SOTU Brutus?

I missed the delivery of the State of the Union (SOTU) address tonight, but read the text.  As usual, the President has conveniently forgotten facts and argues against straw-man positions that Republicans have never taken.  Before I plunge in with criticism, there were some things that were good, or at least not that awful.

Is Uncle Joe falling asleep back there?

• With the exception of path to citizenship, Obama said most of the right things on immigration reform.  I especially liked this quote: And real reform means fixing the legal immigration system to cut waiting periods, reduce bureaucracy, and attract the highly-skilled entrepreneurs and engineers that will help create jobs and grow our economy. If only I thought he really meant it.
• He made a feeble call for compromise, which would have been nice if he had practiced it any time over the previous four years.
• He calls for means testing Medicare, of course, he doesn't call it that, stating obliquely that he will "ask more from the wealthiest seniors." I actually believe this is a good idea, because as the level at which means testing for medicare falls, which is inevitable, given its problems, political support for the status quo will be undermined.  Without getting specific, he says that he will propose more cost savings from Medicare.  That would be great if it were not for our experience with him, that when he offers no specifics, he actually has no plan.
• Deficit reduction gets a lot of air time.  That in itself is evidence of how the tea party has changed the political dialog.
• He talked about bursting the college bubble.  I like that he points out that college costs are soaring and threatens to link federal aid to reigning in costs.  Emphasizing the known link between good technical education at two year schools and employment was also good to read.

Of course there were multiple lapses of memory and disregard for fact:

• He calls sequestration harsh, blames the Congress for passing it, neglecting that he signed the bill.
• Standard accounting treatment of assets that are depleted is called a tax loophole.
•  He conveniently ignores that the federal government created the college bubble through various loan and scholarship programs.
• al-Qaeda is a shadow of its former self. Really? How do they strike deep into the desert and take over an Algerian gas plant? 
• We will invest in new capabilities for the armed forces.  I hardly think so when you signed the sequestration law that significantly cuts their budget.  If true, he will have to cut troop strength even more, because that is the only place to weapons development money.
• He waves the bloody shirt of Newtown to propose gun control that would not have prevented the tragedy at Newtown.
• He claims credit for increased natural gas production even while his EPA works furiously to make extraction more difficult.

And there was the plain awful stuff.

• Imperial overreach on climate change, the usual: if Congress won't act, then I will.
• More shovel ready public works.  Worked great last time.
• More green energy subsidies. Worked great last time.
• Another wasteful "Head Start" like program. For an indictment of Head Start, read here.
• Another minimum wage increase that will predictably increase unemployment.
• And there was this whopper: That is why my Administration has worked tirelessly to forge a durable legal and policy framework to guide our counterterrorism operations. Throughout, we have kept Congress fully informed of our efforts.  His illegal and unconstitutional targeting of American citizens, anywhere in the world, without authority is a heinous violation of the constitution.  Congress should rescind the authority granted the President after 9-11 because they have been stretched beyond meaning. 
• Some scheme to make sure that stricter voting laws are removed in red states.

I'm glad I didn't watch the speech, knowing Obama's style of delivery would only made it more unpalatable.  Someone I know who supposedly had some inside preview of the speech told me I would be surprised.  I was not.  This speech was devoid of any concrete proposal that will see the light of day in this Congress, with the possible exception of the immigration portion.  Meanwhile, folks, read the whole transcript here, and then check the debt clock on the right side of the page.  Let me know if the speech matched the seriousness of our dilemma.

The Answer is Obvious

The question is, "Which plan do you prefer?" Of course, it is not really a contest. The President's budget, submitted to the Congress last January was a fatuous exercise in futility and epitomized his total abandonment of any pretense to leadership.

Dean claims Paul Ryan for his generation as a Great American a member of a cohort destined to save the country. Hard to disagree.

Link to article to WSJ source of material here.

In Case We Forgot What the Budget Fight is About

Keith Hennessey does a great service by graphing the data in the President's budget submission (H/T Greg Mankiw.)



I previously said that the President showed a lack of leadership on his budget submission. After looking at this graph (click to enlarge), I retract that judgment. The President has displayed total political cowardice and cravenly submitted a budget that will cause harm to the nation.

I guess he expects the Congress to save him from himself and produce a good budget. How'd that work out on health care.

The other important point made by Hennessey is that everything to do with government rises. Government spending increases, sucking resources out of the economy. Taxes rise, sucking incentive out of the economy. The budget deficit rises, sucking credit out of the economy. This budget basically. . . , well, you get the idea.

Expanding Deficit - Revenue or Spending Problem? UPDATED

Steve commented on my BWD post that the reason that the federal deficit is growing is due to decreasing federal revenue. Because of Hauser's law, I opined that it must be due to rising spending. I pulled up this chart from the Heritage Foundation to check the facts. What do you think?



In case I lose the link:



However, I am a little mystified at the rate at which the debt is climbing, it does not appear to be fully explained by either the rise in spending nor the fall in revenue. The deficit is climbing at a rate of $2 trillion per year, where as the gap between revenue and debt only recently peaked at $1.5 trillion per year. From CBS News:



Anyone who knows the answer to this mystery, I am anxious to hear from you.

UPDATE

W.C. points out in the comments that I am not the first person to have noticed that the debt is growing faster than the deficit would suggest, pointing out that Zero Hedge and Denninger had commented, without concise conclusion, there seems to be a general consensus that the difference is accounting gimmicks. Adam Freund suggests that it is a failure to account for interest on the debt. Thanks for the further insight.

It's the Spending, Stupid!

Imagine my shock when Bill O'Reilly echoed a main theme of TLT on today's Talking Points Memo, laying into the unsustainable levels of spending at the federal, state and local levels. I normally find O'Reilly entertaining but not usually an inspiration for my blog, but he was spot on today. (Sorry for no link, Bill holds back his material from the web for a day, for business reasons, I suppose.) But this is the exact message of the Tea Party from day one, when we started by protesting the porkulus, the stimulus, and the bailouts. It's never been about race, it's the spending stupid. Why the left can't get this? Because it doesn't fit their narrative and it distracts people from the simple fact that excess spending is causing growing debts and deficits.

But, I think the word is getting out. More and more people identify with the Tea Party movement; the left's attempt at demonization has backfired. Every day we see more articles on the out of control spending, as O'Reilly called it. This is why we will be out in force on April 15. Now the liberals will say to the average tax payer, how has Obama increased your taxes? Answer: even if you don't see it on your tax bill Thursday we all know it's coming. Rich Lowry takes aim:

This is why the country has a roiling tax revolt prior to the imposition of any significant tax increases. The tea-party movement is an act of pre-emption, based on the simple calculation that higher spending eventually means higher taxes. For all the tsk-tsking about its supposed irresponsibility, the movement is attuned to the future in a way that the president -- who hopes to evade or hide the consequences of his budgetary choices for as long as possible -- is not.

Not only will be paying future taxes, we are already paying the price through increased inflation, higher interest, higher state taxes over mandated medicare spending, higher health insurance premiums and fewer jobs due to increased taxes on the rich and capital gains besides the tax increases for the grandkids. Just no increase in your personal income taxes... today. There, don't you feel better. What crap; the President thinks he can increase spending, while holding down middle class taxes and no one will notice? Memo for Team Barry, our level of economic ignorance does not match yours.

Time to get ready for Tea Party protests on Tax Day. The media is going to ask this very question of one of us at the protest, or some variation "Have your personal taxes gone up and if they haven't, why are you protesting?" Let's all be ready with our answer.

I couldn't resist one more paragraph of Rich Lowry's article to round this out:

"I like to pay taxes," Oliver Wendell Holmes famously said. "With them I buy civilization." With ours, we will buy a misbegotten stimulus program, bailouts, runaway entitlements, a costly new health-care program and a federal government where incontinence is a perpetual pre-existing condition. No matter what your tax bill this year, don't worry -- it'll go higher.

Debt and the Deficit

In the video linked in the post below, Pam Stout reminds us that a big reason that the Tea Party came into being was a sense of dread over the size of the national debt and deficits. At just the right moment Donnald B. Marron puts this into scholarly perspective with pictures in National Affairs. (As an aside, those, like Letterman, who complain that the Tea Partiers weren't active when Bush was President, should notice how much worse the trends are under Obama.)

First, to help me get your attention I offer two graphs from the article.

Obama towers over his predecessors.

Obama - Up, Up and Away!

Unfortunately, voters still aren't paying attention and don't seem to care about the impending disaster. However, just as a Republican might have won the 2008 Presidential election if they had listened to Rasmussen and positioned themselves on economic issues, so now, Republican candidates could start winning, and positioning by taking on the debt issue. More from Mr. Marron:

Before we can hope to make a dent in our deficits and debt, there must be broad agreement among the public and the governing class that we even need to. There are still some commentators on both the right and the left who continue to insist that deficits and debt do not matter much. It is important to understand why they are mistaken.

Running deficits can certainly be appropriate — and even beneficial — at times of particular stress, such as wars and recessions. But in the long run, persistent large deficits and growing debts undermine our nation's prosperity.

He goes on to point out seven key reasons why long term deficits and debt hurt the United States. Summarizing:

1. Debt undermines growth by crowding out investment.
2. Debt fuels inflation, a hidden tax and destroyer of wealth.
3. Foreign holding of our debt gives them leverage to negotiate in other areas.
4. Use of shorter and shorter term debt puts interest rate risk on the budget.
5. Rising debt limits our ability to raise money to combat a new crisis or our ability to go to war (not always a bad thing I guess.)
6. Due to the magic of compound interest, debts grow on their own. Especially when you are financing current operations out of debt.
7. We're screwing our children and grandchildren. (Marron uses the PC "intergenerational fairness.")

This is why we should applaud Jim Bunning for his insistence on pay-go. This is why we should mock every stimulus boondoggle. This is why we should demand an end to earmarks. This is why we should demand less spending everywhere. This is why we need to get the Democrats out of the majority in Congress and Obama out of the White House.

Best SOTU Summary

I know it may be a little late, but I wanted to alert readers to Peggy Noonan's article about Obama's State of the Union address. As usual, she masterfully parses the meaning behind the words, accounting for tone, order of priority and context. She also discusses the larger political issues for the Republican Party and quotes an unnamed source who is spot on in my opinion:

The great issue, this friendly critic added, is debt. The public knows this; Congress and the White House do not. "To me the Republicans are as rotten as the Democrats" in terms of spending. "Almost."

"I hope we have big changes in 2010," the friend said. Only significant loss will force the president to focus on spending. "To heal our country we need to get the arrogance out of the White House and the elitists out of the Congress. We need tough love. We need a real adult in the White House because we don't have adults in the Congress."

Exactly. The public is ready for principled leadership that will give direction and reduce the spending that has nothing to do with those priorities. This is why the Tea Party movement won't go away. Republicans could show great leadership by eschewing earmarks immediately, and oppose all Democrat earmarks. But that would require adult leadership.

Happy New Year! You're on the Hook for a Cool Trillion... Per Year... For Life

A smiling Barack Obama goes to meet with Congressional leaders. Later he announced that he is down with deficits of a trillion per year. Happy New Year!

Meanwhile Democrat blogs are pointing out the hypocrisy of Republicans opposing large deficits. However, in their meager defense, KT at the Scratching Post, points out that things could have been worse.