Since taking office, President Obama’s Administration has been singularly obsessed with passing a government takeover of healthcare.  In times like these, one would think that the President and his team would have other buzz words and topics on their mind rather than a wildly unpopular expansion of government.  I can think of several things…to start, how about, jobs, the economy, or the deficit?!

Yesterday, the Treasury Department released its latest budget numbers, and the story is told in a trail of red ink.  In February, the federal government ran a deficit of nearly $221 billion, 14% higher than the previous record set in February of 2009. 

As you might know, the fiscal year of the U.S. Government begins on October 1 and ends on September 30.  Now, 5 months into the new fiscal year, the government’s budget deficit totals nearly $652 billion which is 10.5% higher than this time last year.  This is absolutely beyond sustainability.

Recently, I had the opportunity to question Dr. Peter Orzag, President Obama’s Director of the Office of Management and Budget.  Peter is smart and intellectually honest, and what I wanted to know, is why the President chose to submit a budget to Congress that actuarially does not work, it simply doesn’t...I’ll let the video speak for itself.



NOTE: Mr. Campbell's line of questions begins approximately at mark :51.

“Let me just make this point, John, because we’re not campaigning any more…the election’s over.” - President Obama to John McCain at the Health Care Summit.
 
“I am reminded of that every day” - Response from Senator John McCain (R-AZ)

“You're right, there was an imbalance on the opening statements; because I’m the President…I didn’t count my time in terms of dividing it evenly.” - President Obama on why there was not an equal distribution of time for remarks at the Health Care Summit.

I have said before that the Obama/Pelosi/Reid cabal is more about ruling than leading and that their plans entail an oppressive government that runs everything and tells us what we can and can't do. Here are just a few more pieces of evidence towards that point (in addition to the above quotes):

During the so-called Health Care Summit, The 17 Republicans in the room spoke for a total of 111 minutes. The 18 Democrats from Congress in the room spoke for a total of 135 minutes. But President Obama, all by himself, spoke for 122 minutes, more time than all the Republicans and nearly longer than all of the Democrats.  This speaks more about this President than his words ever could.

In the Budget Committee this week, Treasury Secretary Geithner made it clear that they (the administration) have no intention of proposing or supporting any legislation to replace or wind down Fannie Mae and Freddie Mac this year. Why is this important? Fannie and Freddie are now completely owned by the federal government, they are losing lots of money, and they now make about 95% of all home mortgages. This is so because no private entities can compete with the borrowing power of the feds. There are lots of ideas out there on what to replace them with including: a public utility type model, nothing at all, or something similar to what they were before. But there will be no movement on that. Why? Because this is probably what the statists in charge want. You can't get a home loan unless you get it from the government. Great! The legislation that is popping up now includes all kinds of things including requiring these loans to be based on meeting environmental or social goals. Whatever happened to loaning money only because you figured that the borrower could pay it back? The latest proposal would ban foreclosures anywhere without the approval of a government panel. President Obama wants government-run health care but he is having a hard time getting it to happen. He already has government run home loans. Why change it? Command and Control.

Not a single bill in this Congress has been brought to the floor under an "open rule." An "open rule" allows any Member of Congress to submit an amendment to the bill being considered and get an up or down vote on it if they want. This is the first Congress in the history of Congress in which not a single bill has been subject to an open rule for amendments. Ms. Pelosi knows what's good for you and the other 434 of us may not be allowed to interfere with that. Command and Control.

The latest proposal on the death tax is an idea to eliminate any deduction from estate taxes for money given to private charitable foundations. Such foundations run the gamut from the Bill and Melinda Gates Foundation to the many families involved with the Orange County Community Foundation. Couple this with the President's latest proposal to eliminate charitable deductions for families with incomes over $250,000 (By the way, this is the segment of the population which makes the majority of charitable donations in dollar terms) to partially pay for socialized medicine.  There seems to be a clear Democratic move here to eliminate any tax deductions for giving to charities. Why would they do that? Because charities are the method by which people help other people without anyone telling them what causes they should or should not be supporting. Without charities, only government is left to do that. Command and Control.

And finally, of course, health care. In spite of all the polls, and in spite of 3 resounding defeats at the ballot box, it is now clear that the Democrat leadership intends to press forward using reconciliation (which means they only need 50 votes in the Senate) to pass their socialized medicine bill. If they do this, it must start in the Budget Committee in the House, on which I serve. America is actuarially bankrupt. This is so because the legacies of the New Deal and the Great Society cannot be paid for in the future. What is astounding to me is that even if you believe that socialized medicine is a good idea, we cannot pay for it on top of the already bankrupt Social Security, Medicare, and Medicaid. If they move forward with this, it will hasten the time when either America cannot pay its debts or we inflate our way out of them, thereby destroying much of the wealth of the people. But the President and his minions are going to press ahead because they will command what we do and control it.

The Obama/Pelosi/Reid vision for America includes a government that is bankrupt and must confiscate most of your income; and a government that controls your medical care, home loan, and charitable efforts.  Resistance is futile and you must obey...............

No you don't. I'm not going to. The battle for America's future is still heating up. Don't let up.

We can debate exactly what caused the near economic collapse in the fall of 2008, but clearly over leveraging and excessive risk taking by consumers, banks, and “non-banks” was a major contributor. The economy continues to have a drag caused by deleveraging and fallout from the losses incurred during that period. The U.S. Federal government prevented that collapse by putting the imprimatur of the United States Treasury on a lot of private debt in order to stop the run. It worked because the world markets had a tremendous level of trust in the full faith and credit of the United States government.

But the shoe may soon be on the other foot. Federal spending as a percent of Gross Domestic Product (GDP) is now over 25%. The last time the government represented that much of the economy, we were building B-29 bombers to drop their payloads on Japan and Germany. As a result of the economic downturn, taxes collected are only about 15% of GDP (whereas 19% has roughly been the average for the last 40 years) hence the huge deficits.

And that’s only the federal government. State and local governments now comprise (roughly) an additional 10% of GDP. So combined, government at all levels in this country now account for over 1/3 of economic activity in the country. I happen to think that this is way too much but we can debate that point at another time. The point here is that government at all levels now represent a much larger part of the economy than they ever have before, outside of a World or Civil War.

And the government is in trouble. I wrote you last week about the sheer unsustainability of the current federal spending, deficit, and debt levels. But as you all know, the State of California has serious budget problems of its own, as do probably 30 other states. There is trouble in Mudville at the local level as well. Former Mayor Dick Riordan recently said that he believes that the City of Los Angeles will soon have to declare bankruptcy.

While the private sector is rapidly shedding risk, debt, and leverage, the public sector is increasing the same. Now, government at all levels is broadly overleveraged, has too much debt, and too much risk without adequate reserves. Some of this is from simple current overspending. But some of it is also from promises that can’t be kept on government worker pensions, Medicare, other entitlements, and even some infrastructure projects. This can’t continue. Even if you felt that this spending was the right policy, government literally can’t raise taxes enough to pay for all that it is currently spending plus all it has promised to spend in the future. Something’s got to give.

Therein lies the problem. If we continue on our merry, free-wheeling government way, at some point government will no longer be able to sell its debt, except at very high rates. Think Greece or Portugal here.  The U.S. government rescued the economy in 2008. But governments here may require a rescue of their own in the future.  The government’s problems are, potentially, the biggest impediment to future economic growth as this huge segment of the economy gets rationalized. Obviously, the severity of the impact will be determined by the policy choices that are made in the near future. Doing nothing is, in my opinion, the worst possible choice, which is followed closely by little reform with lots of taxes. But no matter what those choices are, it’s not going to be pretty.

Below is a cartoon from today's issue of Roll Call that is particularly appropriate given President Obama's recent release of his budget and other current events.

For the last few days here at the Greeneyeshade Blog, I have highlighted the atrocities of the Obama budget, and the enormous amount of debt, deficit, spending, and taxes that will result. But, you should feel comforted that the Democratic leadership of this Congress has the situation well in hand…note my heavy sarcasm.

Assuming House Democrats proceed with yet another vote to increase the debt limit, it will have been seven weeks since they last voted to increase the debt limit by $290 billion. In that time frame, House Democrats have:

-  Passed 7 resolutions congratulating sports figures or teams
-  Passed 23 resolutions honoring individuals or entities or promoting awareness of certain issues
-  Passed 5 bills naming post offices 
-  Authorized $50 million in spending to construct a new National Park in the Virgin Islands
-  Passed 0 bills to reduce spending or lower the deficit. 

Fit to Lead? I’ll let you be the judge.

In previous posts, some of you indicated in the comments section about the solutions that I support.  Throughout the course of the year I try to provide a glimpse at substantive solutions I support, here on the Greeneyeshade Blog. 

Last week at the Republican retreat in Baltimore, Maryland, House Minority Leader John Boehner offered a booklet of Republican solutions to the President when he came to speak during our retreat.  Everyone ought to have a chance to a take a look at these, so you can find them here:   http://www.gop.gov/solutions

Additionally, under the leadership of Congressman Paul Ryan (R-WI), I have worked on and support, the Patient’s Choice Act .  This proposal is a bill designed at helping to improve our healthcare system without an intrusive and unnecessary government takeover.

You should also take a minute to look at another proposal I support, which is considerably broader and encompasses health care security, retirement security, federal tax reform, job training, and budget process reform.  This initiative is called the Roadmap to America’s Future, and you can read more about using the link I have provided.

As I mentioned yesterday, the President’s budget will increase spending, increase taxes, increase the deficit, and increase the debt; all in spite of the fiery rhetoric of President Obama’s State of the Union speech, which called for a decrease in each of the above areas.

Here is some information based on a top line analysis:

Debt: The President’s Budget doubles the debt in 5 years and triples it by FY 2019, from FY2008 levels.  It aims to push the debt to $9.3 trillion this year, or 63.6% of gross domestic product (GDP).  This would be the largest debt in history, and the largest debt as a share of our economy in 59 years. 

You may remember Congress passed a debt limit increase just prior to the holidays, but under this budget, that debt limit will again have to be increased before October 1, 2011.  The interest alone on this debt will reach $840 billion in 2020.

Deficits: This budget boosts the deficit to a record level this year, to $1.6 trillion or 10.6% of GDP.  To put this in context, this is the largest deficit as a share of the economy since the Second World War.

Taxes: By the White House’s own estimates, the budget increases taxes by more than $2 trillion over 10 years – this of course excludes the impact on revenue of the costly Cap-and –Trade proposals (which amounts to $834 billion by CBO’s estimate of the House version, in case you were wondering). 

Contrary to previous statements made by President Obama, he is indeed attempting to increase taxes on those earning less than $250,000 including the new cap-and-trade taxes, and a tax on those who do not purchase health insurance.

This morning, President Obama unveiled his Budget proposal for fiscal year 2011.  There is no doubt that the Democrats of the House and Senate Budget Committees will have their own budgetary ideas, to say nothing of Republicans who agree with virtually nothing of the flat out unsustainablity of this President’s budgetary visualizations.

But there are 4 things that this budget will do quite well:  It increases spending, it increases your taxes, it increases the debt, and it increases the deficit.

I will have more on this throughout the week, which will include analysis and numbers, so put your thinking caps on.

This morning, following the President’s State of the Union speech last evening, Americans for Tax Reform sent out a ‘Fact Check’ document this morning.  I have highlighted two examples here:

MYTH:    “We cut taxes for 95 percent of working families…we haven’t raised income taxes by a single dime on a single person.  Not a single dime.”

FACT:    It’s mathematically impossible to cut taxes for 95 percent of working families.  According to the IRS, fully one-third of all tax returns owed no income tax last year.  Nearly 20 percent of returns had neither an income nor a payroll tax liability.  These people cannot see their taxes cut any further.  Anything given to them is pure spending.

Obama, Pelosi, and Reid may not have raised income taxes last year, but they surely tried to.  Last year’s administration budget submission had dozens of tax hikes.  The health care legislation they are still pushing has 18 separate tax hikes.  All told, ATR has calculated that President Obama proposed or supported $2.1 trillion in tax hikes in 2009.  And let’s not forget that he signed into law a $65 billion tax hike on cigarette smokers 16 days into his administration.  The median income of a smoker is $36,000.

MYTH:    “To encourage these and other businesses to stay within our borders, it's time to finally slash the tax breaks for companies that ship our jobs overseas and give those tax breaks to companies that create jobs in the United States of America.”

FACT:    Obama is no doubt referring to his tax hikes from last year’s budget.  ATR has compiled a series of one-pagers detailing his $210 billion in proposed tax hikes on American companies who have overseas income.  How raising taxes on American companies will incent them to remain in the United States is a mystery. 

The reason these tax breaks are in place is to avoid double taxation of international corporate income.  To take away these tax breaks is to tell an American company that they will potentially have to pay taxes twice on the same income.

Information courtesy of Americans for Tax Reform

A lot is going in DC right now and a lot has gone on since I sent you my first missive of the year yesterday. Here is a quick rundown of my thoughts on a few of the goings and comings.

Because of their singular obsession with government-run health care, the Democrats punted a bunch of issues on deadline to the end of February. However, this new deadline is fast approaching. Among the issues that should have been taken up last year yet still remain unresolved include: new permanent death tax exemptions and rates; a 21% cut in the rates doctors are paid by Medicare; a proposed increase in the national debt limit of $1.6 trillion to cover the enormous deficits for one year; reauthorizations of the Department of Transportation and the FAA; and a host of other issues.

Tonight, the President apparently will call for a freeze in non-defense so-called discretionary spending. That is about 15% of the total federal budget. It also was increased by $140 billion last year. So he is freezing spending after he increased it by 25% in one year. It’s a little like the guy who robs your house and then returns your toaster-oven and expects you to be happy about it.  Interestingly, Democrats on the Appropriations committee are already criticizing the President’s freeze as “too tough.” This says that at least some Congressional Democrats still do not understand how severe our fiscal problems are, and that they no longer feel compelled to support their President on all of his policies. The honeymoon ended rather quickly.

There have been a number of recent stories exposing the complete folly of the so-called "stimulus" plan and the number of jobs claimed to have been "created or saved" by this rapacious spending undertaken by the Obama Administration.  Take for instance, the 935 jobs at the Southwest Georgia Community Action Council, the administration it claimed to have 'saved', even though they really only employ 508 people.   Or how about the 129 jobs that were said to have been 'created' at a childcare center in Florida when the money was actually used for employee raises, and not new jobs.

Using these methods, in Obama speak, today I created or saved 3,000 calories towards my diet. Clearly, I could have eaten 300 more calories if I tried, but I "saved" those calories due to my stimulus plan. At this rate, I could lose 100,000 calories while still gaining weight! Now, that is Obamanomics.

Well, many have already become expert 'Obamanomists.' I asked some of my constituents in Orange County, CA for their experiences using 'Obamanomics,' and I recieved many good responses, but the one below is by far my favorite.  I am interested in hearing your best example of 'Obamanomics.'

Dear John:

Using Obamamath, I've just saved, nay, created a great deal of money. How? I had wanted to buy a new Lamborghini Gallardo roadster so that I could drive to the White House to personally thank our beloved President for all that he is doing to save us from financial ruin. The trip, via New Orleans in order to view the results of former President Bush's failure to forestall Hurricane Katrina, would have been an approximately 6,000-mile roundtrip.

I didn't buy the Lamborghini, as it wasn't manufactured by Government Motors. I not only saved (created) some $243,000 (including tax) by not making this purchase, but I saved (created) an additional $1,500 by not purchasing fuel for the trip.

Since both the Gallardo and its fuel would have been imported, I'm sure that the Governmental Accountability Office would classify these as "green" savings.

Thus by not buying a Lamborghini Gallardo, and not driving it to visit our President, I will have created a total of $244,500 in Green Savings. Not bad for an amateur!

But think for a moment: If each of the approximately 4 million families who live in Barack Obama's Illinois and Joe Biden's Delaware were to NOT buy a new Lamborghini, and NOT drive to the White House (via New Orleans), we would create an additional $1 trillion in new Green Wealth. Now that's Obamawealth with a vengeance!

 Add Congressman Campbell on Facebook!

For you avid 'Greeneyeshade' readers, I would like to invite you to follow me on Facebook.  There you will be able to follow all of my work in Washington and in California.  I frequently post floor speeches, my Laptop Reports, press releases, photos, and articles on Facebook which provides some insight on the latest developments in Washington.

I hope you join me on Facebook!

Death Tax: Last week, the House passed a permanent extension of the Death Tax, setting the tax rate on any estates over $3.5 million at 45%, not indexed for inflation. The vote was 225-200 with ZERO Republicans voting in favor and 26 Democrats voting to oppose. The Senate is talking about a much preferable 35% on estates over $5 million, indexed for inflation. I favor complete repeal of the tax, although the Senate proposal would be a step in the right direction. Here is a clip of my 2 minute floor speech on why I oppose this bill and this tax.

You may or may not know why this blog is titled the Greeneyeshade Blog.   I am a CPA by training, a self-professed bean-counter.  I also sit on 3 of Committees available to Members of the House that hold jurisdiction over areas of federal economic policy, budgeting, and economic analysis.  I feel it is particularly instructive that we take a look at some history…because after all, the numbers don’t lie.

- In February 2009, Democrats enacted a debt increase, with the premise and promise that by borrowing another trillion dollars would create jobs for more Americans and that it would happen immediately, thereby thwarting the unemployment rate from rising above 8%...we are now at 10.2%, according to the Bureau of Labor Statistics, this is a 26 year high.

- Since taking control of Congress in January of 2007, Democrats have presided over a 39% increase in the nation’s debt from $8.670 trillion to $12.039 trillion.

- According to the President’s budget, the national debt will soar from $9.961 trillion at the start of 2009 to more than $24.4 trillion in 2019…that’s an increase of 144%.

“It is important though to recognize if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession.”

—President Barack Obama, November 18, 2009

Recently, the White House indicated that it has plans to raise the national debt limit as part of a larger upcoming piece of legislation.  What this means is that the United States Government has run out of its statutory borrowing authority…just like the credit card you have in your wallet or purse…there is a limit on what one can spend.

This is the second time in 2009 that the debt limit has been increased. 

Here is a brief situation report of our economy right now:

• - The national debt has increased to $12.039 trillion or 85 % of Gross Domestic Product (GDP).
• - The debt limit was raised from $11.315 trillion to $12.104 when Speaker Pelosi and President Obama passed their ‘non-stimulating’ stimulus bill, nine months ago.
• - The government is now roughly $70 billion away from reaching the current limit.
• - The White House is now seeking a debt limit increase of at least $1 trillion to $1.5 trillion—increasing the limit to anywhere from $13.1 trillion to $13.6 trillion.

I will have more on this and a historical glimpse in the past tomorrow.