Obama has great plans for the American economy but how much of it based on reality and how much on a fantasy created for his supporters?
The Economy 2009
The economy of 2009 begins with a budget deficit of at least $1 trillion and may be much more by the time the New Year arrives as the latest Bailout has barely touched enough of the mortgage problem to make much difference. According to the Wall Street Journal (WSJ) 10/24,08, Mr. Obama is promising to spend another 4.3 trillion while reducing tax revenue. The question is how is he going to pay for it?
Obama Election Promises
Obama has promised to devote another $1.32 trillion over the next 10 years to several new or expanded refundable credits and special exemptions according to the Brookings Institutions Tax Policy Center (TPC). This is called by him as a "middle class tax cut."
Among the promises are income-based health insurance subsidies, tax credits for tiny businesses, and expanded Medicaid eligibility. The cost: $1.63 trillion, roughly $295 billion a year by 2012, the ten-year total approaching $1.4 trillion, roughly $430 billion a year by 2012-2013. Also in Obama's plans are to double foreign aid.
The National Taxpayers Union Foundation examined an 85-page list of campaign promises Obama has made and although they could only estimate 77 or the 176 , that figure came to $611.5 billion over the next five years.
Obama Fantasy or Reality
Obama explained how he will raise the trillions of dollars he needs to pay for all his social program. He will close corporate loopholes and tax havens. That refers to $924.1 billion over 10 years from what the Tax Payers Union labels "unverifiable revenue raisers." Does this mean that he will increase corporate tax collections by 25% and if this is so, will some flee the country to avoid those increases in taxes taking with them jobs and increasing the number of jobless at a time when those numbers are already rising. Squeezing more revenue out of corporate profits, dividends and capital gains seems a fantasy when such places as banks have cut or completely eliminated dividends.
The fly in the ointment is that when corporations are taxed, that is passed onto the consumers, who are already strapped to make ends meet. For example, if Obama raises taxes on energy-producers, that is passed on to the user, such as utilities, who then adds it on to consumers charges.
Bob Schieffer, who moderated the third debate between Obama and McCain, when Obama said he was planning even more spending cuts, Schieffer told him that: "The non partisan Committee for Federal Budget (CFARB) ran the numbers and found otherwise."
The conclusion by Alan Reynolds, a senior fellow with the Cato Institute, in a paper presented at the Hillsdale Free Market Forum, (9/25/08) is that Obama has offered no clues how he intends to pay for the 175 programs he promised to expand...without reaching into the pockets and taxing those people lower on the economic ladder and even then, he will come up short.
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