Tuesday, July 29, 2008


Yesterday, Obama And His Economic Advisers Ignored The Deficit And Instead Focused On Ways To Spend More Taxpayer Money

In Obama's Meeting Yesterday With Economic Advisers, The Deficit Was Not Discussed, But Instead They "Talked About Adding Extra Spending":

Obama Held An "Hours-Long Meeting With Economic Advisers," But Didn't Address The New Deficit Number And Talked About Ways To Spend More Taxpayer Money. "Mr. Obama said the country is facing an 'economic emergency,' and convened an hours-long meeting with economic advisers Monday, but Laura Tyson, former chairman of the National Economic Council, said the record deficit was not specifically mentioned. 'We actual ly didn't discuss the number that came out today,' she told reporters, adding that participants instead talked about adding extra spending on roads and other infrastructure that, Democrats hope, will boost the sluggish economy. Mr. Obama has talked about proposing a $50 billion package if he wins office." (David M. Dickson and Stephen Dinan, "Bush Successor Faces Massive Debt," The Washington Times, 7/29/08)

Obama Is Committed To Budget-Busting Deficit Spending:

"Not Only Does Obama Say He Won't Eliminate The Deficit In His First Term, As McCain Aims To Do, He Frankly Says He's Not Sure He'd Bring It Down At All In Four Years, Considering His Own Spending Plans." (Nedra Pickler, "Analysis: Obama Won't Try For McCain's Budget Goal," The Associated Press, 7/8/08)

Obama Told Reporters He Won't Promise To Reduce The Deficit By 2013. "'I do not make a promise that we can reduce it by 2013 because I think it is important for us to make some critical investments right now in America's families,' Obama told reporters this week when asked if he'd match McCain's pledge." (Nedra Pickler, "Analysis: Obama Won't Try For McCain's Budget Goal," The Associated Press, 7/8/08)

Obama Also Said He Wouldn't Be Able To Eliminate The Deficit In Eight Years.
Obama: "Now I want to go ahead and tell you the truth, which is, we
will not eliminate the deficit or the national debt in the next four years, or even in the next eight years." (Sen. Barack Obama, Remarks At A Campaign Event, Fairfax, VA, 7/10/08)

Obama Said He Didn't Want To Make "A Fetish Of Perfectly Balancing The Federal Budget." Obama: "I am a progressive, but I always tell people that if you're a progressive you should be fiscally even more conservative than the so-called conservative. ... On the one hand I'm a strong believer in fiscal responsibility, on the other hand we actually have to make some significant investments in order to keep our economy competitive, and, uh, so what I want to do is institute some basic principles that will move us in the direction of fiscal responsibility, without making a fetish of perfectly balancing the federal budget." (Sen. Barack Obama, Remarks At A Campaign Event, Austin, TX, 2/28/08)

Yesterday, Obama Adviser Laura Tyson Struggled To Provide An Example Of How Obama Would Reduce The Deficit; Finally Said His Health Care Plan Would Be "A Major Part Of Deficit Reduction":

Obama Adviser Laura Tyson Finally Said Implementing Obama's Health Care Plan Would Reduce The Budget Deficit. Blitzer: "Give me an example of how Senator Obama is going to cut the deficit." Obama Adviser Laura Tyson: "I really think it's important here to make a distinction -- okay, I will. You need to define for me, Wolf, which deficit you're talking about." Blitzer: "The budget deficit. The budget deficit." Tyson: "No, no, no, no, no, Wolf, as you know first of all there is a structural budget deficit and cyclical budget deficit." Blitzer: "Explain how he's going to cut either one of those. Just explain how he's going to cut the deficit." Tyson: "I'm about to, I'm about to. The structural budget deficit, the biggest driver of the structural budget deficit over the next 20 years is health care, is health care, and he has a meaningful health care reform that is paid for, if the meaningful health care reform is enacted it will bring down the structural deficit. That is a major part of deficit reduction." (CNN's "The Situation Room," 7/28/08)

But Obama's Assumed Health Care Savings Of Nearly $120 Billion Is An "Unrealistically High" And "Extremely Optimistic" Assumption. "There are legitimate questions about both the Clinton and Obama plans: in particular whether they make unrealistically low assumptions about the ultimate price tag (Ms. Clinton puts hers at $110 billion annually; Mr. Obama says his will cost $50 billion to $65 billion) and unrealistically high assumptions about how much they can save by bringing costs under control (Ms. Clinton credits her plan with $56 billion; Mr. Obama claims an extremely optimistic $120 billion.) The Democratic candidates' time would be better spent explaining how their visions are achievable, not taking potshots at each other." (Editorial, "The Mandate Debate," The Washington Post, 3/4/08)

Emory University Professor Kenneth Thorpe Said Obama Underestimated The Cost Of His Health Care Plan; It Could Cost Over $100 Billion A Year. "Emory University Professor Kenneth Thorpe analyzed the proposals and concluded that taxpayers would pick up a $50 billion annual tab. According to Thorpe, the actual cost of [Obama's] proposal would exceed $100 billion a year... Actual federal spending under the Obama plan could be higher than his estimate, Thorpe said. 'That $50 billion is really assuming that everything is really up and fully implemented,' he said, and parts of the plan would take more than five years to put into place." (Jeffrey Young, "Obama Unveils Universal Healthcare Plan," The Hill, 5/30/07)

NOTE: Laura Tyson Also Implied That Obama Would Make No Effort To Reduce The Deficit In His First Year In Office. Tyson: "If you ask me how he's going to reduce the deficit next year, what I will say is that in a bipartisan group of business, labor, academics, there was consensus that the economy needs stimulus. The immediate focus is on stimulating the economy, not on deficit reduction." (CNN's "The Situation Room," 7/28/08)

Obama's Spending Agenda Will Burden American Taxpayers:

Obama Claims He Pays For Everything He Proposes. Obama: "We account for every single dollar that we propose." (Sen. Barack Obama, CNN Democrat Presidential Candidates Debate, Myrtle Beach, SC, 1/21/08)

But Obama Doesn't "Come Close To Meeting This Standard." "[Obama] has rhetorically committed to a 'pay-as-you-go' approach by offsetting new spending and tax cuts with new taxes or spending cuts, but his proposals do not come close to meeting this standard." (John Maggs, "Obama On The Economy," The National Journal, 5/31/08)

PolitiFact Blows Out Obama's Claim That His Proposals Are Paid For; Says His Rhetoric Is "Disingenuous." "Until he fleshes out his economic plan considerably more, it's disingenuous to go around claiming his proposals are 'paid for.' And that claim is even more suspect considering that his proposals would leave a larger deficit than would the tax laws currently on the books. We find his claim to be Barely True." ("'Paid For' Without Real Money," St. Petersburg Times' "PolitiFact.com," www.politifact.com, 6/16/08)

The New York Times' David Brooks Said For Obama To Fund His Domestic Programs, He Will Have To Break His Pledge Not To Tax The Middle Class. "Both [Obama and Clinton] promised to not raise taxes on those making less than $200,000 or $250,000 a year. They both just emasculated their domestic programs. Returning the rich to their Clinton-era tax rates will yield, at best, $40 billion a year in revenue. It's impossible to fund a health care plan, let alone anything else, with that kind of money. The consequences are clear: if elected they will have to break their pledge, and thus destroy their credibility, or run a minimalist administration." (David Brooks, Op-Ed, "No Whining About The Media," The New York Times, 4/16/08)

Obama's Economic Policy Director, Jason Furman, Said Obama Hadn't Been Specific About Funding Certain Proposals:

"Obama 'Hasn't Been Very Specific About How He'd Pay For A Pretty Ambitious Tax Plan,' Furman Said." (Sarah Liebowitz, "Democrats' Plans Have Sizable Costs," Concord [NH] Monitor, 12/9/07)

Furman Said Edwards And Clinton Had Been More Specific. "In terms of tax plans, Edwards and Clinton have 'more clearly specified where the money's coming from and going to.'" (Sarah Liebowitz, "Democrats' Plans Have Sizable Costs," Concord [NH] Monitor, 12/9/07)

Former Clinton Adviser And Current Obama Adviser Gene Sperling Criticized Obama's Funding Mechanisms For His Proposals And Questioned His Fiscal Responsibility:

Sperling "Took The Obama Campaign To Task" For Claiming That They Could Pay For Proposals By Shifting Iraq Spending, When That Money "Should Be Considered Emergency Spending." "For example, Clinton economic adviser Gene Sperling, in a conversation with CNNMoney.com earlier this year, took the
Obama campaign to task for proposing that money saved by drawing down troops in Iraq could be used to pay for some of Obama's proposals. That's money that should be considered emergency spending, Sperling said. 'When Iraq spending goes away, it goes away. You don't use it as a pay-for,' he said. 'We're assuming that will bring the budget down.'" (Jeanne Sahadi, "Fuzzy Math On The Campaign Trail," CNNMoney.com, 5/6/08)

Sperling Said There Was A "Significant Gap" Between Clinton And Obama On Fiscal Responsibility, Noting That Clinton Had Actually Provided "Realistic Ways" To Pay For Her Proposals. "[Sperling] says the key difference between the two candidates' proposals is that Clinton has been more conscientious and rigorous about finding specific, realistic ways to pay for her plans. 'There is a significant gap between Sen. Clinton and Sen. Obama on the fiscal responsibility of their proposals,' says Sperling. 'She felt very much that when you're talking to people you need to be able to look them in the eye and tell them very specifically where's the beef.' Sperling notes Obama estimates it would cost about $85 billion a year to deliver the three tax cuts he's proposed that Clinton hasn't - for seniors, for payroll taxes, and another that would allow a mortgage-interest tax credit for non-itemizers. The cost of Obama's tax cuts has raised eyebrows not only in Clinton's camp. Leonard Burman, director of the Tax Policy Center in Washington, a joint venture of the Urban Institute and Brookings Institution, says he is concerned that both candidates have promised too much at a time 'when we know our fiscal situation is bad and getting worse.'" (Elizabeth Auster, "Clinton, Obama Plans Are Similar," [Cleveland] Plain Dealer, 2/24/08)

Obama Has Double-Counted Funding Mechanisms And Relied On Savings From Ending The Iraq War Which Would Emerge Slowly:

Obama Reused His Capital Gains Tax Hike As A Funding Mechanism For Two Different Multi-Billion Dollar Proposals. "[M]r Obama Appears to have counted the proceeds of a higher tax on capital gains both for his healthcare plan and for an 85bn middle-class tax relief plan that he announced [in September 2007]." (Edward Luce, "The Grab For A Job Democrats Turn Protectionist On Trade And Labour," Financial Times [London], 10/9/07)

Obama's Economic Adviser Austan Goolsbee Said Any Savings Produced From Ending The Iraq War "Would Emerge Slowly"; He Was Unable To Fix A Dollar Amount To It. "Mr. Obama does expect the winding down of the Iraq war to ultimately produce a 'peace dividend' that can be used for other things. Austan D. Goolsbee, a University of Chicago professor who is advising Mr. Obama on
economic matters, said that any such dividend would emerge slowly, and he did not fix a dollar figure on it." (John M. Broder, "Views On Money For Iraq War, And What Else Could Be Done With It ," The New York Times, 4/14/08)

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