"We Can't Just Cut Our Way Into Growth" - iBank Director of Professional Services, Chris Heath
President Obama released his 2013 Federal Budget last week, leaving many people to wonder will this proposal really help restore the Federal budget. While I think the president is right when he says, “We can’t just cut our way into growth” he sorely misses the mark in balancing necessary cuts with needed expansion. Most of his plan in regards to taxes, education, and job growth is fairly sound, but he fails to address the biggest drain on our Federal Budget: Health Care.
Before ripping into President Obama’s negligence regarding health care, I would like to mention some of the better parts of his plan.
1) Taxes. The proposed budget would raise over $1.5 trillion in new taxes over the next decade. This would be done by both increasing taxes on couples making over $250,000 a year and reducing the amount of deductions wealthy individuals and corporations can take. Many right wingers are up in arms about this, but if you’re making over 5 times the per capita GDP sorry you should pay a little more.
2) Job Growth. President Obama is seeking more than $350 billion in order to kick start job growth. In the short term he wants to invest $50 billion in transportation projects, $30 billion to modernize schools, and $30 billion to help states hire more public employees. The latter may create some state issues, like in California, where benefit packages for public employees is grossly out of line (They are paid way to little in wages and way too much in retirement, but that is a discussion for a different day). Overall though his growth plan has merit.
3) Education. Take it from a guy that has been through both undergraduate and graduate programs: Our educational system is a mess, especially at the college level. The budget seeks almost $9 billion for education of which eight will go to community colleges to train workers in high-growth industries. Honestly $9 billion isn’t enough, but it is a start.
While the above three points are positive aspects of his plan, they do not even come close to outweighing the fact that he is pretty much ignoring Medicare and Medicaid. Right now Social Security, Medicare, and Medicaid account for 43% of our National spending. That is 10% more than Defense, Security, and Domestic spending combined!
If you ask almost any economist not on President Obama’s payroll he/she will tell you there is no way to significantly reduce our deficit without reforming Medicare and Medicaid. When Medicare was enacted in 1965 the government projected by 1990 the program would cost $9 billion. Try $66 billion. In 2011 the two programs combined cost almost $1 trillion a year! There is no way any reasonable politician (an oxymoron, I know) can ignore this elephant in the room, but by doing just that President Obama may have just cost himself a second term.
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2/20/2012 10:03:04 AM by
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