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Posts Tagged ‘Budget Deficits’

With Intrade.com showing an 83 percent chance that Obamacare will be approved, let’s console ourselves by looking at a bit of good news. The Wall Street Journal has a good editorial today lauding the new Republicans governors of New Jersey and Virginia, both of whom are reducing spending. But unlike in Washington, where a spending cut is so loosely defined that politicians can increase spending and simultaneously claim to be cutting spending (so long as they increase spending by less than previously planned), Governors Christie and McDonnell actually are proposing to spend less next year than is being spent this year. That hasn’t happened in Washington since 1965 – and it certainly won’t happen under Obama’s phony spending freeze:

Republicans Chris Christie (New Jersey) and Bob McDonnell (Virginia) were elected in November in states that had seen years of tax increases and explosive spending growth. Mr. Christie inherited a $2.2 billion deficit in 2010 and it is expected to grow to $11 billion in 2011. Mr. McDonnell is confronting the largest deficit in Virginia history—$4.2 billion for fiscal years 2011 and 2012, out of a $32 billion two-year general fund. This week Mr. Christie proposed his first budget, calling for a 9% cut in the state’s $32 billion annual general fund. He is not talking about phony Washington-style “cuts” against a baseline that automatically increases each year. The governor is asking Trenton to spend $2.9 billion less in 2011 than it did in 2009, shrinking the budget to $29.3 billion, which he admits will be “painful, but what other choice do we have?” …Mr. Christie deserves special applause for his willingness to battle government employee unions. His office calculates that New Jersey’s unionized employees have carved out health-care benefits that are 41% higher than the typical Fortune 500 company offers. A teacher who has contributed $62,000 toward her pension, and nothing toward medical benefits, can retire and receive over her lifetime a $1.4 million retirement package and an additional $215,000 in health-care payments. …Meanwhile, Mr. McDonnell is preparing to sign a 2011-12 budget of $14.5 billion that will reduce state spending below 2006 levels ($14.8 billion). The $2.3 billion in cuts include a reduction in state employee pay, halving arts funding, selling off state-owned liquor stores, and cutting Medicaid payments by $300 million and aid to school districts by $700 million. Mr. McDonnell argues the cuts are fair because school spending has risen 60% in the last decade, while Medicaid is up more than 75%. He has already signed legislation to allow off-shore oil drilling, which the state says could raise $5 billion in revenues over the next 30 years. (Are you listening, California?) Both governors are under attack from liberal interest groups and the media for not raising taxes, but the public wants government to restrain itself the way families have already had to do. New Jersey’s property tax rates are the nation’s highest and its top income tax rate is close to the highest at 8.97%. Mr. Christie will have to negotiate his way through a legislature that is dominated by Democrats who answer to the public unions, but as he told them: This “is what the people sent me here to do.” Virginia Democrats raised taxes twice in six years and should consider New Jersey’s punishing rates and fleeing taxpayers an example not to emulate.

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Even though I’ve been in Washington for almost 25 years, I still get shocked by the deceit and double-talk that characterizes this town. A perfect example can be found in today’s Wall Street Journal, which features a column by Karl Rove attacking President Obama for fiscal incontinence. I’m a big fan of condemning Obama’s big-government schemes, but Rove is the last person in the world who should be complaining about too much wasteful spending. After all, he was the top adviser to President Bush and the federal budget exploded during Bush’s eight years, climbing from $1.8 trillion to more than $3.5 trillion. More specifically, Rove was a leading proponent of the proposals that dramatically expanded the size and scope of the federal government, including the no-bureaucrat-left-behind education bill, the two corrupt farm bills, the two pork-filled transportation bills, and the grossly irresponsible new Medicare entitlement program.

Not surprisingly, Rove even tries to blame Obama for some of Bush’s overspending, writing that “…discretionary domestic spending now stands at $536 billion, up nearly 24% from President George W. Bush’s last full year budget in fiscal 2008 of $433.6 billion. That’s a huge spending surge, even for a profligate liberal like Mr. Obama.” This passage leads the reader to assume that Obama should be blamed for what happened in fiscal years 2009 and 2010, but as I’ve already explained, the 2009 fiscal year started about four months before Obama took office and 96 percent of the spending can be attributed to Bush’s fiscal profligacy. Yes, Obama is now making a bad situation worse by further increasing spending, but he should be criticized for continuing Bush’s mistakes.

Rove then has the gall to complain that Obama is “…growing the federal government’s share of GDP from its historic post-World War II average of roughly 20% to the target Mr. Obama laid out in his budget blueprint last February of 24%.” Yet a quick look at the budget data shows that the burden of federal spending jumped from 18.4 percent of GDP when Bush took office to more than 25 percent of economic output when he left office. Even if the (hopefully) temporary bailout costs are not counted, Bush and Rove are the ones who deserve most of the blame for today’s much larger burden of government. It should be noted, by the way, that none of the new spending under Bush was imposed over his objection. He did not veto any legislation because of excessive spending.

Finally, Rove concludes by writing that, “After a year of living in his fiscal fantasy world, Americans realize they have a record deficit-setting, budget-busting spender on their hands.” I’m almost at a loss for words after reading this sentence. All during the Bush years, I would complain to people in the Administation about wasteful spending. It didn’t matter whether I was talking to people at the Office of Management and Budget, the Council of Economic Advisers, the Treasury Department, or the National Economic Council. They almost always expressed sympathy for what I was saying, and then complained that the decisions were being made by the “White House political people.”

There’s an old joke about chutzpah and it features a guy who murders his parents and then asks the court for mercy because he’s an orphan. Karl Rove has taken the joke to the next level, but there’s nothing funny about the consequences for America.

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