President Obama’s 2014 Budget: To what end?

Posted on April 10, 2013 by

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As promised, President Obama unveiled his 2014 budget today, albeit 2 months late.  We discussed some of the proposed outlines on Monday, which you can find here.  But in his public comments as reported by CNBC, Mr. Obama continues an approach which can only divide, not unify.  Whether this is by design is only a matter of speculation.  But in an incredibly divided country, is it too much to ask our leader to be the unifier?  Mr. Obama promises that his budget will reduce deficits by

“asking the wealthiest Americans to begin paying their fair share.”

After just raising the top effective tax rate to over 43%, with the bottom 50% of the population paying virtually no income tax, and the U.S. having a much more progressive tax system than almost all of Europe, what can he mean by “begin” to pay their fair share?  Of course we would love him to define–specifically–what does he define as fair?  And under what moral basis does he make that definition?  I am left to conclude that fair means that any spending that he wants to make must be paid for by the rich.

And what determines the level of spending?  Unfortunately, it cannot be wise investments.  For example, the WSJ reports that his budget includes $78B for a new pre-school program for low to moderate income children.  Ponder this for a moment–a new program when our nation is running ruinous deficits, and are already effectively bankrupt if unfunded liabilities are added in.  Worse yet, his own Department of Education reported out that the much vaunted Head Start is effectively useless–there is little statistical difference in academic performance  between those students that participate in Head Start and those that do not.  When there is little empirical support for improved outcomes, it is easy to see why some Americans might conclude the only purpose of programs like these is to increase dependency upon the government.

Finally, consider Mr. Obama’s self-proclaimed “fiscally responsible” budget.  No doubt he would like to continue to posture as a centrist between the left and the right.  But how centrist is this budget?  Per the WSJ

:OB-XA061_BUDGET_E_20130410102603

Mr. Obama’s spending trajectory still consumes 21-22% of our GDP, while tax revenue has averaged ~18% of GDP since WWII–with a variety of tax rates.  This suggests we will never close the gap on our deficit’s w/Mr. Obama’s plan.  Of course, if the deficit is not a problem–which Mr. Obama avers, then perhaps it is a centrist budget.

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