The big speech was a few nights ago and Obama did a great job. He certainly brought a different tone with him as he delivered a stirring, informal and commanding address. Obama needed to make some points about his predecessor (Bush), about the direction of our country and about the opposition he is facing from the Republicans.
He did a great job hitting home on all of these points and much more. One of the highlights of the speech for me was when Obama explained the facts of the Bush administration. We are in debt because of the failures of that administration, not because of the policies of the Obama administration. This is important for Obama to make this distinction because he has been attacked by the Republican Party for spending too much money.
Generally, the reference to government spending and Obama is related to health care or to the bank bailouts. Any rational person who does their own thinking would understand that Obama is caring out the Bush bailouts that began in 2008. Also, one would realize that a single-payer universal health care system would ultimately bring incredible amounts of savings not only for the public but also for the government.
Click here to watch the 2010 State of the Union Address
After watching Obama’s speech last night I saw about a thousand different things to talk about. I could write about Iraq troops coming back in august, the plans to combat student loan issues, economic issues, allowing gays in the military and many more things.
But, for this article, I am not going to cover those subjects. I am writing to remind all of us just what type of hole the Bush administration dug for us and how much work the Obama administration has done so far to dig us out of that hole.
So, let’s begin.
At thinkprogress.org there is a nice little table and article talking about the Bush Tax cuts.
Here is a link to that article.
There is a table full of information towards the end of this article. It compares a $900 billion economic recovery package and the infamous Bush Tax cuts from 2001.
The total cost of the Bush Tax cuts were $1.35 trillion. The Obama economic recovery package cost $900 billion. For the Bush Tax cuts one of the major reasons behind this bill was due to the fears of an upcoming recession. The Republican’s thought that by giving tax cuts to the rich that economic growth would be spurred and jobs created. When the
Bush Tax cuts started in 2001 unemployment was at 4%. When Obama took office and proposed en economic recovery package the unemployment was at 7.6%.
When Bush passed the tax cuts 12.7% of Americans lived in poverty, .48% were dealing with a home foreclosure and 17 million Americans relied on food stamps.
When Obama proposed the 2009 Economic Recovery we had 17% of the population living in poverty, 1.19% were dealing with a foreclosure and over 30 million relied on food stamps.
After 8 years of the Bush administration we saw the unemployment rate almost double, an increase of 4.3% in the poverty rate, Foreclosure rate more then doubled and the amount of people who rely on food stamps almost doubled as well.
So, we have a $1.35 trillion tax cut that disproportionately benefited the wealthiest of Americans. The Pulitzer Prize winning website, www.politifact.com, had this to say regarding the Bush tax cuts:
“The Tax Policy Center, a joint project of the centrist-to-liberal Urban Institute and Brookings Institution, looked at all of the Bush-backed tax cuts enacted between 2001 and 2008 and found that the richest one-fifth of the population saw its after-tax income rise by 5.4 percent, compared to 0.7 percent for the bottom one-fifth. Meanwhile, the richest 1 percent saw its after-tax income rise by 7.3 percent.”
Okay, the Bush tax cuts are well known by now. Most people are well aware that those cuts played a huge part in our current deficit. But what about The Medicare Prescription Drug, Improvement, and Modernization Act, do you remember that? It has a 10-year estimate of $1.2 trillion. The bill was supposed to have a ten year impact of $534 billion, but that obviously increased a little bit.
Then there was this little thing called the Iraq War. According to nobel-winning economist Joseph Stiglitz and co-author Linda Bilmes the true costs to our economy of the Iraq war are closed to $3 trillion.
The nearly 5-year-old war, once billed as virtually paying for itself through increased Iraqi oil exports, has cost the U.S. Treasury $845 billion directly.
“It used to be thought that wars are good for the economy. No economist really believes that anymore,” Stiglitz said in an interview.
Stiglitz and Bilmes argue the true costs are at least $3 trillion under what they call an ultraconservative estimate, and could surpass the cost of World War Two, which they put at $5 trillion after adjusting for inflation.
The direct costs exclude interest on the debt raised to fund the war, health care costs for veterans coming home, and replacing the destroyed hardware and degraded operational capacity caused by the war.
In addition, there are costs not accounted for in the budget such as rising oil prices and social and macroeconomic costs, which the book details.
To illustrate how the money could be spent elsewhere, Bilmes cited the annual U.S. budget for autism research — $108 million — which is spent every four hours in Iraq. A trillion dollars could have hired 15 million additional public school teachers for a year or provided 43 million students with four-year scholarships to public universities, the book says.
Stiglitz and Bilmes say they were excessively conservative in calculating the $3 trillion figure, overcompensating for their bias in having opposed the war.
Operation Enduring Freedom, aka the war in Afghanistan costs $150 Billion.
No Child Left Behind was cheap, originally $17 billion, then up to $25 billion or so.
But dont forget the act that Republicans blame on Obama, even though he wasn’t president yet. The infamous Emergency Economic Stabilization Act of 2008. This is the act that created TARP the Troubled Assets Relief Program. This only cost the US tax payer $700 billion. No one really knows precisely what it was spent on.
We have seen a continuation of this government spending by the Obama administration. However, the current administration has done this in order to stop the economy from failing.
The American Recovery and Reinvestment Act had a final cost of $787 billion, and there was nearly $1.2 trillion total if debt service is included. Compound interest is a bitch. But the reasoning behind that bill was that it was needed to keep our economy afloat.
Recently, the senate voted to allow the US to take on an extra $1.9 trillion in debt.
From the AP on startribune.com
The measure would put the government on track for a national debt of $14.3 trillion — more than $45,000 for every man, woman and child in the United States.
The budget for the current year is about $3.5 trillion and the deficit will probably match last year’s $1.4 trillion. The government would have to borrow to cover that $1.4 trillion.
The first year of the Obama administration has been challenging and has deepened the political divide amongst us all. Many people now are coming out and claiming they fear ‘big government.’ But, this people were mostly silent during the Bush administration when wiretapping, torture and kidnapping of US citizens and others took place. But that is a different story.
Here is more information about the Patriot Act.
Now, you are probably a little concerned. The US government, ie citizens, owes a ton of money to countries like China, Japan, Saudi Arabia and many other countries. In the past it was the US that held this debt of foreign nations, but the tables have turned. Fortunately, we have a military that is strong enough to defend us from any threat from these nations. But, we still have to address our debt head on and effectively manage it. If we fail to do so we will be at war with one of these nations, most likely China, in the future. If they need the money and ask for it and we can’t pay, they will try to just take it. This is a realist perspective.
The budget freeze proposed by Obama is one of the ways that this administration is attempting to tackle this huge debt.
When the White House talks about non-security discretionary spending, it’s referring to spending on an array of domestic programs — everything from agriculture to energy — that add up to $447 billion of roughly $3.5 trillion in the federal budget.
It does not include Social Security, Medicare, and Medicaid. Obama’s plan to freeze spending would not apply to those or other entitlement programs.
And the federal government does not plan to stop paying interest on the federal debt, a move which would have dire economic consequences. You can remove that from the equation as well.
Obama also would exempt programs tied to defense, veterans or national security from the freeze on spending.
Yet his plan could put the squeeze on agencies such as the Departments of Agriculture or Interior. It could require those and other agencies to spend the same amount for the next three years that they spent this year.
“Instead of wielding an across-the-board axe, the president will cut programs that are duplicative or that he believes serve no important purpose,” White House press secretary Robert Gibbs said Tuesday.
“We are investing in what we believe is important to invest in. We are cutting programs we think have outlived their usefulness and need to be cut.”
The administration is claiming that these cuts will save the US $250 billion over the next decade. This is not nearly enough. If our debt is slated to be at $14.3 trillion soon, when it was at $16 billion in the last year of the Clinton administration, how is $25 billion a year going to help?
Admittedly, this is just a first step. Another step is repelling the Bush tax cuts on the wealthy and get back to our roots of progressive taxation. It has worked well for us and will continue to do so.
One of the ways we could accomplish these goals is to drastically lower our defense spending. This is expected to happen once we are out of Iraq and it should decrease even further if we leave Afghanistan.
This is a tidbit from a previous article I had wrote, Continuation of Previous Failures
In 2006, the Defense Department base budget was $411 billion, in 2007 $430 billion, in 2008 $481 billion, in 2009 $515.4 billion. For the fiscal year 2010, Barrack Obama has already requested $533.7 billion. This does not include additional War on Terror spending or the expenditures for the BioShield operations which is “part of a broader strategy to defend America against the threat of weapons of mass destruction” (Project BioShield Act of 2004).
On top of all of this spending, and all of the personnel involved, here is another statistic that really sums up the US Empire. There are 156 countries in the world with U.S. troops stationed there. 63 countries have U.S. military bases and troops. While, there are only 46 countries with no U.S. military presence.
Currently, the United States recognizes 196 independent countries in the world. This excludes Taiwan (because of China), Greenland, Palestine, The Western Sahara, Scotland, Wales and other nations as well. But, it includes Kosovo.
The Department of Defense owns 845,441 structures around the world that spans over 30 million acres, making the US department of defense the world’s largest land owner. Does anyone see a problem with this?
The United States is not only messing with the sovereignty of other nations but it is screwing itself over as well. Because of the $533.7 billion budget for the DoD, we can only spend $66.5 billion on education for our children. We are also failing at improving basic infrastructure and on providing health care for the poorest of Americans. This would drastically change if we could get our DoD budget down to the amount of $396 billion seen in 2003 or $289 billion last seen in 2000.
Imagine a savings of $200 billion to $300 billion a year? That would get us on track to pay off our debt within years, not decades. This would also allow us to maintain, if not improve, our domestic programs. Like education, health care, social security and our transportation system.
Of course, there are many reasons we are not dropping the DoD budget at the moment. We are engaged in two wars and wars are not cheap, especially the ones in Iraq and Afghanistan. After August of 2010 we will no longer have combat troops in Iraq. This should at least stop the annual increases in DoD spending. But, an increase will be seen for Afghanistan, not to mention if we start something with Yemen or any of the other countries that our on the US hit list.
The fact is the main reason we are not cutting military is because we need to keep up our status as hegemon and try to position ourselves to defend against future threats. Such as the BRIC nations, specifically China.
We need to keep up our military because we are indebted too much. Our military is a real deterrent for countries calling in their debts. Obviously, it is in the best interests of the US and China to maintain peace and for the US to pay down this debt.
Until we do so we will be held captive by foreign interests and will fail to properly care for our citizens. That is why debt control should be a top priority. That is why Obama’s budget freeze, even if it only saves $25 billion a year, will be a good start.
What do you think about government spending? We want to hear from you!
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