Tuesday, February 15, 2011

Obama's Budget Bluff: Dick Morris

Too searing not to post. Emphases mine...

By Dick Morris & Eileen McGann

The Obama Administration and its acolytes on the Bowles-Simpson deficit reduction commission are propagating the myth that it is Social Security and Medicare that are driving the deficit over $1.5 trillion. Discretionary spending, they plead, is but a tiny part of the budget, not much worth fooling with.

...This formulation is a myth! The fact is that this deficit has been caused by a rapid runup in discretionary, non-defense spending and in welfare entitlements like Medicaid and food stamps. The key to cutting spending and slashing the deficit is not to focus on Social Security or Medicare, but on the real culprits – discretionary spending and welfare entitlements.

The following chart, taken from
Revolt!, illustrates this key point:

Category 2008 2010 %Incr
Welfare $260 $400 54%
Domestic $485 $682 41%
Medicare $456 $528 16%
Soc. Sec. $612 $700 14%
Defense $612 $690 11%

Obama and the Democrats are playing a game... By pretending that the most politically popular programs – Social Security and Medicare — cause the deficit, they insulate the whole array of less popular government programs from cuts. They hide appropriations for EPA, PBS, highway construction, the Department of Education and like behind Social Security and Medicare reform.

But it is the core spending on the bureaucracy itself that is driving this deficit, increasing by $200 billion in the two Obama years. And it is Medicaid and food stamps and other welfare entitlements, up by $140 billion that are also culprits.

In the past two years, we have added 80,000 federal workers, 11 million food stamp recipients and $50 billion in Medicaid costs under Obama.

When baby boomers start to retire in greater numbers later in the decade, we will need to focus on Social Security and Medicare...

Revolt! itemizes many other proposed cuts. It is not hard to bring the deficit down to less than 4% of GDP by 2014 by cutting discretionary and welfare entitlement spending.

Its just that liberals don’t want to do it.


Jim said...

Leave it to Morris to cite his own book as the source of his information. No context is provided for the numbers and no actual source for them either.

That said, the two biggest contributors to the current deficit are the economic downturn and the Bush/Obama tax cuts. Third is the wars in Iraq and Afghanistan.

Are there cuts to be made in spending? You bet. But Social Security is NEVER one of them. Social Security is a self-funding program. The only thing Social Security has to do with the deficit is that the budget includes interest on US Treasury bonds, like the ones most of us have in our 401(k)s and that are in the Social Security Trust Fund.

Here's what could be done to significantly reduce the deficit:

1. Rein in military spending. No need for two different engines for the same aircraft. No reason for the US to spend more that China, India, Russia and the rest of the world combined. $100B a year.

2. End or reduce subsidies to big agribusiness. $7-8B

3. Reduce wasteful tax expenditures: special credits, deductions, exclusions, exemptions, and preferred rates. $100B

4. Put a quarter percent tax on trades of financial instruments. $50-$150B a year.

5. Negotiate Medicare drug prices. $15B per year.

Susannah said...

HI Jim~ My fault. Mr. Morris actually does include a source for his info. I just cut it. The source he cited was "US Government." Can't remember if he had a link in the original text.

And, you're wrong. Economic downturn is the main reason to STOP SPENDING, as BHO is so want to do. Bush/'obama' tax cuts are an effort to NOT BLEED BUSINESS DRY, so that perhaps they could possibly, just maybe create the jobs we so desperately need.

AND, to cut the budget, they MUST start w/ entitlements (sans SSec./Medicare), which have ballooned under heir commisar.

Jim said...
This comment has been removed by the author.
Jim said...

"heir [sic] commisar" Is he a Nazi or a commie?

"Morris actually does include a source for his info"

Yeah, he says "US Government" but doesn't link to anything. What is "Domestic"? What is "Welfare". There's no context. How much is for the expense of cleaning up the Gulf. No source, no context. He doesn't even say whether his numbers are millions or billions. You have to buy his book. He's so sleazy. You can even pre-order the book at the bottom of his article.

You can't have an economic downturn that causes a half trillion dollar reduction in revenues in one year and expect to cut a half trillion dollars in spending in the same year. It simply doesn't work that way.

If you are a two job family and one of you loses your job, you don't stop paying the mortgage or stop buying food. You can stop going to the movies or eating at Olive Garden, but that's not going to solve your problem.

"NOT BLEED BUSINESS DRY" You must be joking. 3.4% more on PERSONAL incomes over $250K is hardly bleeding business dry. Less taxes do not create jobs. You don't create a job if you don't have to pay $34,000 tax on your last million. You create a job if there is a demand for your product or service. Then the $34,000 you pay someone is a tax-deductible expense. So taxes bleeding companies dry is ridiculous. Taxes have never been lower.

Which entitlements have "ballooned" under Obama? Please provide a real source, not Morris' numbers from thin air.

Susannah said...

"heir [sic] commisar" Is he a Nazi or a commie?
I don't know, Jim. You tell me...

You're so much fun to mess with. I don't even know what these 2 words together means. Just sounded good, & I knew it'd get your goat...bingo!)


"Which entitlements have 'ballooned' under Obama? Please provide a real source, not Morris' numbers from thin air."

Um, other than any "man on the street," how 'bout Wall Street ?

Too easy, Jim. (I need one of those Staples 'easy' buttons.)

Jim said...

Thanks for your link. But your statement that entitlements ballooned under [Obama] is kind of like saying spending on national security ballooned under George W. Bush.

From the WSJ article:

"And that number has undoubtedly increased as the recession has hammered jobs and household incomes. Some 41.3 million people were on food stamps as of June 2010 up 45% from June 2008.

"With unemployment high and federal jobless benefits now available for up to 99 weeks, 9.7 million unemployed workers were receiving checks in late August 2010, more than twice as many as the 4.2 million in August 2008."

Seems like there was a recession going on.

Sandy said...

I actually agree somewhat with both Jim and Sus on this one.

Sus: I agree that Obama's budget is a pretty bad joke. He could be a dumb accountant but probably a smart politician trying to lay the pain that is ahead at the feet of his opponents.

Jim: Yep - we need to cut military spending, agri-subsidies, certain tax exemptions, negotiate medicaid drug prices, etc.

But we also MUST address the looming social security crisis that is just around the corner. It is not insurmountable - maybe extend the age for benefits? Create an amnesty program where immigrants actually have to register in order to receive benefits and after a defined time period (five years? seven?) of working, paying taxes, staying out of trouble, learning english and the basics of Americanism (history, governmental structure, etc.) as evidenced by passing some sort of exam - make them citizens. Immigrants could actually help us out of this mess but we need to only welcome and provide for those who have something to offer in return (John Stossel calls them makers, not just takers).

Susannah said...

Jim dear, I admire your consistency. When I posted my link, I chuckled a little ('Watch, he's gonna quote your link back to you, as if it proves his point.)
See how much fun you are?

Sandy~ Welcome back! You're right, & Jim's right too - nothing can be the sacred cow, as we look to spending cuts. The suggestions you've made are very similar to the suggestions made by Karl Rove. Great minds think alike, I 'spose.

(Enter here: Jim's crack on Karl Rove.)

Problem w/ the illegal immigrant thing is that the Left will cry racism & class-warfare if we try to compell these people to actually contribute for their freebies. Which goes to Morris' point about entitlement cuts: "...liberals don’t want to do it."

Always On Watch said...

Is Obama deliberately trying to destroy our economy? Sure looks that way to me!

Jim said...

Sandy said, "But we also MUST address the looming social security crisis that is just around the corner. It is not insurmountable".

Sandy, what exactly is this social security "crisis" to which you refer?

Susannah said...

AOW~ So glad you're here! Take a look @ the "Cloward & Piven" post that I did a while back. (Several have written about it.) No time to grab a link for you now - sorry, but it's in 'labels.' I think you're onto something...

Jim, dear~ Playing dumb doesn't become you.

DUTA said...

You need some mature, grown-up person as head of state, before it gets too late.

Jim said...

Susannah dear, I'm not playing dumb. I know there is no Social Security crises, so I'm asking Sandy to explain what hers is.

Or maybe you can fill in for her. Whichever.

Susannah said...

DUTA~ Agree, wholeheartedly.

Jim, Sandy can speak for herself, as you know.

Jim said...

"You need some mature, grown-up person as head of state, before it gets too late."

Wow! Wonder what that is code for?

Susannah said...

I think maybe it's 'code' for "mature, grown-up person as head of state."

Jim said...

Hmmm...let's see:

- 49 years old, married with two children, college degree, law degree, basically on his own since the age of 18

- successful career in law, consulting, education, successful author

- active and successful state legislator, popular and successful US Senator, campaigned and won the US Presidency

- while dealing with the worst economic recession in 80 years, proposed and passed major legislation, greatly increased US anti-terrorism efforts in Afghanistan, and greatly increased anti-illegal immigration efforts in US.

So what about him exactly would lead someone to suggest that our current head of state is not a "mature, grown-up person"?

Susannah said...

Hmmm...the classic Narcissistic personality is hardly the model of psychological & emotional maturity, no matter how "high functioning" he appears to be...

(Whatdya say, Duta?)

Jim said...

"the classic Narcissistic personality"

This is your diagnosis and even if it were true, which you can't prove, does not make him immature and not grown up. It's just a smear because you don't like him. Why don't you just say you don't like his policies and maybe even say why instead of smearing him?


Sandy said...

To answer Jim's question: there are 80 MILLION baby-boomers that will be retiring in the next ten plus years. SS is ok right now, but when it was designed in 1950 there were 16 workers for every retiree, it has been amended over the years but still today there are only 3.3 workers for every retiree, by 2025 there will only be 2 workers for every retiree.

The current surpluses will dry up by 2017. By 2022 the program's annual deficit will be $100 billion and continue to increase almost exponentially until the boomers die or we get some new workers into the system to pay taxes. It's just basic demographics and math.

Jim said...

Sorry Sandy, your information is incorrect.

The current surplus will not dry up by 2017. You are off by 20 years as the Trust Fund will last until 2037. Social Security began in 1936, not the 1950s. There have been several adjustments to payroll taxes, retirement ages, and benefits over the years including a major change in 1983 which established the Social Security Trust Fund to save up for the baby boomers.

Right now Social Security payouts and revenues are about equal at 4.5% of GDP. By 2030 payouts will be about 6% of GDP and will flatten out there as baby boomers die off. Untouched, revenues will remain at 4.5% of GDP. So worst case, WORST CASE, if nothing is done to increase revenues, Social Security will be able to pay out 75% of promised benefits in perpetuity.

But if we increase revenues by slowly increasing payroll taxes by 1.5% of GDP, Social Security will pay out 100% of promised benefits for the next 100 years and more.

There is no crisis. And there is nothing you can do with Social Security that will help the deficit except to default on the US Treasury Notes in the Trust Funds so as not to have to pay interest on them or pay them back. But then you'd have to default on all the US Treasury Notes in your 401(k)s, mutual funds, and granny's safe deposit box. Don't think that's going to happen.

There is no Social Security crisis.

Buck Ofama said...


Your sources of information are Kathleen Sebelius and Mother Jones? Pull a demographic chart man and do the math yourself.

Jim said...


The first source is the Social Security Administration Trust Fund Trustees. The second source, regardless of its publisher, is an explanation of Social Security and is backed up by the first source. You can find all the information needed to verify this information at www.ssa.gov and reports of the independent SS Trust Fund Administrators.

I have provided the math. Can you provide yours? I'd love to see your "demographic chart", man. Can you link to it?

If you don't believe the Social Security Trust Fund trustees, then I'd love to read any credible analysis you'd like to provide which specifically refutes their report.