Summarizing a Few Spending and Deficit Comparisons for Obama to Bush

The Tuesday, 20 January 2015 issue of Investor's Business Daily offered a few comparisons of George W. Bush's budgets compared to those of Obama in its Issues and Insights Section.  These observations are timely given that Obama's budget for 2016 would increase spending by $68 billion.  Every single year Obama's budget request exceeded that which was approved by Congress, while all but one year under Bush, Congress insisted on spending more than he requested.  Every one of Obama's budgets called for a higher deficit than wound up being approved by Congress.  This spendthrift Democrat Socialist posed as a much more fiscally responsible man than Bush in his first presidential campaign, consistent with his unsurpassed proclivity for the Big Lie.

If Obama's budgets had been approved by Congress, the USA would have a gross national debt $1.8 trillion greater than it is now.  If Congress had only spent as much as Bush requested, the increase in the national debt under Bush would have been $800 billion less.

Under Obama, the gross national debt has grown by $7.5 trillion already and it has nearly two years more to go up, compared to its growth under Bush of $4.9 trillion.  So if Obama had had his way, the national debt would have been $9.3 trillion greater in 6 years, while if Bush had had his way, it would have gone up $4.1 trillion on his 8-year watch.

Yes, the spending, the deficits, and the debt were all handled poorly in Bush's budgets, but they were handled even more recklessly under Obama's budgets.

It is the Job of the House of Representatives to Stop Excessive Spending and ObamaCare

The federal government is wholeheartedly engaged in excessive spending.  Most of its spending is for purposes that are not consistent with the powers of the federal government as enumerated in the Constitution.  It is the responsibility of the House of Representatives to stop such spending.  One of the most egregious examples of the government violating its enumerated power limits is ObamaCare.

The federal government has no enumerated power to either provide healthcare to Americans or to impose limits on the healthcare they are allowed to choose for themselves.  This is so clear that the the only way that it could survive review by the big government Supreme Court was by five Justices pretending it was justified as a tax, despite the claims at the time of passage by its supporters that it was not a tax.  As I have argued before, such passage of legislation on a fraudulent basis should be sufficient by itself to have a law nullified by the Court.

But most fundamentally, ObamaCare's primary premise is that the government owns every individual's body and mind.  If it did not, it would not be in a position to dictate how individuals care for their bodies and minds.  There are almost innumerable other grounds for rejecting ObamaCare as a tyrannical violation of individual rights as well.

The House of Representatives is required by the Constitution to originate tax or revenue bills.  The passage of ObamaCare itself made a mockery of this requirement since that bill really originated in the Senate.  This was a severe violation of the separation of powers.  The House was chosen as the critical point of revenue bill origination because the power to tax was much feared by the Framers of the Constitution and they knew it to be feared by the People.  They wanted the House which had the most rapid turn-over and could be most quickly punished for its misdeeds by the People to play the primary role in taxation.

Because the House must originate taxation bills, it should be especially concerned to limit spending.  This is the only way, aside from running up the nation's debts, that it can avoid taxing the People at levels which will harm them and slow the growth of the economy.  To avoid the onus of heavy taxation or irresponsible debt, the House must control spending.  ObamaCare is a huge spending bill and it is also a bill which is substantially reducing the strength of the economy and increasing the burden of spending on households, thereby reducing their ability to pay taxes.

Yet despite these natural functions and responsibilities of the House of Representatives, we are being told by people such as Bill O'Reilly, Karl Rove, and Obama supporters that should the House of Representatives defund the ObamaCare train-wreck and should the Senate and the President then refuse to approve the spending bill sent to them by the House, that it is the House that has shutdown the government.  According to them, it is the responsibility of the House to bow to the Senate and the President on spending and presumably on taxation no matter how irresponsible their spending is.  These opponents of defunding ObamaCare are actually depriving the House of Representatives of its constitutional mandate to be the close guardian of government taxation and spending in the interests of the People.

ObamaCare supporters imply that a bill passed by some previous Congress is binding on future Congresses and all of its spending is also binding on those future Congresses until such time as a future Congress may repeal the entire law.  This is nonsense.  The American Principle is that government should be minimal and devoted to the protection of individual rights.  If the house of Congress closest to the People, the House of Representatives, is taken out of the control of the Democrats and comes to be controlled by the Republicans in large part due to the People's anger over the passage of ObamaCare, it is the responsibility of that House to limit the damage of the rights-violating, spendthrift, and health care degrading bill.  This is the process intended by the Framers of the Constitution.  The natural and responsible way to do this is by reducing its funding or better yet by defunding it altogether.

The Senate and Obama are simply obstructionist when they require that every program they want be fully funded or they will shut down the entire government.  They are failing their responsibility to provide those few functions of the government which are actually constitutionally required of it.  ObamaCare is not actually even allowed by the Constitution, let alone required by it.  Yet the media will insist that the House must bow to the power of the Senate and Obama to spend as much as they wish, no matter what the cost is to the People.

It is time for the People to insist upon the responsible use of their hard-earned tax dollars and upon limits on future debt increases.  It is also time for them to insist in no uncertain terms that ObamaCare is damaging their ability to manage their own medical care and hence is a fundamental violation of the very right to live and of the right to pursue their own happiness.

Left Says GDP Contraction of 4th Quarter of 2012 Due to Government Austerity

We are being told that the reduction of the GDP by 0.14% in the Fourth Quarter of 2012 was due to a decrease in spending by the federal government.  What on earth are they talking about?

Here is current federal government spending by quarter at the annual rate with seasonal adjustment going back to the 4th Quarter of 2010 according to the St. Louis Federal Reserve Board:

2012 4th Quarter: $3,765.2 billion
2012 3rd Quarter: $3,760.6 billion
2012 2nd Quarter: $3,774.8 billion
2012 1st Quarter: $3,723.6 billion
2011 4th Quarter: $3,716.8 billion
2011 3rd Quarter: $3,743.3 billion
2011 2nd Quarter: $3,830.6 billion
2011 1st Quarter: $3,737.1 billion
2010 4th Quarter: $3,756.3 billion

Federal spending went up very slightly from the 3rd to the 4th Quarters of 2012, not down as we have generally and widely been misinformed.  What is more, going all the way back to the 4th Quarter of 2010, the rate of government spending has been relatively flat.

When government spending rates change, there are direct changes in the GDP because that figure includes all government spending.  But no change in government spending, or a very small increase as shown here, should have no effect on the quarter by quarter GDP, except that of an accumulating wearing down of the private sector growth by discouraging investment due to excessive extraction of wealth and income from the private sector.  That and the increasing effect of laws and regulations harmful to business and investment is surely what really caused the 4th Quarter contraction in 2012.

One really has to wonder at the remarkable dishonesty of the story we are being told by the left and the media outlets they control.

It makes more sense to monitor the Disposable Personal Income (DPI) as a measure of the economy's health, since that does not include the money spent and largely wasted by government.  According to the Bureau of Economic Analysis, the DPI for the last quarter of 2012 increased by 1.3%.

Obama Cruelly Threatens to Withhold Social Security Payments

There is no cruelty to match that of a frustrated socialist yearning for control over the People.  Obama has told tens of millions of very frightened seniors on Social Security that if the Republicans do not cave-in and give him a blank check to continue spending massive amounts of taxpayer money and then add much more to the national debt, he may not send out Social Security checks in August.  This is probably an empty threat, but that does not diminish the brutality of it.

By any rational analysis, it is also an absurd threat.  In 2010, Social Security income was $677.1 billion according to the Social Security Fund Trustee's Report.  Social Security outgo was $584.9 billion, which means it had a surplus of income over outgo of $92.2 billion.  That surplus was used to help fund the massive deficit spending on all other government programs, as the Social Security surplus has been used for decades.  Because of this, of the $677.1 billion of income, $108.2 billion is interest on government bonds the Social Security Trust Fund bought to help the government finance its deficits in the general fund for decades.

The Obama administration wants to keep spending money it does not have on such things as

• the expenses of setting up the bureaucracy and rules for ObamaCare, 
• setting up the bureaucracy and rules for the Dodd-Frank finance "reform", 
• paying ethanol, windmill, electric vehicle, solar, and other "green" energy subsidies, 
• paying higher electric and gasoline bills because it is foolishly convinced by its own propaganda that man is causing a catastrophic global warming, 
• paying hordes of scientists to prove this false catastrophic man-made global warming hypothesis,
• persecuting business with reinvigorated threats of anti-trust actions, 
• putting more people on Medicaid and Medicare,
• paying bloated union wages on federal contracts,
• using the Labor Department to provide site requirements to companies for their expansions while considering only Union Shop states,
• using the Justice Department to promulgate injustice against the states and the people and discrimination against those not in government-favored minorities,
• funding universities that long ago became bloated with government money and stopped educating students,
• promulgating tens of thousands of new regulations which serve no useful purpose but to increase the power of bureaucrats over the People who do not have the time to read the regulations,
• and providing funding to the United Nations, the IMF, the World Bank and many other international institutions that do not like the U.S. and hate our Constitution and concept of individual rights.

Apparently, Obama is now telling us that he is so unwilling to stop such foolish spending that he is going to transfer more than the surplus in the Social Security Fund income out to cover these other expenses.  It is his decision to do this which will prevent him from sending out the August Social Security checks!  Actually, I do not think the law will even allow him to do this, but then he is accustomed to ignoring the law, so that does not mean he will not do it.

Let us suppose that he chooses not to use the federal income from income taxes, corporate taxes, capital gains taxes, tariffs, gasoline and cigarette taxes, and many other taxes to pay the $108 billion owed the Social Security Fund in current interest payments.  In other words, he might make payments on interest to the Chinese and to investors, but not to the Social Security Fund.  The Social Security surplus of $92.2 billion would then be turned into a small deficit of $16.0 billion.  If he then did not send out that $16.0 billion, but did send out the remaining $568.9 billion of checks, this would mean that 2.8% of Social Security payments would not go out.  But, there is no way that $16 billion shortfall due to the default on the interest payment would not be made up by any President not grasping at power as a lust-driven would-be dictator.

Obama's threat really has struck terror into the hearts of many Americans on Social Security.  This was a totally irresponsible and pernicious act on the part of this cruel and evil man.  It seems to take such people to be the strongest advocates of socialism.  Despite its pretenses of caring for the needs of some of the People, those who pursue this so-called ideal as a career are never actually caring people.

This entire fuss about the debt ceiling is due to the failure of the Senate to produce a budget for over two years.  The House would not produce one either until the Republicans took it over.  But, the Senate and the President have ignored their budget.  Since no agreement has been reached on what the government will spend in 2012, there is no basis for an agreement on what spending cuts will be made to reduce the deficit to some manageable proportion of our GDP.  All we know is that the record over the last three years was for the government to spend an average of more than 24% of GDP, while before 2008, the spending was below 20% of GDP.  Obama and the Democrats appear to want to continue spending much more than 20% of GDP even though that will mean huge on-going deficits.  Apparently, they intend that this funding will be the result of many more continuing resolutions on spending, so they will never have to recognize that the welfare and crony mercantilist government they want is not sustainable.  They can ignore the failure of big government socialism as long as they do not have to produce an actual budget.  Unless, of course, we collapse as Greece is and Italy may be on the verge of doing.

A 4% of GDP reduction in government spending is more than a $600 billion reduction per year.  It is clearly easy for the government to function at its 2007 spending levels, so there is no excuse for spending cuts that are not in the $600 to $700 billion per year range relative to the spending of this year and the two previous years.

Last Gasp Socialist Omnibus Spending Bill Defeat Gives Hope for New Era of Responsibility

This last week was quite a momentous one for individual rights and more legitimate government, with the continuation of almost all of the lower tax rates of the Bush presidency, the declaration by Judge Hudson that the individual mandate and the penalties in ObamaCare are unconstitutional, the end of the ignoble Don't Ask, Don't Tell Policy in the military, and the defeat of the last gasp effort of the Progressive Socialist Elitists to fund their program for the next year in an Omnibus Spending Bill.

The Democrats had completely neglected to fund the current fiscal year's federal government with the normal 13 appropriations bills, each to be studied, discussed, and debated by responsible adults in the Congress.  Instead, they proposed, in the manner this Congress has become accustomed to, to wrap the whole process into one massive, take it or leave it bill to be passed in the most rushed and ill-considered way possible.  Indeed, as with other bills in this Congress, this was a You Must Pass the Bill in Order to Find Out What Is in It kind of bill.  It was another Trust Us, We Know What is Best for You Bill.  The Omnibus Spending Bill had barely numerable evils embedded in it:

• 1,924 pages which few members of Congress had read and which were not debated appropriately.
• Total spending of about $1.27 trillion, which was way beyond the government's expected tax revenues.
• About 6700 earmarks costing about $8.3 billion, with the usual extra concentrations of earmarks for members of the Appropriations Committee.
• One year's worth of funding for ObamaCare so the coming Anti-ObamaCare House of Representatives would have no opportunity to defund ObamaCare for a year.  This socialist government wants to get a good start hiring those extra IRS agents to make sure everyone buys very expensive government-approved health insurance and that all businesses fill out and submit their 1099 Forms for every transaction or sum of transactions totaling more than $600 in a year with any vendor.
• The Legal Services Corporation would have its budget increased to $440 million so it could once again engage in class action lawsuits, which it had previously so abused that it was forced to stop class action lawsuits in the 1980s.  It says it now wants to force banks to stop predatory lending, which would just mean that more people would turn to payday lenders who charge up to 500% annual interest as banks are forced to bring down their interest rates.  Presumably the Legal Services Corporation would also presumably return to suing landlords and other targets it had previously chosen to harass and extort.

This sort of package deal with thousands of unrelated provisions is a strong bias toward wasteful and wrongheaded spending of the taxpayer's money.  The appropriate bias of Congress should always be against spending the taxpayer's money.  But just as our present-day interpretation of the Constitution is biased toward nearly unfettered governmental powers rather than toward maximal individual rights, the entire appropriations procedure of Congress has become biased toward thoughtless spending of the taxpayer's hard-earned money.  It is noteworthy that Senator Mitch McConnell actually marshalled the opposition of the Republicans to this bill, despite their own many earmarks in it, by correctly stating that this was no way to do business.  He noted that the bill was too expensive and that it was a grab-bag of junk provisions that flew in the face of the voters who made their disdain for such legislation only too well known in the November election.

Senator McConnell proposed a 60-day extending budget resolution, which I believe should have been a 30-day extension.  This would have been just enough time to let the incoming Congress deal with as much as possible of the 2011 fiscal year budget.  Unfortunately, I just heard that the continuing budget resolution will carry the government's excessive spending binge into March.  This will make the 2011 federal deficit much larger than it should be.  Socialism carries a very high price tag in lost individual freedom and the excessive spending of other people's money.

Eliminating the Deficit Is Not Hard

Daniel Mitchell of the Cato Institute has a prescription for a simple way to balance the federal budget without higher taxes.  He would freeze the budget where it is or allow either a 1% or 2% increase per year to achieve budget balance in a few years.  Freezing the budget where it is, projected tax revenues will slightly exceed the spending in 2016.  With 1% spending increases, a micro surplus would occur in 2017.  A 2% spending increase allows a surplus in 2020.  His is a simple response to the absurd claims by John Podesta of the Center for American Progress that the Bush tax cuts cannot be extended or made permanent because there is no reasonable way to downsize the government.

Let us look at this a bit further.  I have plotted the actual federal spending in 2005 dollars from 2000 through 2009 below, with the corresponding actual federal tax revenues.  Beginning in 2002, the tax revenues have been consistently lower than the spending, so we have become habitual deficit spenders.  The Obama government's expected spending and tax revenues for 2010 through 2015 are also plotted.  The Obama government intends to continue huge deficits through the 2015 fiscal year.  I have also plotted what government spending would have been if it had increased each year since 2000 at the same rate as the growth of our population.

For many decades, federal government spending has been excessive.  It was certainly excessive in fiscal 2000.  At least $2 of spending was unconstitutional even then for each $1 that might have made a reasonable claim for being constitutional.  If the federal government had increased its spending at the rate of population growth since then with a constant per capita spending rate, the tax revenue income would have been a match for spending except in the dip of revenue corresponding to the aftermath of the dot.com bubble bust and the present Great Socialist Recession in 2009 and 2010.  This would have been government we sorta, coulda have afforded.  Instead, we have had an insistence that at no time should the government feel any constraints on its spending.  In 2009 and 2010, the years whose spending Obama and the Democrats have completely controlled, the spending has been more than two-thirds higher than tax revenues.  I see no reason for the ridiculous spending of the years 2009 and 2010 to be continued, even without growth.  The new Republican House should insist that 2011 spending return to at least the absurdly high spending level of 2008.  The federal budget could then be allowed to grow at the population growth rate of 0.986% a year from 2000 to 2010.  The rate of spending from 2011 through 2015 is the curve I have called Spending Rationalized.

Under the Spending Rationalized plan, spending would be barely in excess of tax revenues with the extended Bush tax cuts in 2013 and there would be a small surplus in 2014.  There is no reason for government to grow faster than the population does.  In fact, while one might argue that the kind of protective services of local and state governments might justify growth at the population rate, there is no reason for the federal government to grow as fast as that.  At least there is no constitutional reason.  A constitutional government's main expense, by far, would be defense.  The threats to us defensively tend to be what they are, whether we have some more people or some fewer people.  Actually, with more people, enemies may be more reluctant to tangle with us, so the defense needs per capita may drop.

The socialists of the Obama government may argue that the recession will require on-going higher spending levels.  But, the many Obama attempts at stimulating the economy with massive spending bills have not worked.  It is clear that what is needed is a restoration of business confidence, both for large corporations and for medium and small businesses.  They need a known and not too expensive regulatory climate coupled with a reasonable tax policy that recognizes that many American companies are in direct or indirect competition in the world markets.  They need the government to get out of the way and let them produce. 

The only way to get out of the looming cost of government problems such as the Medicare, Medicaid, and Social Security underfunding problems is to cut back on those programs somewhat and foster real growth of the private sector.  The Obama idea of transferring wealth in larger and larger amounts from the private sector to the governments is a recipe for the collapse of the American economy, not just on the temporary scale he has forced in 2009 and 2010, but on a permanent basis.  Indeed, I have little confidence that Obama and the Democrats would even hold spending down to the very high levels they are projecting.  I am even more confident that under their management, the growth in tax revenues they are projecting for 2011 onward is unrealistically high.

Those increases in revenue are not too high if there is a sufficient change of philosophy in Washington that results from the Republicans gaining control of the House, which has to originate all spending bills.  If the Republicans manage to defund ObamaCare and to prevent the EPA from driving up the cost of energy due to their ridiculous declaration that CO2 is a pollutant, then there is hope the U.S. economy might become healthy enough to be able to generate the tax revenues projected.  If Obama takes over the many union pension funds that are underfunded and in critical condition and pushes through union card check so that many more businesses will be forced into a death spiral by being unionized during the lame duck session of Congress just after the election, then growth will be slowed for several years and things may be less rosy than the Democrat projection of tax revenues assumes.  Or, the Republican leadership may think it can ignore the Tea Party and its demands for smaller government and start making compromise after compromise with the socialists to grow government more and the business recovery will be impeded.  Many ifs remain and we will have to be aggressive in making demands of the Republicans once they are in office if the economy is to be set upright again.

The Bailouts and the Stimulus Bills provided gifts to many financial and large companies, but they hurt almost all other companies except for those in the green energy and global warming fraud business.  Obama's much touted small business loans came late and were not at all what small business needs.  Few small businessmen want Obama to become their partner.  Come to think of it, most large businesses belatedly learned that he is not usually a good business partner.  Most American businessmen, and especially small businessmen, agree that they just want government to stop constantly writing more laws and regulations to micromanage their businesses.  There are more laws and regulations than they can comprehend, which is not surprising given that the law makers themselves do not have the time to read the laws for which they vote.  Businessmen have to earn a living and then they are either supposed to read the voluminous laws themselves or have the surplus piles of cash to hire someone else to do it and constantly advise them.  This is a huge drain on small businesses and an unnecessary drain on any business of any size.

So, if government wants to have the tax revenues to spend for all the programs it is already committed to, then it had better change its tune and start recognizing that it is business that generates the income the government taxes or distributes money as wages and salaries, which the government taxes.  You could say that the business of America is business.  I think I have heard that before.  It is often held up to ridicule, but business is the way we all lead productive lives and generate the wealth that sustains the government and for that matter the charities of America.  It is high time we see the validity of that saying that the business of America is business.  So, in the name of the business of America, we need a federal government which knows to avoid being constantly in the way of those who are producing America's wealth.

Rasmussen Defines the Political Class

John Fund interviewed pollster Scott Rasmussen after he gave a speech at the American Legislative Exchange Council.  Rasmussen notes that he takes care to define whether his polled people belong to the Political Class or to the Mainstream Public.  The Political Class favors government in at least two of the following three questions:

1. Whose judgment do you trust more, that of the American people or America's political leaders?
2. Has the federal government become its own special interest group?
3. Do government and big business often work together in ways that hurt consumers and investors?

My answers to these questions are:

1. The American people, unless we mean the Founding Fathers and the Framers of the Constitution.
2. The federal government is a voracious special interest group.
3. Big business is often happy to use the force of government to protect itself from competition and to harm small business.  Politicians are often happy to offer big business and labor unions plums for their contributions upon which the public is choked.

The Political Class has shrunk since the recession began hurting Americans in late 2008, while the Mainstream Public has grown slightly.  I find it puzzling that still more people have not lost their faith in government, but faith in government is a stubbornly held religion.  Strangely enough, a majority of Democrats, of Republicans, and of independents are Mainstream Public.  The Political Class believe or favor these views:

• 67% believe the U.S. is moving in the right direction.
• They overwhelmingly support the bailouts of the financial and auto industries, ObamaCare, and suing the state of Arizona on its immigration bill.

84% of the Mainstream Public believe the U.S. is moving in the wrong direction!  The Mainstream Public intensely oppose the bailouts, ObamaCare, and suing the state of Arizona.

On the Democrat congressional agenda:

• 91% of Political Class think it mainstream
• 70% of Mainstream Public think it extreme

On the Republican congressional agenda:

• 81% of the Political Class think it extreme
• 53% of Mainstream Public find it mainstream

Rasmussen points at polling questions from the Political Class that make no sense to the Mainstream Public.  An example is "Should policymakers spend more to improve the economy or reduce spending to cut the deficit?"  Rasmussen says 52% of Americans think more government spending hurts the economy, while only 28% think it helps.  Consequently, while the pollster thinks he is asking for a trade-off, the public only sees the reduction in spending as good.

The week the bailout plan passed Congress, 62% of the voters wanted more tax cuts and less government spending.  They understood from the beginning that spending bailout was unlikely to succeed in helping the economy.  When Obama told Americans that ObamaCare would reduce health care spending and cut the deficit, most Americans already knew otherwise.  60% thought it would increase the deficit and 81% thought it would be more expensive than the Congressional Budget Office numbers said it would be.  The Mainstream Public is much harder to make fools of than is the Political Class.

Rasmussen noted that the American people voted against the party in power in the last three elections.  While Republicans will gain from this in November, 75% of Republicans say the Republicans in Congress are out of touch with the party base.  Rasmussen says Republican leaders will have to move quickly after the election to convince Republicans that they have regained contact with and understanding of the party base.

Federal Spending and Revenue

Brian M. Riedl of the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation has put out a very useful report called Federal Spending by the Numbers 2010.  It is chock full of graphs of the spending and revenues of the recent past and projections to 2020.  For example:

It is interesting to note that the long term rate of federal revenues has been about 18.0% of GDP, but the federal spending rate has exceeded that level by 2.3% of GDP on average year after year.  It is clear we have long been politically unwilling to live within our means and that if we allow the Obama plan to stay in place, we will either have to tax ourselves at a much higher rate than we have historically or we will be spending at rates of about 8.3% of GDP higher than federal revenues.  Such rates of spending are unsustainable.  If taxes are increased that much, the economy will stumble and future growth in the economy and standard of living will suffer terribly.  If taxes are not increased drastically, the accumulated deficits will leave America bankrupt.  It is impossible not to see the critical necessity of drastically reigning in the Obama spending plans.

Here are two more fascinating plots from this Heritage Foundation report showing the effects of future spending on the three major entitlements:

Medicare in particular is an overwhelming spending problem.  By 2050, Medicare, Medicaid, and Social Security will require the complete historical average of federal revenues just to fund them.  Medicare was already going to be a major problem before ObamaCare was passed to make it an even worse problem.  Note that in today's dollars, the average extra tax burden of these three entitlement programs alone will be $12,636 per household!  Do you have that much money available to give to the federal government?  Think about it.