Update: revised for content and grammar 11/26/11 by J Smithson
Update: in February of 2011, Obama's first budget effort failed in the Senate, 97 to 0 -- seriously. The speech we are about to briefly review, is his second effort and it had a poorer congressional showing than the first. What could be worse than a "zero" vote count? Well, how about no count at all? The CBO sent the proposal back to Obama, telling him that it "could not estimate a speech." That is the speech you are about to read. As speeches go, it is fine. As a legislative/financial proposal, it is as bad as it gets, mostly (no doubt) because Obama did not seek out any professional help in formatting this abortion.
Update (11/25/11). I just want to drive this point home: this April 13 speech was so poorly constructed as relates to finances, that Doug Elmendorf, head of the CBO, had this to say when returning the speech in June, "We don't estimate speeches. We need much more specificity than was provided in that speech for us to do our analysis." The speech never made it to the Senate floor. It's content was never voted on. Understand that this April 13 speech, was preceded by Paul Ryan's April 5 budget presentation, detailing 6.6 trillion in cuts. Before Ryan's speech, no one, absolutely no one, in the Obama Administration was talking about budget cuts exceeding $60 billion. Ryan's speech was an embarrassment to Obama. There is no doubt in my mind that Ryan was the reason for Obama's speech. Barack was about to get even with Ryan. Keep in mind that Obama's first speech called for 60 billion in cuts and lost in a Senate vote, 97 - 0. How embarrassing was that!! Understand that Ryan was calling for cuts that totaled more than 100 times those of Obama's. His April 5 speech brought the budget discussion into a meaning context.
Obama's full speech can be found here: hyperlink. In the following brief, Obama's actual words are in green. The brief is original with this blog's editor, J Smithson
Before beginning our anecdotal summary, I want to point to the disgraceful way Obama approached this opportunity. Understand that he sent a personal invitation to Paul Ryan and had a place for him to sit, on the first row of the assembly. Ryan misunderstood this gesture as an "olive branch" and came to the auditorium with hopes that this indicated a willingness on the part of Obama to work with Ryan and the GOP. Instead, he listened to the first 24 minutes of this speech as Obama blasted Bush 43 for excessive spending and, then, typified the Ryan budget as an effort that was not a serious budget proposal. Before moving on with his "budget" proposal, Obama made this insulting summation as he stood directly in front of and above Paul Ryan:
Obama says: "As Ronald Reagan’s own budget director said, there’s nothing “serious” or “courageous” about this plan. There’s nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires. There’s nothing courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill. And this is not a vision of the America I know."
So, that was the context of today's speech. Obama made a conscious decision to push back against the GOP, making it clear that there would be no negotiations on the 2012; that it would be "my way or the highway." As Chris Matthews of MSNBC characterized the speech: "Obama drew a line in the sand." Nothing new about that. It is the way he governed during most of the first two years of his administration. Clinton said, "Let's sit down and talk." Reagan did much the same thing. So, too, did Bush 43. In fact, he (George Bush) went much too far in his effort to work with the Dems. And Obama? Well, he has no intentions of being a national leader. He is the partisan head of the Democrat Party and nothing more.
Early in the speech, before he started his attack on Paul Ryan, he went back to the tired, old "its Bush's fault" strategy. Understand that this was a political speech. It was not a budget presentation; not enough detail.
Obama did not mention the fact that before Clinton's second term ended, the nation was in a mild recession. In fact, it was this recession that led to the Bush tax cuts. Those tax cuts generated more tax revenue than any administration in modern times. Years later, we continue to benefit from those cuts. Understand that with the Bush cuts in place, revenues for 2010 - in the midst of our current recession - increased by 21%.
Obama's four point budget proposal:
The first step in our approach is to keep annual domestic spending low by building on the savings that both parties agreed to last week – a step that will save us about $750 billion over twelve years.
The agreement last Friday evening was for cuts on projected spending of 38 billion. There are problems with this "38 billion in savings" but we will leave that for another post. If we take 38 billion and multiply it by 12 years, that comes out to a $456 billion dollar savings. Not sure what Obama had in mind at this point, but he was definitely wrong in his math. Know this, that projected savings are not valid? Why? Because those claims never happen. Heck, two years from now, we will have a different congress; fours years from now, another congress; six years from now, yet, another . . . . and so on. This is nothing but feel good talk, if history is a predictor. Besides -- Obama brags about $750 billion in savings over 12 years. During that same period of time, we will add more than $22 trillion to our national debt including his pretend "savings." Trust me: 22 trillion is more than 750 billion.
The second step in our approach is to find additional savings in our defense budget. . . . . . Over the last two years, Secretary Gates has courageously taken on wasteful spending, saving $400 billion in current and future spending. I believe we can do that again.
Before Obama could get off the stage following this speech, his Defense Secretary, Gates, released this statement concerning the Obama military cuts: "(Reuters) - The United States may have to scrap some military missions and trim troop evels if President Barack Obama sticks with his goal of saving $400 billion on security spending over a 10-year period."
Point three:Already, the reforms we passed in the health care law will reduce our deficit by $1 trillion. My approach would build on these reforms. We will reduce wasteful subsidies and erroneous payments. We will cut spending on prescription drugs by using Medicare’s purchasing power to drive greater efficiency and speed generic brands of medicine onto the market. We will work with governors of both parties to demand more efficiency and accountability from Medicaid. We will change the way we pay for health care – not by procedure or the number of days spent in a hospital, but with new incentives for doctors and hospitals to prevent injuries and improve results. And we will slow the growth of Medicare costs by strengthening an independent commission of doctors, nurses, medical experts and consumers who will look at all the evidence and recommend the best ways to reduce unnecessary spending while protecting access to the services seniors need.
Look, we heard these very words more than a year ago when he was making up reasons for our accepting his health care reform law. A few weeks ago, the CBO released a memo that admitted ObamaCare would actually cost the American taxpayer $1.3 trillion over the next decade.
The fourth step in our approach is to reduce spending in the tax code. In December, I agreed to extend the tax cuts for the wealthiest Americans because it was the only way I could prevent a tax hike on middle-class Americans. But we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. And I refuse to renew them again.
I am sorry (not really) to report that the rich will always have money, if the society they live in is a free and open society. It is not fair or even truthful to point to the millions the rich make and if there is something with a society that allows them to exist. The fact of the matter is, the top 1% of our nation's wealthy (we are all rich compared to the remainder of the world) pay 37% of all income taxes. Understand that Obama is not talking about a "tax cut for the rich." He might think he is but that is not the case. What is being debated is a reduction in their tax rate.
Here is a fact -- with the lower tax rate, the rich will actually pay more taxes !!! There is no loss of a "trillion dollars worth of tax cuts." Again, the rich will pay more in taxable income with a reduction in their tax rate. We know this because they paid more in taxes when their rates were reduced from 90% to 70% by JFK. They paid double in taxes when Reagan cut their rate from 70% to 28%. And Clinton's reduction in the corporate tax rate netted increased taxes, as well.
If Obama does the opposite, and increases the tax rate for the rich, they will only find other venues for making money and spending their profits. They are not stupid. Proof of this is Obama's good buddy, Jeffery Immelt of General Electric and the fact that GE paid no taxes on $5 billion in corporate profit. Obama had two years to deal with this sort of tax loop-hole and, instead, decided to play the world's reformer. GE was the single largest corporate supporter of Obama. He and Immelt are comrades with Immelt a member of Obama's jobs commission. Immelt's GE paid no taxes for 2010 and 2011.
In the end, our review gives Obama as low a score as one could imagine. Short on genius and innovative thinking and a big zero for his rehash of his health care concerns.
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