Monday, March 2, 2009

Obama buries Reaganomics with debt-fuelled spendathon

At the weekend, I published Treasury's analysis on New Zealand's budgetary position and it did not look very good.
But things could be worse.
This morning David Farrar raises the Obama budget and it looks like reality has forced Kiwiblog to see that the leftist lightweight is not the Messiah and may well be a one term leader.
For all our sakes, let us hope he is.
Britain's Sunday Times reveals some shocking figures and a revelation, though it won't be to many Obama-phobic blogs on the right, that Obama is burying the legacy of Reagonomics under a mountain of debt, some $3,6 trillion US dollars deep.
The scale of Obama’s ambition has only just begun to sink in. If his budget for 2010 passes through Congress largely unscathed, it will represent the “the biggest redistribution of income from the wealthy to the middle class and poor this nation has seen in more than 40 years”, said Robert Reich, a former secretary of labour under Bill Clinton who has been advising Obama.
Reich told The Sunday Times: “It is the boldest budget we have seen since the Reagan administration, and drives a nail in the coffin of Reaganomics. We can basically say goodbye to the philosophy espoused by Ronald Reagan and Margaret Thatcher.”
There's a raft of extra taxes, but will it fill the gap?
Even if the economy recovers at a clip over the next 10 years, America will still be running a deficit of 3% of GDP by 2019. The president’s daughters Malia, 10, and Sasha, 7, along with other members of their generation, are likely to emerge into adulthood saddled with debt.
The article also notes that if the economy does not meet the rosy scenarios that Obama expects, the poor will be socked with higher taxes too!
The International Herald Trubune also notes a similar shift from Reaganomics.
But despite Obama's campaign promises, it's a pork-stuffed budget as well.
Indeed, much is to buy off Democrat Party interests, reward the ACORN group that campaigned for Obama ($2Bn, is the latest claim), as well as entrench welfarism in America and build a new base of Democrat supporters relying on government/ taxpayer handouts.
Yes, this is truly change we can believe in!
Either way, the markets are not impressed either!
Hat tip: Theo Spark


Anonymous said...

Hm.. Actually tax cuts & spend ups were precisely what Reagan did. The budget was balanced, of course, by Clinton: Bush II did lots of damage, but now Obama is flushing Clinton's legacy down the tubes.

Anonymous said...

The rich dont pay tax at anywhere near the same proportion of their gross as the middle class do and then poor dont because they are on welfare.

When oh when are these dumbies going to wake up that just as citizesn have a pain threshold so they have a tax treshold and when they reacj it if theyc an they either avoid or evade of dont pay any tax. Where do the pollies think the funds in offshore tax havens come from the bloody fairies.

Tax and spend (waste) is such a 20 Century nonsense.

the way out is to cut taxes cut government waste cut governemnt to no more than 20% of the economy and let the citizens make their choices on how they spend what they earn

Until these bunnies get this thru their skulls it will only get worse


Ackers said...

Until gd get's a skull which has a brain I guess we'll just have to follow what the grown ups are doing.

Clearly he's never studied depression economics, has no idea what a liquidity trap is, has no idea what leverage is, is completely clueless to the causes of the economic collapses of Indonesia and Argentina in the last couple of decades and thinks FDR caused the Great Depression.......I suspect no amount of rational argument will help.

Like most of the right wing sods on this site, hidebound by ideology, completely clueless as to whats actually happening in the world, they are incapable of providing sensible answers as to what needs to be done.

Reagan is an apt metaphor. Senile, multi tasking capability reduced to tax cuts and cuts in Government spending neither of which is a solution, one of which is a definite recipe for disaster.

Gooner said...

Well, I don't see how Obama can reduce the deficit while spending so much money.

Ackers, have you studied the economic history of Japan? They have tried to hold their economy together over there with zero % interest rates and aggressive fiscal spending. The 0% interest rates didn't work and when the fiscal surge stopped during the mid nineties the economy did nothing. Japan's house prices haven't moved in 12 - 15 yrs. It recorded an annualised 13% drop in GDP last month. It got to this with zero interest rates and government spending. Neither are the answer.

Anonymous said...

cut government waste

Waste is an invention of pesudo-labourites

the nasty truth is there isn't that much waste.
much less than 10%

Want a big cut: health. education. welfare. pick one.

economic history of Japan?

precisely. now the answer is clear from simple mathematics, it's just like calculating 100 - 1000000, people don't like the answer

Wages in NZ in real terms need to drop by 50-90%.
And I mean real terms. Most people with jobs would still have enough to eat - but nowhere near enough to pay a mortgage. The dole needs to go - and we need to be planning for around 500,000 unemployed by Christmas. That means stomping on failing businesses, not propping them up!

We need to protect the productive sectors of society: the entrepreneurs, the farmers, the people who actually produce value overseas, while ensuring the rest go to the wall.

We need to do that now, do that throughly, do that fast. As Roger says: we must finish the job now.

Barnsley Bill said...

By putting taxes up I would imagine.

Psycho Milt said...

As Roger says: we must finish the job now.

Given that Roger's not a fascist, it's unlikely he has the same definition of "finish the job" as you, Sinner.

Fairfacts: look at your own graph: "Reaganomics" was a time of increasing deficit due to the Republicans' undeviating "cut tax and spend" policies. If Obama's turning his back on that, good - in relative terms, "tax and spend" is a lot less lunatic than "cut tax and spend."

Anonymous said...

The massive borrowings we are seeing will leave an untold debt burden on us all, particulalrly our children.
And all because of the sub-prime crisis created by Bill Clinton , Jimmy Carter and ACORN, one of whose discipleas was a young lawyer, Barack Obama.