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House Democrat Budget Pushes Nation towards Fiscal Disaster
Washington, DC,
February 6, 2010
Tags:
Economy and Tax Reform
House Democrats today paved the way for the highest deficit spending since World War II by jacking up the federal debt ceiling by a staggering $1.4 trillion, and House Republican Conference Secretary John Carter says that could begin a precipitous decline in the value of the U.S. dollar. "This action by the President and Speaker Pelosi has triggered alarms that could lead to a cut in the U.S. bond rating over the next year," says Carter. "That spells a potential fiscal disaster of a magnitude unseen since the 1930s. The reckless spending of the Democrat House has now crossed the threshold into the absurd." Business Day reported today that Moody's Investors Service Inc. states the US government's AAA bond rating will come under pressure in the future unless additional measures are taken to reduce budget deficits projected for the next decade. The bill passed the House by a narrow 217-212 margin, with 42 Democrats joining all House Republicans in opposition to the bill. Carter says a first task of a new Congress next January should be to repeal all unspent funding under the bill, and begin development of a balanced budget and a Balanced Budget Amendment to the U.S. Constitution to prevent future fiscal irresponsibility by Congress. Since Democrats took control of Congress in January 2007, the debt limit has been raised by Congress five times and the national debt (the combined public debt and debt held in government accounts) has increased by 42.5 percent or $3.69 trillion. Today’s vote marks the third time that President Obama will have increased the debt limit since being inaugurated. Under the President’s budget, the national debt will soar from $9.961 trillion at the beginning of 2009 when President Obama took office to more than $25.77 trillion in 2020—an increase of 147 percent. The House Republican Conference today compiled editorials from across the country supporting Carter’s take, with opinions from the left and right strongly against the actions of Obama and Pelosi. Washington Post: “Under the path laid out by the president, absent the work of the fiscal commission, the national debt is set to rise to a staggering 77 percent of the economy by 2020. That year, interest payments on the debt alone will be $840 billion; by way of comparison, all nonsecurity discretionary spending in 2020 is estimated to be $537 billion. And these terrifying numbers reflect the optimistic scenario. They assume that Congress accedes to all of the president's suggested cuts and savings…The projections also assume that, after setting aside $160 billion for war costs in 2011, the annual price tag for ‘overseas contingency operations’ can be trimmed to $50 billion. They assume that health-care reform along the lines of the House and Senate proposals will pass -- and save $150 billion over 10 years. And they assume that the administration's relatively optimistic economic forecasts will pan out. If any of this leaves you skeptical, you are within your rights.” (2/2/2010) Wall Street Journal: “[T]he budget that President Obama released yesterday for fiscal 2011 is one of the greatest spend-while-you-can documents in American history. We now know why the White House leaked word of a three-year spending freeze on a few domestic accounts before this extravaganza was released. No one would have noticed such a slushy promise amid this glacier of spending. … If this budget is Mr. Obama's first clear demonstration of his long-term governing priorities, then it's hard not conclude that this spending boom is deliberate. … Even these tax increases won't be enough to pay for the spending that this Administration is unleashing in its first two remarkable years. On the evidence of this budget, the Massachusetts Senate election never happened.” (2/2/2010) Detroit News: How long can America sustain ‘unsustainable’ deficit spending? As far into the future as anyone can project, according to the federal budget proposal presented Monday by the White House. …This budget flies in the face of warnings from economists that using borrowed funds to pay for one-fourth to one-third of federal expenditures is not sustainable and will lead to an economic disaster down the road. …[S]omeday, this debt will have to be paid. That will require higher taxes and a lower standard of living in a future that may not be all that far away. “ (2/2/2010) Dallas Morning News: If jobs, jobs, jobs are the focus, is the president's proposal serious enough? Government can't directly create private-sector jobs; the most it can do is create an environment that allows businesses big and small, from Bank of America to your local dry cleaners, to hire more workers.... Even under the administration's optimistic future scenarios, the bottom lines are staggering. A record $1.56 trillion deficit for 2011, with trillion-dollar estimates (give or take a few hundred billion) deep into the decade.“ (2/2/2010) Philadelphia Inquirer: “President Obama is in a tight spot. Economists tell him spending is necessary to grow the economy, but that just deepens already huge deficits that also threaten the country's future. So, what to do? Obama's new budget tells the tale. His proposed $3.8 trillion in spending puts the nation on course for deficits totaling more than $5 trillion over the next five years. That's staggering. Recession or not, the country can't afford that level of spending. The federal government now borrows one-third of all the money it spends. No household could survive very long like that. On this pace, interest payments on the national debt alone will reach $840 billion in 2020. That sum is more than the government is projected to spend in the same year on all discretionary domestic programs not related to security.” (2/3/2010) Washington Times: “Over the next decade, President Obama plans on increasing taxes by $1.4 trillion, offset by his planned $300 billion in tax cuts. But his spending splurge will increase so much that Mr. Obama will add $5.1 trillion to the national debt over the next five years and $8.5 trillion over 10 years. This will be on top of the $1.4 trillion deficit we ran last year. At the end of these 10 years, the publicly held national debt will nearly double to $18 trillion. Even Mr. Obama's own estimates put all the other tax-and-spend liberals to shame. And Mr. Obama hasn't even gotten his massive, costly takeover of the health care system and his even more costly cap-and-tax proposal. It is not as if Americans couldn't survive with a smaller amount of government spending - eight years ago, the budget was about half as big as Mr. Obama's proposal.” (2/2/2010) Orlando Sentinel: “The federal budget is on the road to ruin, with long-term deficits that threaten the nation's economy and security. But instead of heading for an exit, Barack Obama would step on the gas. In unveiling his proposed budget this week, the president declared, ‘We simply cannot continue to spend as if deficits don't have consequences.’ Amen. The consequences include diverting dollars from investments that would make America more prosperous and secure, forcing Uncle Sam to depend even more on China and other foreign creditors, leaving a crushing debt burden on future generations, and raising the risk of another economic meltdown.” (2/3/2010) Boston Herald:“There’snothing like a $3.8 trillion federal budget to make the average taxpayer’s head throb. And as much as the one filed yesterday by President Barack Obama was anticipated - along with a freeze on an estimated 17 percent of that budget - well, it will take some time to get under the hood of this one… [T]he president has proven himself just as stubborn as those members of Congress on his own decision to close the military prison at Guantanamo Bay - whatever the costs. In this budget alone is a $250 million appropriation for the purchase of an Illinois prison that is a likely facility to house Gitmo detainees, $200 million in grants for cities that become the sites of trials for those detainees (of course, the now abandoned plan to try the 9/11 mastermind in Manhattan would have cost $200 million for that trial alone) and $73 million for the transfer, prosecution and further imprisonment of detainees…That’s one damned high price to pay for symbolism. And more than that it undercuts the president’s sincerity on budget-cutting as a priority.” (2/2/2010) Washington Examiner: “One way to look at President Obama's proposed budget for 2011 is to focus on the fact that it includes the largest annual deficit -- $1.6 trillion -- since World War II. It's even more revealing to examine Obama's spending plans for the next five years. There we find a cumulative federal deficit of $5.08 trillion. White House spinmeisters will crow about Obama "cutting" the deficit in half -- to $700 billion -- by 2013…As bad as the official numbers are, however, a closer examination of the data behind them makes it clear that future deficits are almost certain to be higher than even the Obama administration now projects. The reason is that Obama, like previous presidents of both parties, too often counts his federal revenue chickens before they hatch.” (2/2/2010)
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