How to have your cake and eat it, too:  Obama Has Plan to Slash Deficit, Despite Stimulus Bill

After a string of costly bailout and stimulus measures, President Obama will set a goal this week to cut the annual deficit at least in half by the end of his term, administration officials said. The reduction would come in large part through Iraq troop withdrawals and higher taxes on the wealthy.

Mr. Obama’s budget outline, which he will release on Thursday, will also confirm his intention to deliver this year on ambitious campaign promises on health care and energy policy.

Who will pay higher taxes?  Hedge fund and private equity partners, and people who make more than $250,000 a year, by allowing the Bush tax cuts to expire in 2010.  I found this paragraph interesting:

As a candidate, Mr. Obama called for immediately repealing those tax cuts. He decided instead to keep them in place through 2010, as scheduled, reflecting the widespread belief that raising taxes further depresses economic activity.

It’s not a belief, it’s a fact.  Will that fact change after 2010?  Just asking.

Another interesting paragraph about saving money in Iraq:

As for war costs, Mr. Obama’s campaign projected that withdrawing combat troops from Iraq would save about $90 billion a year. But it is not clear how much any savings would be offset by increased spending in Afghanistan, where Mr. Obama has ordered an additional 17,000 troops, bringing the total there to 56,000.

The Obama vision:

The budget will provide the first clues to how Mr. Obama will reassert fiscal discipline after signing into law a $787 billion economic recovery plan. As difficult as cutting the deficits will be, much of the reduction by the end of his term will simply reflect an end to spending from the two-year stimulus package and — assuming the economy recovers — higher tax revenues and lower expenditures for safety-net programs like unemployment compensation.

An awfully big assumption, especially with his planned tax increases.  Does it also reflect the future cost of the seemingly never-ending cycle of bailouts we’re currently experiencing?

Other planned cuts:

Mr. Obama will propose cutting a variety of programs, including the Medicare Advantage subsidies for insurance companies that cover seniors who can otherwise acquire health coverage directly from the government. Another target is spending on private contractors, especially for defense, which spiked during the Bush administration. And he will scale back some promises, including his proposal to double money for foreign aid.

Changes in accounting:

Yet Mr. Obama will inflate his challenge by forsaking several gimmicks that President Bush used to make deficits look smaller. He will include war costs in the budget; Mr. Bush did not, and instead sought supplemental money from Congress each year. Mr. Obama also will not count savings from laws that establish lower Medicare payments for doctors and expand the alternative minimum tax to hit more taxpayers — both of which Mr. Bush and Congress routinely took credit for, while knowing they would later waive the laws to raise doctors’ payments and limit the reach of the tax.

Mr. Obama plans to make changes in the health care system:

Mr. Obama will suggest in his budget that expanding health coverage to the more than 46 million uninsured can be done without adding to the deficit, both by making cost-saving changes in the delivery of care and by raising revenues. Advisers declined to identify the tax source.

His advisors don’t have to.  It will be the taxpayer.

On energy:

…Mr. Obama’s budget will show new revenues by 2012 from his proposal to require companies to buy permits from the government for greenhouse gas emissions above a certain cap. The Congressional Budget Office estimates that the permits would raise up to $300 billion a year by 2020.

Since companies would pass their costs on to customers, Mr. Obama would have the government use most of the revenues for relief to families to offset higher utility bills and related expenses. The remaining revenues would cover his proposals for $15 billion a year in spending and tax incentives to develop alternative energy.

Because having a brand-spanking-new government bureaucracy as a middleman is guaranteed to be cost-efficient.  And Al Gore will benefit tremendously now that he will have a role in controlling the production of energy.

According to the article, we’ll have to wait until April for the full details of the budget, so everything you’ve just read may have a shelf life.

If you want to know the size of the national debt, you can go here.  Today the magic number is $10,802,021,982,124.74.  To see a chart on how your taxpayer money is spent based on Senate Appropriations Bills, go here.

H/T Daily Beast

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