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    Obama's Debt Reduction plan “Cooks the Books”

    03/03/2013
    Democracy and Power 108: Obfuscation

    Wherever politics intrudes upon economic life, political success is readily attained by saying what people like to hear rather than what is demonstrably true. Instead of safeguarding truth and honesty, the state then tends to become a major source of insincerity and mendacity. – Hans F. Sennholz

    Obama's Debt Reduction plan “Cooks the Books”

    According Investors Business Daily, President Obama has a plan to reduce the deficit.  However, by twisting the English language an alleged savings is really a tax.    Here are the intentional distortions of  the truth - exposed by IBD:
     
    Worse, Obama's "balanced" plan actually counts hundreds of billions of dollars in new revenue from taxes, fees and rebates as "spending reductions." For, examples:

    • His plan to "strengthen" unemployment insurance is labeled as a "cut," but it's really a $50 billion tax hike.
    • The $35 billion from Federal worker retirement programs involves boosting worker contributions.
    • Most of the $35 billion in Medicare savings comes from charging wealthy seniors more money.
    • The $140 billion in "reduced payments to drug companies" are, in fact, rebates Obama wants drugmakers to pay Uncle Sam for selling drugs to poor seniors.
    • Then there's the $45 billion in spectrum fees and asset sales that Obama lists as spending reductions.

    If viewed correctly, it looks like more than $300 billion — about a third — of Obama's proposed "spending cuts" are actually revenue increases.  Immorally, this mislabeling has occurred in DC for a long time.  Most recently, Presidents Clinton, Bush II and Obama have intentionally deceived the American people by labeling a tax increase as a spending cut.

    To stop this fraud, Laurence Kotlikoff, an economist at Boston University, has developed the fiscal gap - a true cost or savings of government programs.  The fiscal gap measures a program's impact.   In 2011, Kotlikoff explained the deceit by the Obama Administration  - albeit a much more sophisticated  mislabeling and deceit than the above examples.

    It’s only the value of the infinite horizon fiscal gap that is unaffected by the choice of labels of language. Take this year’s payroll tax contributions as an example.   We'll call these transfers from workers to Uncle Sam “borrowing” by the government rather than “payroll taxes” since the money will be paid back as future benefits. If the future payback isn’t in full (equal to principal plus interest), we can call the difference a “retirement tax.” Presto! With this change of words, our 2011 deficit of about 10 percent of GDP is boosted another five points to 15 percent.

    Tragically, in 2003 Kotlikoff and others were asked by  Alice Rivlin of the Office of Management and Budget  to present the fiscal gap to stop these distortions and deceits.  After months of study the project was snuffed by the Clinton administration.  Why?  It exposed our exploding debt.  The same occurred in the Bush II administration.  Treasury Secretary Paul O’Neill sought a true accounting of the debt.  O'Neill and the report were annihilated in favor of pushing tax decreases and prescription drugs.  [Read:  When Pretending Fails to Hide Bankruptcy]

    Two years ago, I warned of these deceits and dangers to America, democracy and freedom. 

    Dear fellow Americans, we have a momentous problem.   America’s elected elites have willfully, wrongfully and harmfully damaged America.  These political power addicts - Republicans, Democrats, progressives, liberals, and conservatives - all seek the immediate gratification of power over long-term, good policy.  Over the last three elections, Americans have peacefully rebelled by voting out incumbents.  Continuing the peaceful rejection of this deceit and mendacity is the only hope for saving freedom, peace and democracy.  We the People, the hoi polloi, are the only safeguard in our present system of government from being overwhelmed by the greed and avarice of the political plunderers.

    Immorally, the distortions, deceits and the exploding debt continue and greatly threaten peace, prosperity, democracy and freedom.