The Purple People Vote

Monday, March 30, 2009

Obama Budget Doubles Deficit in 5 Years Triples it in 10

Senator Lindsey Graham talked with bloggers today about President Obama’s budget plan. In short, spending is going way up in all areas except for military and defense spending, which will be cut. For President Obama’s budget to add up he has to take an extremely rosy view of the future. His administration is betting that unemployment will peak this year at a little over eight percent, and they are predicting a substantial economic recovery for next year. His view of the current world situation is also extremely optimistic, as he sees little need for spending on military and defense. Unfortunately, there are logistical problems in taking this perspective since, as Senator Graham put it, “We are flying the wings off our airplanes.” Finally, President Obama has included in his budget a plan for cap and trade that Senator Graham explained is far more costly than the McCain - Lieberman - Warner versions of cap and trade that have been introduced and debated in the past. Senator Graham stated that this is old fashion big government liberalism. He went on to say that in 2007 Senator Obama was ranked the most liberal Senator, and that his policies reflect that, that he simply took a year off from liberalism to run for President.

The problem with all this government spending is three fold. We can’t afford it. The likelihood of massive inflation is extremely high. We are burdening tax payers for generations to come with a huge debt that will almost certainly lead to higher taxes. (The fact China owns a huge amount of our debt is not comforting either.) This isn’t as much about partisanship, or liberalism as it is about bad math. Debts have to be paid, and the numbers are being manipulated to try to pretend that this plan adds up when it does not.

Obama Budget Doubles Deficit in 5 Years Triples it in 10

Wednesday, March 4, 2009

Pro-Growth is Most Fair Option

Unfortunately, many in America are losing track of the logistics of the economy and are getting caught up in emotion. People are angry about bailouts and white collar crooks running ponzi schemes and are becoming resentful towards big business and the wealthy. Yet we risk losing site of the real goal of turning the economy around when emotion and arguments about fairness start start trumping logic and math. The reason not to raise taxes on the rich, businesses, and capital gains is not because one loves, hates, or feels indifferently about wealthy people. The reason not to raise taxes on those of means is because they are the ones able to create jobs, and invest in the businesses that are so desperately needed right now. The argument that the rich should pay more because that is what is fair ignores the fact that, particularly in a struggling economy, increasing taxes slows growth. Consequently economic recovery slows, and that is fair to no one. In reality when the economy slumps those just getting by pay check to pay check suffer the most. The rich may not be as rich as before, but they're still rich. Those being laid off and struggling to pay their bills are hurt the most in a prolonged recession, and implementing policies that hinder growth is not fair to anyone.

Also, small business owners are being grouped into the 'rich' category in an unfair manner. If a small business owner makes $250,000 a year that becomes a rather average income if he or she has to pay two to three employees salaries with that income. Also if they are trying to grow their business, it is likely a chunk of that income is being put right back into their business. That isn't the life of the highly privileged wealthy class. We'd be well served by taking the emotion and morality judgments out of economic policy, and simply look for policies that are pro-growth.

Larry Kudlow and Donald Luskin voice their frustration about the current policies that are anti-growth. Certainly, not unemotional in their criticism, they point out why a pro-growth strategy is simply the most fair economic strategy for all Americans.