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What Are the Consequences of Obama's $3.8 billion Budget?

02/02/2010

President Obama’s newly released budget proposal clearly indicates that he is not focused on decreasing our country’s fiscal deficit anytime soon. Instead, Obama plans on spending $3.8 billion of taxpayer money that taxpayers can’t afford. Obama’s budget represents what The Wall Street Journal classifies as,

…one of the greatest spend-while-you-can documents in American history.

Instead of choosing to abandon the Keynesian tax, borrow, and spend philosophy for which he has become notorious, Obama will continue to raise taxes for hard working Americans, increase discretionary spending faster than the tax dollars come in, and therefore create more debt for the current and future taxpayers of America. I’m not exactly sure how this approach exemplifies fiscal responsibility; a priority that Obama emphasized the importance of achieving during last week’s State of the Union Address.

The Heritage Foundation reveals that Obama’s budget will produce the following;

•   Permanently expand the federal government by nearly 3 percent of gross domestic product (GDP) over 2007 pre-recession levels;
• Raise taxes on all Americans by more than $2 trillion over the next decade (counting health care reform and cap and trade);
• Raise taxes for 3.2 million small businesses and upper-income taxpayers by an average of $300,000 over the next decade;
• Borrow 42 cents for each dollar spent in 2010;
• Run a $1.6 trillion deficit in 2010--$143 billion higher than the recession-driven 2009 deficit;
• Leave permanent deficits that top $1 trillion in as late as 2020; and
• Double the publicly held national debt to over $18 trillion.[2]


The size of Obama’s budget is a clear indication that he believes that big government isn’t the problem, but rather the solution. Regarding the size of Obama’s budget, The Wall Street Journal asserts that;

It is an effort to put in place programs and spending commitments that will require vast new tax increases and give the political class a claim on far more private wealth.

As a result of this constant enlargement of the federal government (as Obama’s budget promotes), markets will continue to be distorted, individual freedoms will continue to be limited, and Americans will continue to face a grim economic future. The plan presented in Obama’s expansive and expensive budget proposal will not lead us out of this recession. As current circumstances show, big government spending of taxpayer dollars and government intervention in the economy does not create prosperity—it destroys it. Given our soaring fiscal deficits, our exceptionally high tax rates, our increasing unemployment rate, and our federal government’s continuously proven tendency to waste taxpayer dollars, it is beyond me why many Americans still continue to invest faith in the government being the necessary cure for our economy’s ills.