Big Spender? Tax Cutter? Tax Hiker?

[Jiro]

Obama's spending: Runaway or reasonable? - Jun. 22, 2012

NEW YORK (CNNMoney) -- Is President Obama a big spender who has blown up the national debt?

Republicans say he is, and Democrats say he isn't. And they both use numbers and past presidents' records to make their point.

Trouble is, "you can make the numbers tell you what you want if you torture them enough," said Rudolph Penner, a former director of the Congressional Budget Office.

Here's what we know about spending and deficits during the Obama administration: They started climbing sharply in late 2008, even before he took office, and have remained high since.

In fact, both spending and debt have been far above their historical norms as a percent of GDP. Revenue, meanwhile, has been treading near 60-year lows.

But those numbers alone don't fully address the question. The context matters. Among the factors to consider:

1. Obama took office when the economy was sinking: Economic conditions were seriously deteriorating at the end of the Bush administration and descended into God-awful during the first year that Obama was in office.

For fiscal year 2008, which ended on Sept. 30, 2008, the country had racked up $459 billion in deficits, or 3.2% of GDP. In September, the world's financial system imploded and the U.S. economy's decline accelerated.

The country racked up $563 billion in deficits in the first four months of fiscal year 2009 alone. Bush was president for three and a half of those months.
For the whole of 2009, the deficit clocked in at $1.43 trillion, or 10.1% of GDP. The story improved only slightly for 2010.

Those eye-popping numbers arose in large part because Congress passed the $700 billion TARP bank bailout in October 2008 under Bush and then the $787 billion Recovery Act in February 2009 under Obama.

Safety-net spending on unemployment benefits, Medicare and Medicaid rose during that time. Tax revenue plummeted.

"It was entirely appropriate to increase spending in the recession," Penner said.
And since that kind of recession spending is intended to end, he added, "it doesn't tell you much about the long-term spending growth pattern for either [Bush or Obama]."

What's more, the fact that safety-net spending automatically rose during economic distress was to be expected no matter who sat in the Oval Office.

2. Tax cuts played a role in digging the fiscal hole: The story gets more complicated in fiscal year 2011. The economy was in the midst of a slow recovery and the deficit topped $1 trillion for the third year in a row.

While Republicans often blame the outsized deficits under Obama on spending, a key reason the 2011 deficit was so high was tax cuts.

Obama and the Republicans cut an $858 billion tax compromise that extended the Bush tax cuts for two years. It also enacted a one-year Social Security tax holiday and reduced the estate tax.

All told, the tax cut compromise added about $410 billion to the 2011 deficit, the CBO estimated.

3. When it comes to fiscal policy, no president is an island: That tax cut deal raises another factor to consider when judging Obama's spending record.

Congress and prior presidents have a big say in determining the budget policies of a sitting president.

For example, Obama walked into large increases in defense spending and veterans' health care because of the ongoing military efforts in Iraq and Afghanistan.

And no president has control over the interest spending required on debt that accrued over the country's history. Because of the outsized growth in debt during the past few years, this is an issue that will be a big one for future presidents.

"Assigning blame or credit to presidents ignores the fact that they must work with an entire Congress to pass legislation. [And] their budget can be significantly affected by the decisions of previous Congresses and presidents," the Committee for a Responsible Federal Budget noted recently.

4. Obama's future plans might be more telling: Given the economic circumstances Obama walked into, a better view on the question of whether he's a big spender may be in his 2013 budget proposal, Penner said.

Under Obama's 2013 proposal, spending as a percent of the economy would average 22.5% over the next decade, below where it's been in the past few years but above the historical average of 20.8%, according to the CBO.

Mandatory spending on entitlements would average 14.2% over the next decade, up from 13.5% today.

That increase is partly due to demographics.

"You can't blame Obama for the population aging," said Donald Marron, a former acting director of the Congressional Budget Office. The surge of baby boomer retirements is going to increase entitlement spending regardless of who is president.

And partly it's due to health reform -- Obama's signature piece of legislation.
The 2010 Affordable Care Act permanently increases entitlement spending because of a new insurance subsidy. But overall, it's estimated that health reform will reduce deficits modestly -- in the first decade -- because of cost-reducing measures and tax hikes.

Of course, there is concern that some of those cost-saving measures won't deliver as hoped.

Meanwhile, so-called discretionary spending under Obama's budget -- the money that goes to many of the government's most basic programs including defense -- would fall to the lowest level of GDP in 50 years, the CBO said.
That's in part because of spending controls put in place under the Budget Control Act, which Republicans pushed hard for.

So is Obama a big spender or not?

The political answer will always be yes for Republicans and no for Democrats. For independent budget experts, the political debate is not productive at a time when policymakers face truly pressing fiscal decisions.

Indeed, the Committee for a Responsible Federal Budget noted: "[T]he blame game is much less important than trying to find a bipartisan solution to our budget problems."

 

[Jiro]

Obama's tax record - Jan. 30, 2012

NEW YORK (CNNMoney) -- Republicans portray President Obama as the tax-hiker-in-chief.

Obama portrays himself as a tax cutter for the masses but not the rich.
The truth isn't so cut and dry.

The fact is, the president's record on taxes is a mixed bag. In three-plus years in office, Obama has raised some taxes even as he has cut others.

The end result: Both sides get their election-year talking points, and families and businesses get a maze of temporary or soon-to-expire tax laws mixed in with some new ones on tap.

Low- and middle-income households: The president wants to make the Bush tax cuts permanent for anyone making less than $200,000 ($250,000 for couples). In the meantime, as part of a deal with Congress in December 2010, he supported a two-year extension of them through the end of this year.

Mostly in the context of stimulus, he created several new -- if temporary -- tax breaks. He has tried to make a few permanent, such as the Making Work Pay credit for families earning under $150,000. And he has backed the expansion of existing breaks, such as the earned income tax credit and the child tax credit.

He lost the fight to permanently extend the Making Work Pay credit. But he gave his blessing to a temporary payroll tax cut that he is now seeking to extend through 2012.

Obama, however, also signed into law measures that would raise the tax burden for some in the middle class.

Specifically, he made it more expensive to smoke and look mahvelous by approving a federal tobacco tax hike and a new 10% tanning tax.

He also reduced how much one can put into a tax-advantaged flexible spending plan at work and raised the bar on how much one needs to accrue in medical bills before being allowed to deduct any medical expenses.

The bottom line: Three things can be said with certainty about Obama's tax record. Democrats will tout his tax cuts. Republicans will lambast his tax hikes. And serious tax policy experts will continue to beat their head against the wall because the president has done nothing to simplify the code.

TaxVox blog editor Howard Gleckman coined the president's most recent tax proposals his "Tax Deform Agenda."

Indeed, said Chris Edwards, director of tax policy studies at the libertarian Cato Institute, "President Obama has a lousy record in terms of the making the tax code more complex."
Then again, so do both parties in Congress.

 

[TXgolfer]

Wow, I usually respect CNN Money but the out of context quotes by Penner alone doom this article. So sad.

Interesting how the article didn't mention that the total cost to the taxpayer for TARP will be $32 billion according to the CBO.

And, why not highlight this?

Obama, however, also signed into law measures that would raise the tax burden for some in the middle class.

Specifically, he made it more expensive to smoke and look mahvelous by approving a federal tobacco tax hike and a new 10% tanning tax.

He also reduced how much one can put into a tax-advantaged flexible spending plan at work and raised the bar on how much one needs to accrue in medical bills before being allowed to deduct any medical expenses.

 

[Jiro]

Wow, I usually respect CNN Money but the out of context quotes by Penner alone doom this article. So sad.

please do feel free to elaborate on that.

Interesting how the article didn't mention that the total cost to the taxpayer for TARP will be $32 billion according to the CBO.

And, why not highlight this?

Because the highlighting part is to show that you (general you) are wrong. and you're forgetting that with Obamacare in place, it makes sense to limit how much one can put into a tax-advantage flexible spending plan at work and such.

 

[naisho]

Redundant posts have been removed.

If you're gonna argue stuff, have the decency to do it later in the thread after at least some of the topic's been discussed. Plunging straight into the argument abyss for the initial posts is only going to end up tasteless for all of us to read.

 

[DeafBadger]

Fact is, this recession would have been difficult for ANY elected president.

McCain is lucky he didn't win. He would have been dealing with the same unemployment stats.

Consider Bush I. It's often said that he lost reelection because of the recession. Truth is, the economy was just about to revive. If Bush I had won reelection, he would have been credited with resurrecting the economy.

Instead, Bush I was blamed for a bad economy and lost reelection. Clinton was credited with reviving the economy. But actually, it was about to swing up anyway.

Now, Obama is in the position that Bush I was in. The economy will probably swing up in the next term, for whoever gets it. If it doesn't, this will be a hell of a long recession, and quite unusual.

I guess we'll see who will win this election.

But the president actually doesn't have as much power over the economy has the Fed Reserve chief does. To an extent, it's a little silly to blame any president for the economy. But the President is the most visible representation of the government, so Presidents have always been blamed for it. Presidents only ride the wave.

And business cycles, like waves, will always happen. It's better to prepare for the inevitability of the business cycle, than blame people for it. That's my opinion, anyway.

 

[TXgolfer]

Because the highlighting part is to show that you (general you) are wrong. and you're forgetting that with Obamacare in place, it makes sense to limit how much one can put into a tax-advantage flexible spending plan at work and such.

"Wrong" of course would be a matter of opinion. It seems when an articles gives a counterpoint, highlighting only one point is trying to make the article say what you want it to. That's just my to cents.

As for limiting the Tax Advantage spending plan, How exactly does it make sense to penalize hard working responsible savers?

 

[Jiro]

"Wrong" of course would be a matter of opinion. It seems when an articles gives a counterpoint, highlighting only one point is trying to make the article say what you want it to. That's just my to cents.

so point it out and show me exactly which part am I wrong and explain why. The highlighted part is a rebuttal for all other "blame obama" threads.

As for limiting the Tax Advantage spending plan, How exactly does it make sense to penalize hard working responsible savers?

what is this Tax Advantage spending plan you speak of? penalize how? what's "hard-working responsible savers"? Joe the Plumber? or Warren Buffet?

 

[Foxrac]

so point it out and show me exactly which part am I wrong and explain why. The highlighted part is a rebuttal for all other "blame obama" threads.


what is this Tax Advantage spending plan you speak of? penalize how? what's "hard-working responsible savers"? Joe the Plumber? or Warren Buffet?

Obama is very easily to be blamed by narrow mind, idiot, ignorant conservatives, especially TXGolfer is one of them, that's sad.

I think their posts are completely joke.

 

[TXgolfer]

what is this Tax Advantage spending plan you speak of? penalize how? what's "hard-working responsible savers"? Joe the Plumber? or Warren Buffet?

The same plans you mentioned here...

with Obamacare in place, it makes sense to limit how much one can put into a tax-advantage flexible spending plan at work and such.

And "savers" in this context would mean people who contribute to these plans. "Penalize" obviously would mean reducing the amount people could save in these accounts. You said this makes sense, I am asking you how.

 

[TXgolfer]

....... Plunging straight into the argument abyss for the initial posts is only going to end up tasteless for all of us to read.

You mean like this???

Obama is very easily to be blamed by narrow mind, idiot, ignorant conservatives, especially TXGolfer is one of them, that's sad.

I think their posts are completely joke.

 

[Foxrac]

You mean like this???

What about your post #3, #7 and #10?

 

[airportcop]

Foxrac this comment is not intended for you but for Jiro.


Here we go again, It's all Bush's fault! Go ahead and play the blame and finger pointing game because it works both ways! I thought that you could do better than that Jiro but I guess I was wrong!

 

[airportcop]

Obama is very easily to be blamed by narrow mind, idiot, ignorant conservatives, especially TXGolfer is one of them, that's sad.

I think their posts are completely joke.

Actually, I think that TxGolfer has a lot of wisdom and good insight usually! I thought you were talking about me!

 

[Foxrac]

Actually, I think that TxGolfer has a lot of wisdom and good insight usually! I thought you were talking about me!

I made poor taste joke so my bad.

Yup, TXGolfer has sense of humor in his posts and I found some of his posts are funny.

 

[Jiro]

Foxrac this comment is not intended for you but for Jiro.


Here we go again, It's all Bush's fault! Go ahead and play the blame and finger pointing game because it works both ways! I thought that you could do better than that Jiro but I guess I was wrong!

that's not what the article said.

Congress and prior presidents have a big say in determining the budget policies of a sitting president.

And no president has control over the interest spending required on debt that accrued over the country's history.

"Assigning blame or credit to presidents ignores the fact that they must work with an entire Congress to pass legislation. [And] their budget can be significantly affected by the decisions of previous Congresses and presidents," the Committee for a Responsible Federal Budget noted recently.

The surge of baby boomer retirements is going to increase entitlement spending regardless of who is president.

and lastly......

"[T]he blame game is much less important than trying to find a bipartisan solution to our budget problems."

do you understand now?

 

[Jiro]

The same plans you mentioned here...

And "savers" in this context would mean people who contribute to these plans. "Penalize" obviously would mean reducing the amount people could save in these accounts. You said this makes sense, I am asking you how.

mandatory clause. and tax cut. and probably some tax credits for families.

 

[TXgolfer]

mandatory clause. and tax cut. and probably some tax credits for families.

That makes absolutely no sense.... Again, why punish the people who are saving responsibly.

 

[kokonut]

You mean like this???

That's pretty much an insult being called an idiot. Interesting that some are looking the other way. I thought AD made it clear on that.

 

[Foxrac]

That's pretty much an insult being called an idiot. Interesting that some are looking the other way. I thought AD made it clear on that.

Well, you did call someone an idiot in past.