, part of a record $3.8 trillion budget that would boost the deficit beyond any in the nation's history while only slowly beginning to put Americans back to work.

The spending blueprint for next year calls for tax cuts for workers and business and more aid for cash-starved state governments as well as the unemployed. The jobs initiative largely mirrors last year's stimulus bill, but is about one-third its size. The president is asking for nearly $300 billion for recession relief and job stimulus.

While proposing increases for immediate needs, he urged lawmakers to follow his lead and make cuts, even painful ones in programs dear to them. "I'm asking Republicans and Democrats alike to take a fresh look at programs they've supported in the past to see what's working and what's not, and trim back accordingly," he said.

"They're not willing to do big ideas. They're doing ideas that create perception but don't do anything big," said New Hampshire Sen. Judd Gregg, senior Republican on the Budget Committee. "The spending freeze for example. You're talking what, $10 billion on a $1.6 trillion deficit?"

Democrats, facing the prospect of major losses in November, are likely to join Republicans in balking at many of Obama's proposals. Moderate Democrats already are wary of another debt-financed economic stimulus program and may also choke on many of the recommended tax increases and spending cuts.

Obama's proposal to cut payments to wealthier farmers, for example is probably dead on arrival and his renewed push to end purchases of new C-17 cargo planes for the military is sure to incite a battle with lawmakers from California, where the planes are assembled.

Proposing a partial spending freeze, tax increases for wealthier people and a new fee on banks, the president's proposal still amounts to just tinkering at the edges of the larger budget problem.

While White House Press Secretary Robert Gibbs spoke Sunday of a $100 billion jobs initiative, these "temporary recovery measures" in fact total $282 billion through the autumn of 2012, according to budget documents.

At the same time, Obama wants to hand off to a commission decisions on the tough steps needed to reduce deficits and slow the growth in the federal debt to levels economists deem prudent. The panel's recommendations wouldn't be due until after the midterm election.

Obama's proposal lays out a path to reduce annual deficits to about $700 billion in four years, but ideas for tax increases or cuts in popular benefit programs like Medicare or Social Security to reduce them an additional $200 billion would have to come from the commission.

"We simply cannot continue to spend as if deficits don't have consequences, as if waste doesn't matter, as if the hard-earned tax dollars of the American people can be treated like Monopoly money, as if we can ignore this challenge for another generation," Obama said.

Obama dropped his plan into a poisonous election-year atmosphere. Republicans in Congress immediately labeled it as a toxic mix of higher taxes, big spending and debt, saying it would still produce deficits totaling $8.5 trillion over the coming decade.

Is Anyone Happy?

A quick look at the above article is all it takes to answer the question. Moreover, I am struggling to believe Obama does not comprehend how ridiculous he looks chastising both parties for spending while adding new proposals seemingly every day.

And what's with freezing 1/8 of the budget at best while adding something to every piece of the remaining pie?

Economist Paul Krugman is sure to complain the President is not spending enough, right along with House Majority Whip James Clyburn (D-S.C.) who says "We're not going to save our way out of this recession. We've got to spend our way out of this recession, and I think most economists know that." (See In Defense of Drunken Sailors for details).

Balance that with every economist in their right mind (although admittedly there are very few), who think it is impossible to spend one's way out of a debt bubble.

Meanwhile healthcare is dead, yet war spending, the one thing nearly everyone in the country thinks is a bad idea is going up.

Indeed, Obama's budget seems carefully crafted to offend as many people as possible.

As anger mounts, look for the mid-term elections to be a slaughter. Any weak incumbent is going to have a very tough time retaining his seat. Republicans now have a genuine shot at retaking the House, although many of them deserve to be booted as well.

Here's my rule for the upcoming election "If In Doubt, Vote Them Out".

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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