Barack Obama Owns This Debt Crisis

The Obama Administration’s fiscal and budget policy is simple: Position the President to blame others for the debt crisis and to take the credit if the relatively few competent adults who serve in Congress manage to resolve it.

With the (2nd) debt ceiling deadline looming, and secret, high-level negotiations on-going, President Obama appears and reappears, playing the role of wise observer, dismayed by deficits and debt piled up by someone else, and urging those irresponsible miscreants to at long last do something about it.  Here’s a sample from his Weekend Address:

Republicans and Democrats don’t see eye to eye on a number of issues…We agree that after a decade of racking up deficits and debt, we finally need to get our fiscal house in order.

In his press conference Monday morning Obama said:

What I emphasized to congressional leaders yesterday is now is the time to deal with these issues. If not now, when?

One who had not paid attention for several years might get the impression that Barack Obama is the sober, sensible, frugal one who shares our disgust with the wild spending of others.  This is exactly the impression he wishes to plant in the minds of the uninformed.  His “decade of racking up deficits and debt” is a slightly more subtle version of it’s-Bush’s-fault.

Yes, there were deficits in seven of Bush’s eight years.   Perhaps they were justified as tax revenue declined in the wake of the the stock market crash and the 9-11 terrorist attacks.

But after falling for three years Tax revenue increased rapidly from 2004 through 2007 and with a modicum of discipline Congress could easily have produced a surpluses in 2006 and 2007.  Those deficits were a big part of the reason fiscally conservative voters sat out the 2006 election, allowing the Democrats to take over Congress in 2007.

But the spending increases and deficits during the Bush years, as irresponsible as they were, look like small change compared to the audacious spending torrent of the first three Obama years.

Obama took office in January, 2009 the fourth month of the 2009 fiscal year.  He claimed to have “inherited” the 2009 deficit but within his first thirty days in office he:

  • Doubled the size of the bank bail out program begun by the Bush administration.
  • Signed hundreds of billions of spending increases enacted by the new Democratic majority in Congress, and
  • Jammed through his $800 billion stimulus with such urgency that the final version of the legislation had not even been printed the day Congress voted to pass it.

Four months ago President Obama submitted a proposed ten year budget so brimming with red ink the US Senate rejected it by a vote of 97 to zero.  Since then the President has failed to offer anything in writing – no spending cuts or tax increases.  Nothing.

As the chart below shows, Obama’s unprecedented deficits have driven up the total debt from levels that were manageable during the Bush years to alarming now.

Wall Street rating agencies have warned that they will have to downgrade their ratings for U.S. Treasury debt.  Predictably, progressives have called them fear mongers and agents of the rich, betraying “working” Americans, etc.  But their credibility would be in doubt if they didn’t react to what every investor on the planet knows, the US Government is accumulating debt at a rapid rate that cannot continue much longer.

Mr. Obama is right about one thing: now is the time to act.

 

18 Comments so far

  1. AzTex on July 12th, 2011

    This is simple: Bush caused this crisis with massive tax cuts for the wealthiest.

  2. UAW-Man on July 12th, 2011

    Blaming Obama for deficits is an evil lie. Bush turned Trillions of surpluses into Trillions of deficits with his gargantuan give-aways to the rich.

    The Republicans have just one goal – to make sure the top 2% doesn’t have to contribute anything to the country that enabled them to get rich.

    They won’t even cut the tax giveaway for corporate jets! Why does Donald Trump need a single mom who drives a 20 year old Honda to help him pay for his private jet?

    Why do hedge fund managers get away with 15% in taxes when fire fighters and teachers are paying 35%?

    This country is completely upside down. Obama made some small improvements and now the rich are using the Republicans to fight back.

  3. Drew on July 12th, 2011

    “This is simple: Bush caused this crisis with massive tax cuts for the wealthiest.”

    No, this comment is simple minded. Just look at the size of the deficits and compare to the supposed tax revenue declines. Game over.

    Next ridiculous excuse for Obama incompetance……

  4. Drew on July 12th, 2011

    Unbelievably Assinine Worthless – Man…….

    Why was GM bailed out at taxpayer and bondholder expense?

    “Why do hedge fund managers get away with 15% in taxes when fire fighters and teachers are paying 35%?”

    They don’t, dumbo. When they receive a management fee for stewardship of assets they pay the salaries and light bills for the firm, and if there is money left over they pay ordinary income tax rates on what’s left, just like a mutual fund manager, or a fireman.

    What they pay 15% on is the profits from running their business, just like any other business owner in the US. If you want to make the case for taxes on capital gains being taxed as O/I do so. Otherwise you are just spewing ignorant tripe. Oh, that’s right. UAW sucking at the public trough. No wonder.

  5. UAW-Man on July 12th, 2011

    Drew –
    You don’t know what your talking about. Business owners pay regular income tax on their profits. My wife owns a business and I do her taxes.

    Yes, if the profit is low enough for us to fall into the 15% tax bracket we pay 15%. But if it’s higher that is above that bracket we pay 25%. Plus payroll tax. That adds up to 40%. If we have a really good year it will be even higher.

    we aren’t rich but we’re paying almost half! But the hedge fund guy who makes millions gets away with 15% thanks to Bush and the republicans. What sense does that make?

    I hope Obama tells boner and the Pubs to go to hell

  6. MeginMiami on July 12th, 2011

    UAW-man is an uninformed partisan hack but he is right about one thing. businesses pay regular income tax rates on profit. Up to 35% if their taxable income after deductions is over $379,150.

    My understanding is hedge funds or their managers pay 15% capital gains instead of regular income rates. But I don’t know for sure.

  7. Drew on July 12th, 2011

    UAW clueless man –

    “You don’t know what your talking about. Business owners pay regular income tax on their profits. My wife owns a business and I do her taxes.”

    No, you don’t know what you are talking about, and are an incompetant tax man. They pay OI on yearly income, just like everyone else, including the yearly income of hedge fund managers. But when business owners realize a capital gain, usually upon sale of their business, they pay 15%, just like a hedge fund manager who sells a portion of their business.

    Thank you for playing, but your commentary was worthless.

  8. MeginMiami on July 12th, 2011

    Drew

    Thank you for clarifying that. As always the Democrats try to demonize people they think the masses don’t like. In this case I guess they think Joe sixpack hates hedge fund managers. Most of those Joes probably don’t even know what a hedge fund is.

    If Drew is right hedge funds get tax treatment that isn’t different from everyone else after all.

  9. Drew on July 12th, 2011

    M&M –

    See above and…..

    “My understanding is hedge funds or their managers pay 15% capital gains instead of regular income rates. But I don’t know for sure.”

    No. As I pointed out, hedge fund managers (more properly: general partners in a variety of investment vehicles) pay ordinary income rates on their yearly profits. The way a GPartnership works is that they receive a mangement fee to pay for all of the expenses of managing the investment vehicle. Salaries, insurance, lights etc. The residual is the income to the general partners. Its taxed, properly in my view, as ordinary income.

    But what a GP really does is invest its own money, and its limited partners money, in a business that is simply a portfolio of busineses or real estate investments etc. Just like any other business owner. It sources them on a proprietary basis, not from the stock tables of the Wall Street Journal, it hires and fires executives, it raises financing, it controls the Board and guides policy etc. That is what differentiates it from mutual “stock pickers.” Its a business owner.

    And business owners, when they sell, get capital gains treatment. We are talking about the so called “carried interest.” A portion of the profits of the business. Cap gains treatment is a well established tax policy rooted in the notion that capital formation and appreciation is in the public interest. Otherwise capital could simply be put in the proverbial mattress.

    Hope that helps. And pay no attention to UAW – he’s an ignorant dope who has no clue what he’s talking about. I seriously doubt he can even comprehend what I just wrote.

  10. Drew on July 12th, 2011

    M&M –

    Your post popped up while I was typing. Yes, its just typical leftist demogoguery. Just as today Obama tells us if we don’t raise taxes social security checks can’t go out. (Didn’t it go into a “trust fund?” ….snicker)

    I’m sure we will be told over the next week or two that if we don’t raise taxes the widows and orphans will all die, be ground up into Soylent Green, and be fed to the rich as caviar……same old same old…it never stops.

    BTW – You have in your state one of the few hopes for the nation: Marco Rubio.

  11. MeginMiami on July 12th, 2011

    Thanks Drew. That helps.

    I’ve been following this and reading the numbers and 1% of the deficit is $16 billion dollars! I’ll bet if they raised taxes on every hedge fund manager it wouldn’t add up to $16 billion.

    That’s the way Obama plays politics. He builds up small-balls like hedge funds and corporate jets to get people to think the whole crisis would be over if if only he would get his way.

    Even the Democrats admit their corporate jet tax change would only be 2 billion over ten years. It’s a joke. It would cost the governemnt more than that to pay unemployment benefits to aircraft employes who might lose their jobs.

    Since you seem to know, How many hedge funds are there? How much income is he talking about that is taxed at 15%?

  12. Drew on July 12th, 2011

    M&M –

    “Even the Democrats admit their corporate jet tax change………….”

    Its all smoke and mirrors. Because they use the straw man of the “evil” rich to justify tax increases that, because of raw arithmetic as you correctly point out, will need to dip down all the way to the middle class. Its basically fraud.

    “Since you seem to know, How many hedge funds are there? How much income is he talking about that is taxed at 15%?”

    There are industry rags like “Private Equity Analyst” and such that track the stats you are inquiring about. I don’t know the exact numbers, other than that I can guarantee you the numbers are tiny compared to the deficit. This is all BS. If you fish around on the internet you can find studies that disect what would happen if we simply confiscated the income of the top 1%, 5% etc. Its small comfort. That’s why income tax changes (increases) dip into the $100K – $200K range. And of course, you have many small business owners here – taxes up, jobs down.

    I happen to be in that proverbial top 1% of income earners. And just about everyone I deal with is also so. And I can tell you unequivocally that they watch the Obama/Pelosi/Reid complex and make decisions accordingly. There is no hope for significant recovery until they are out. None.

    Best Regards.

  13. Thousand Flowers Blooming on July 12th, 2011

    Did you the news today? Obama said there may not be money to pay Social Security, the military, veterans, etc. What is the only Republican answer to this crisis? MORE TAX CUTS! FOR THE RICH!

    These Republicans are insane!

    This blog is completely wrong, as usual. Bush set in motion the economic forces that caused this crisis. Tax cuts for the rich, tax cuts for transnational corps, to help them ship jobs to Mexico & China, deregulation of banks and mortgages, that wrecked the economy.

    Republicans even changed the law so workers can’t go into bankruptcy when they’re unemployed and have no way to pay Wall street credit card companies!

    The government is paying historically low interest on its debt. The world is eager to lend more. All it takes is for these obstinate Republicans to GTF out of the way!

    This is insane! How long will the people put up with this?

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  15. Drew on July 13th, 2011

    Thousand Floweres –

    Put the crack pipe down.

  16. Irving Riggsby on July 14th, 2011

    But a smiling visitant here to share the love (:, btw great design and style . “People forget how fast you did a job – but they remember how well you did it.” by Howard Newton.

  17. Ted Barnhart on July 14th, 2011

    “Bush turned Trillions of surpluses into Trillions of deficits with his gargantuan give-aways to the rich.”

    Sorry to disappoint you, but the overwhelming majority (over 80%) of the “cost” of Bush tax cuts is a result of cuts for the non-wealthy.

    Treasury Estimated that total cost of cuts at $3.7 trillion over 10 years.

    The cost of the cuts to the “wealthy” were estimated to be $700 billion over 10 years

    http://money.cnn.com/2010/09/15/news/economy/bush_tax_cuts_faqs/index.htm

  18. surfcitysocal on July 16th, 2011

    “But the spending increases and deficits during the Bush years, as irresponsible as they were, look like small change compared to the audacious spending torrent of the first three Obama years.”

    Audacious indeed!

    Obama’s book should have been called: The Audacity of Debt.