No Spines vs. No Brains, President Obama's Deficit Speech Analysis

If you read my last post then you'll see that it all played out exactly how I said it would. Liberals talked about how the proposed cuts would starve and kill everybody etc. It's the same old game and no surprise. As the title of this post implies, what you've mostly seen in this budget debate is a debate between ignorant, Keynesian Dumbocrats and wimpy, spineless Retreaticans.

Look how much arguing went on between the 2 parties over a measly $38.5 Billion in cuts to the $3.7 Trillion budget. Republicans are too afraid of the potential political ramifications that may come from the typical fear mongering of the Democrats labeling Republicans as lacking compassion to make a strong stand on budget cuts. Democrats are so convinced that government spending automatically qualifies as a good investment so they label all cuts, (aside from military of course), as catastrophic.

You have to keep in mind that President Obama and due to his actions late in his second term even to a degree President Bush are following an economic theory championed by English economist John Meynard Keynes. It's an economic philosophy that believes that government can inject money into the economy through various spending programs, (e.g. stimulus), in order to spur economic activity leading to economic growth. The centralized planning models fatal flaw is much akin to the growth in the welfare state for example. When you become too dependant on government you lose the competitive edge that allows you to grow without it, thus leading to more and more government subsidizing of costs and therefore a lack of actual growth within the economy. The increase in costs becomes less of a concern when you don't pay for it, note the increase in college tuition without matching increases in quality of that education for example as much of the college costs are covered through financial aid from the government.

On the one hand the Democrats are hoping that all of the same old fear tactics will work and on the other hand the Republicans are afraid that the same old tactics will work. Obama has weighed in on the issue in his recent speech and I'd like to give you an analysis of President Obama's recent speech. If you haven't watched the speech for yourself then you should stop reading and watch it for yourself first. Obama has always been given credit by me for being a great speaker and I maintain that again today.

Here's how this will work. I will first give you a quote from Obama's speech, watching the speech will allow you to see for yourself that I'm not going to change any of the words he says. I'll give you a comment from the speech and then give my thoughts as it relates to the quote at hand. I will also use other quotes and facts in order to back up whatever point I'm making at the time. It is my belief that Obama's main concern isn't in fact the debt and deficits, his concern is re-election. Now let's get started.

"We contribute to programs like medicare and social security which guarantee us health care and a measure of basic income after a lifetime of hard work."

If that's the case then what did we need health care reform for? Seniors are apparently doing fine. Also by "basic income" he means you get to live in poverty off of social security. Just ask someone who lives exclusively off of socialist security and you'll see what I mean.

"As a country that values fairness, wealthier individuals have traditionally born a greater share of this burden than the middle class or those less fortunate. Everybody pays but the wealthier born a little more."

Actually, 47% of people in this country broke even or actually made money based on income taxes. That means that 53% are already paying for 47% yet the system is unfairly rigged in favor of that 53%.....if you say so. Also the wealthier don't cover "a little more" they cover a hell of a lot more. Quick thought, in 2005 the late Ted Kennedy made around $300 million through various foundations etc. yet he paid only $156,000 in taxes on that money and hid the rest overseas, I wonder why the left had no problem with that? Oh, and the politically well connected to Obama, GE made 14 Billion last year and paid no taxes but never mind that though, nothing to see here folks, move along.

"A little credit card debt isn't going to hurt if it's temporary, but as far back as the 1980's, America started amassing debt at more alarming levels."

Actually, it goes back well into the 60's and 70's but he's trying to paint it as a Republican issue and more specifically a Ronald Reagan started problem and I'd like to give the gipper a chance to defend himself.

March 8, 1984 diary entry

"I'm convinced we must take the lead & wait no more on the Democrats for a bi-partisan approach to the deficit. They think they have a campaign issue. They've been in charge of the congress for 45 years & for 45 years they've run up deficits. Now they want to hang the present deficit on us & yet they've only given us half the spending cuts we've asked for." - Ronald Reagan

Notice some key words there, take the lead, campaign issue, only given half the spending cuts we've asked for. Now you tell me that quote isn't perfect for today.

"We increased spending dramatically for 2 wars and an expensive prescription drug program but we didn't pay for any of this new spending. Instead we made the problem worse with trillions of dollars in unpaid for tax cuts. Tax cuts that went to every millionaire and billionaire in the country. Tax cuts that will force us to borrow an average of 500 B every year over the next decade."

It's true we didn't pay for the 2 wars but the lie in this quote is the "unpaid for tax cuts". If you look at revenues following the 2003 tax cuts implemented by Bush and recently extended under Obama, government tax revenues INCREASED following the cuts rather than decreased. This has historically proven accurate as even JFK reminded us.

"Our true choice is not between tax reduction, on the one hand, and the avoidance of large federal deficits on the other. It is between two kinds of deficits, a chronic deficit of inertia, as the unwanted result of inadequate revenues and a restricted economy, or a temporary deficit of transition, resulting from a tax cut designed to boost the economy, produce revenues, and achieve a future budget surplus. The first type of deficit is a sign of waste and weakness, the second reflects an investment in the future" - JFK

You see, the problem isn't that tax cuts don't generate revenues. The problem is that if spending goes out of control then it outweighs the gains of the cuts. For example, if you get a $50/week increase in your take home pay every week and to celebrate it you start spending $60 more per week on going out to eat more often, you'll end up having less money than before the raise. The problem isn't that you aren't taking home more money, it's just that your increased spending has eliminated the raise and then some. The same rule applies to the relationship with taxes, revenues, and spending as it relates to government.

"In the last decade if we had simply found a way to pay for the tax cuts and the prescription drug benefit our deficit would currently be at low historic levels in the coming years."

The prescription drug benefit is the only arguable point as I've already shown that the tax cuts increased revenues and therefore did in fact pay for themselves and then some. The prescription drug benefit was already addressed in the previous quote though so this was little more than an additional misinformed dig at the Bush tax cuts for those who don't understand economics. As far as the deficit being at low historic levels, this is little more than optimistic rhetoric based only on pointless speculation on what could have been.

"In this case we took a series of emergency steps that saved millions of jobs, kept credit flowing, and provided working families extra money in their pocket."

Several problems here. The Chamber of Commerce has already stated that there is no real accurate way to judge a job as truly being "saved" so talking about millions of jobs saved is simply an optimistic view designed to make you forget the millions of jobs lost since Obama took office which can be tracked. One of the criticisms Obama has had regarding the banks is the fact that credit wasn't in fact flowing so to take credit for keeping credit flowing is in fact contradictory to his own past rhetoric. As far as working families having extra money....let me just ask you if you feel like you have extra money since the stimulus etc. have passed?

Perhaps the fact that inflation has begun with food and the price of gas doubling since Obama took office has made you forget about all of that "extra money" that you have. By the way isn't it funny how food and gas prices aren't included when calculating the inflation index, what a coincidence. The 2 products you can't go without are the 2 products that aren't considered when telling you how much your money is worth, what a great scam.

"By 2025 the amount of taxes we currently pay will only be enough to finance our health care programs, medicare and medicaid, social security, and the interest we owe on our debt."

By financing "our health care programs" he actually means his health care program. Medicare and medicaid are 2 of the programs that the left goes after the right every time they are mentioned for reform. Socialist security is a third. Also, look at this and tell me that $38.5 Billion in cuts looks all that impressive. We need massive changes and massive cuts in order to fix this, this lobbyist controlled scalpel scheme that both parties are subject to when regarding the budget is a joke.

"We won't be able to afford good schools, new research, or the repair of roads."

Never mind the fact that "we won't", the reality of our current situation is that we can't afford much of anything presently. As far as details, we spend more on money on education than ever before yet the quality of that education has declined dramatically and many other areas of the world, (China and India for example), are kicking our asses in the field of education despite spending less on it. The problem with education in America isn't money, it's bureaucracy.

"New research", oh, you mean like green jobs which have led Spain to the highest unemployment rate in Europe. How about the repair of roads? Did you know that despite having some of the worst roads out there New Jersey didn't receive much stimulus money where it was needed? Meanwhile, here in my hometown they repaired a major road, that wasn't needed, but the green signs reminding us that stimulus paid for it look great.

"The implication is that tackling the deficit issue won't require tough choices or politicians suggest that we can somehow close our entire deficit by eliminating things like foreign aid. Even though foreign aid makes up about 1% of our entire budget."

I think most of us are aware that tackling the deficit will require tough choices, we just don't seem to have enough politicians that are willing to make those choices, Obama included, talking about it on the campaign is one thing. Many on both sides of the aisle have proven that actually making those choices are decisions many are not willing to actually make when it counts.

Also, just because something is a small part of our budget doesn't mean we should treat it as insignificant, after all Obama, didn't you say that everything needs to be on the table? Foreign aid counts as everything doesn't it? For example, let's say you buy a coffee everyday for $2.00. That's not a big part of your budget but if you stopped buying it and make coffee at home or went without then you'd save $60/month. It's not much but it's something, the same applies to the government's budget, cuts to the many small budget items can make a big difference.

"around 2/3 of our budget is spent on medicare, medicaid, social security, and national security."

Well what does that tell you? It tells me that those are the 4 areas of government spending that we have to spend the most time on addressing. Unfortunately, those are the 4 areas that most politicians are most afraid to tackle for political reasons. Democrats instantly go after anyone who proposes changes to medicare, medicaid, and social security. Republicans refuse to tackle spending issues that tend to relate to national security.

If you go after medicare, medicaid, or social security you are labeled as hating the poor, elderly, or disabled. If you go after defense spending you hate the troops or are willing to enable the terrorists. For these reasons they are most likely to be able to avoid serious changes or cuts as politicians actually have the backbone to challenge the conventional wisdom regarding these programs. How are we supposed to get serious about tackling our debts and deficits if the very programs causing most of the problem are deemed untouchable by those in Washington? Now you know why the $38.5 is being hailed as such an accomplishment when in fact it means next to nothing.

Then President Obama got into Paul Ryan's proposed 2012 budget which just passed in the house of representatives today. Obama did in fact give the Republicans credit for at least proposing a budget, unlike the Democrats, which is why we're in this situation with the budget debate in the first place. Now, of course President Obama doesn't like this plan since it's a plan that cuts spending which, due to his Keynesian, socialistic, economic view of centralized control of our economy by government, is simply not in line with his economic philosophy. How many times have you heard President Obama and others, usually Democrats, talk about how catastrophic reducing government spending would be? Go back in this post and read the Ronald Reagan quote again. The Democrats didn't like spending cuts back then and they're even more resilient to them now.

Here's some of Obama's criticism of the Ryan plan:

"A 70% cut in clean energy, a 25% cut in education, a 30% cut in transportation, cuts in college pell grants that will grow to more than $1000/year, that's the proposal"

Let's start with that. "Clean energy" is a joke and wouldn't survive if it weren't heavily subsidized by government money. I'm all for working on solar power, (wind is impractical and doesn't provide enough energy to be a viable solution), and the problem with bio fuels for example are the effects on other things. It's true that Brazil uses sugar, (which they are a big producer of), to make ethanol and we use corn, (which we are a big producer of), to make ethanol. The problem is that it reduces supply to be used for food and therefore drives up the cost of many other things. Corn is one of the most widely used foods in our food chain. Look how many products use corn syrup for example. A vast majority of the corn we grow is in fact used for that purpose.

Also, we use mostly corn to feed our livestock, cows etc. If we reduce supply and drive up the cost of corn, it also drives up the cost of beef and milk, (which means all dairy products really). Meanwhile, who the hell is even using ethanol in their cars? Have you ever filled your car with ethanol? I'm guessing most reading this are saying no right now so where's that great investment really going? Let's move on.

A 25% cut in education......good. The cost of education is at it's highest levels and yet the test scores of our students have remained largely flat or gone down. What's all that money buying us? Expensive pensions, increased wages, and job protection for tenured teachers. We spend thousands of dollars per student and yet our drop out rate has only gone up. Money isn't the problem with education in this country, bureaucracy and government are the problem with education. How come we don't hear Obama complaining about the monopoly on college text books? Why does it cost $800 for a couple of books that you are required to have for specific classes? The answer of course is that the government supports and subsidizes much of that cost through financial aid so there's no incentive to keep costs down.

Why have college costs spiraled so out of control in this country? People went to college before the government paid for most of it and they actually got a better quality education for a much more reasonable price. Once government got involved the costs skyrocketed, just wait until you see what it does to health care. As far as the 30% cut to transportation I'd like some details as to what exactly that 30% is. Speaking of which, let's talk roads.

"It's a vision that says if our roads crumble and our bridges collapse we can't afford to fix it"

At the moment we can't afford to fix anything but that's not the point. Remember what stimulus was supposed to do? Wasn't that supposed to fix roads and bridges? Where did all the money really go (cough)THE DNC(cough) if the Ryan plan is going to make sure all of our roads and bridges turn to crap? We spent over a trillion dollars on roads and bridges etc. with our wonderful Keynesian stimulus packages, or so we were told, and now that we've already spent that money President Obama is acting like we're about to spend nothing on fixing roads in the future. Does his argument there really make sense when you think about it? Maybe it's just me but I'm going to call that bluff.

"it says instead of guaranteed health care you will get a voucher and if that voucher isn't enough to buy the insurance that's available in the open marketplace well, tough luck, your on your own. Put simply it ends Medicare as we know it."

Do you remember what the 4 biggest problems with our budget are? Medicare, Medicaid, social security, and national defense. Now, I don't know enough about Paul Ryan's proposal to call that statement by Obama false, (maybe like Obamacare we have to pass it so we can find out what's in it, take that Nancy Pelosi), but there's something telling about the end of this Obama quote. "Put simply it ends Medicare as we know it", well, if Medicare, Medicaid, and social security are 3 of our biggest problems then in order to truly get back into shape couldn't it be argued that all 3 of those programs have to be ended AS WE KNOW IT. You see, ending as we know it doesn't mean getting rid of the programs, it means reforming and changing these programs and I thought Obama was all about change. He should be embracing changes to those 3 programs yet even though he knows they aren't sustainable all he can do when a change is proposed is criticize as usual.

"Elderly, poor children, middle class families with autistic children or down syndrome, severely disabled, fend for yourselves."

See my last post about the scare tactics used whenever cuts are proposed and this quote doesn't surprise in the least. This type of rhetoric is always used to paint critics as heartless bastards who just want to starve and kill everyone. This quote was worth showing but really doesn't warrant much more than that as a response.

"We can't afford education etc. but we can afford 1 Trillion in tax breaks. The bottom 90% saw income decline while rich saw increase"

Don't forget, lower taxes = higher revenue so once again this quote is for those who don't understand the Laffer curve or supply side economics. It's easy to make most of us hate the rich by criticizing millionaires and billionaires but that because it's not as sexy as saying he wants to tax the hell out of business owners who provide us with jobs.

"Ronald Reagan's own budget director said there's nothing serious or courageous about this plan"

Ronald Reagan didn't agree with everything everyone in his administration said all of the time, what president does. Hell, Obama won't even listen to the debt commission he himself appointed. This is a way to inject Reagan's name into a criticism of the Republican plan by Paul Ryan. There's nothing courageous except the fact that they at least came up with something and proposed it, unlike the Democrats.

"I don't think there's anything courageous about asking for sacrifice from those that can least afford it and don't have any clout on capital hill."

Well then, how about you make sure there's no such thing as having "clout on capital hill" by making lobbying and lobbyist illegal. You could propose it tomorrow, it'd have about a 99% approval with the public, and any politician who stood with the lobbyists interests over the public's would be doomed. Hell, that alone would probably secure your re-election and cause the polls to skyrocket in your favor so why not do it? The answer of course is that just like the rest of the politicians Obama is in bed with his own corporations and lobbyists just like many others. That's why companies like GE get away with paying no taxes even though Obamacrit likes to bash those evil corporations....you know, except the ones he likes.

"we're a nation that built a railroad accross a continent"

Damn right but you have got to read this, government involvement strikes again with usual results. From the link:

"After the transcontinental railroad was completed in 1869, congressional investigations revealed that some railroad entrepreneurs had illegally profiteered from the two Pacific Railway Acts"

Due to government subsidizing and paying more for risky terrain there was a lot of track that actually had to be ripped up and redone. Building was based on getting the most money out of government rather than working for efficiency and reduced costs. It's a shame more people don't learn from our history.

"we saved millions of seniors from poverty with social security and medicare"

Talk to a few seniors living off of social security and ask them if they think that's true. Medicare and social security are 2 of the 4 biggest problems we face in our fiscal mess. Medicare may help but social security only helps you maintain living in poverty if that's your only source of income. This quote is a lie plain and simple.

"to meet our fiscal challenge we will need to make reforms, we will all need to make sacrifices, but we do not have to sacrifice the America we believe in."

He's right here. We don't have to sacrifice the America we believe in, we have to sacrifice the America we currently live in. Most of us believe in a better America than we currently have. In talking about his own budget Obama made some questionable claims.

He talked about saving $4 Trillion over 12 years, funny since best case scenario he'll only be president for another 5 but that's not the point.

"It's an approach that puts every kind of spending on the table"

You know, except for Medicare, Medicaid, and Social Security, 3 out of the 4 biggest problems. I'm sure his plan cuts plenty from national defense but remember all 4 have to be addressed. Like I said, Democrats won't touch the first 3 and Republicans avoid the fourth. So to say it addresses every kind of spending is just a touch away from the truth. He laid out 4 specific steps in his plan.

Step 1: keeping the agreed upon cuts, (38.5 Billion) over 12 years. He claims that saves $750 Billion.

The problem is that 38.5 * 12 = 462 Billion. Obama must be hoping that we are clueless in basic math, the $750 figure is a lie, end of story.

Step 2: find savings in defense budget.

I believe him here, remember the big 4, this is the one the Republicans pet peeves. Liberals never have a problem cutting defense and I agree that it's necessary depending on what's cut so congratulations Mr. President I agree with you for once in this post.

Step 3: further reduce health care costs.

It's a nice thought, but this is based on the assumption that his health care plan will in fact reduce costs. There's much reason to speculate that that may not be the case. This is based on a claim that may or may not prove true. I for one am not optimistic based on the history of government programs costing far more than promised, like social security for example.

Step 4: review the tax code and make changes.

I agree here as well but only if it's simplified. Simplifying the tax code will in fact save a lot of money and make more money on our bottom line as well. I just don't trust the folks who need thousands of pages for anything they propose to come up with a simplified, more streamlined tax code. After all, if it's simplified how are you going to hide perks for your friends like GE and the unions, (perks for unions were hidden in the health care bill)?

President Obama also mentioned that his plan calls for a review in 2014 to see if bigger cuts are needed. Translation: re-elect me so my plan for a 2014 review will be realized and I'll still be around to make the cuts we know we'll need. Hell I can save you some time Mr. President, WE NEED BIGGER CUTS, NEVERMIND YOUR REVIEW.

"I believe that most wealthy Americans would agree with me. They want to give back to their country."

I disagree, there's no penalty for paying extra taxes. If the guilt of not paying extra in taxes is keeping you awake at night then you don't need a speech or policy from President Obama. All you need to do is write a check. Maybe Obama should write a letter back to the rich who don't feel like he's taxing them enough and ask why there's no check enclosed with the letter. I'm sure the reply's would be fascinating.

"There are those who believe that we shouldn't make any reforms to medicare, medicaid, or social security out of fear that any talk of change to these programs will immediately usher in the sort of steps the house republicans have proposed."

Here Obama is talking about the Democrats. He just listed the 3 out of 4 things I told you Democrats won't and he said it himself in a single sentence. The problem here is that in reality Obama is one of them. He's trying to act like he supports changes to these programs to look like a deficit hawk but in reality he opposes all changes proposed by the Republicans, since the Democrats refuse to propose changes to these programs.

"We have the obligation to prove that it works by making government smarter and leaner and more effective"

In other words you have the obligation to make government smaller, not bigger, unfortunately here you don't believe your own words, see health care, the auto industry, the banking industry, the housing industry, or stimulus for details.

Thanks for sticking with me until the end on this post but I'd like to leave you with one last quote from President Obama as well as a quote in response.

"Ronald Reagan and Tip O'Niel came together to save social security for future generations"

That's true, social security was saved at the time but you forget, (or let's face it, you don't know), that Reagan also left us with a warning.

From a note written by Ronald Reagan dated July 24, 1981

"If I may, let me explain the situation and what it is we were trying to do with Social Security. I have reneged no pledge. I said during the campaign that we would do nothing to hurt those presently dependent on Social Security checks - that we would not pull the rug out from under those people so dependent. I did say that I would try to restore the integrity to the program. As it is now, the program without change will run out of money for paying benefits to the present recipients sometime late in 1982. Beyond that, however, there is a long-range actuarial imbalance which means that down the road in the next century, but within the lifetime of younger workers today, the program will be several trillion dollars out of balance."

Obama remembers and admits the first part of this quote to be true. The problem is that the warning, which I've put in bold print, is forgotten and is now here, we've run out of time and the Democrats denying there is a problem with social security, as moveon.org and others do all the time, won't make it go away. Thanks for reading, I hope you've learned something and found it worth your time.