The Obama Budget

Well, we've seen the "change" that Obama has in store for us. Early in the budget document, there is a chart that shows the share of wealth held by the top 1% of the population. Check out the story on opinionjournal.com (http://online.wsj.com/article/SB123681860305802821.html) about the chart, it's origin, and meaning.

Basically, the Democrats believe the wealth distribution should be more level. They don't seem to grasp the concept that equal opportunity does not mean equal outcome. (Races are fair when all the runners start at the same place and time, not when they all finish at the same time!)

We're already hearing about no tax increase on 95% of the population, and all the wonders we'll see from alternative fuels, "green" jobs, guaranteed health coverage, and all the other "goodies" in the budget. What they don't tell us is how much additional debt will result from this massive spending. (John McCain has at least that much right ... he calls it "generational theft!")

Obama's deficit projections are predicated on a 4% growth rate, beginning in 2010. Even the Congressional Budget Office believes that to be wildly optimistic. (And, of course, if the growth is lower than anticipated, the deficits will be greater than advertised.)

Second, the "cap and trade" plan to cut carbon emissions is nothing more than a tax on everyone who consumes energy. The price for carbon credits will force some older plants to make massive investment in modernizing, or go out of business. ALL these costs will be passed along to consumers. (Shareholders will not lower their return expectations because the government decides we need to be "green." If their returns slip, they'll move their investments to more attractive companies, industries, and countries. Companies will pass those costs along to preserve their shareholders' value ... as they should.) The result is, we'll all end up paying more for gasoline and diesel fuel, electricity, natural gas, etc. That's the direct cost. Indirectly, the higher energy costs will raise the price of goods and services ... everything else will go up, too. Mr. Obama, that is a "tax" ... a taking of citizens' money to fund government operations (even if there are one or more "companies" helping collect those funds in the form of higher prices.)

We can't spend our way out of trouble. We can't "tax the rich" enough to pay for all the "goodies" for those who expect them for free.

The problem with taxing the rich is that it doesn't help the economy (or, in the longer term, help the government.) Taxes are the "price" of economic activity. The higher the price, the less we'll get of it. If taxes become too high in the U.S., the wealthy will stop investing in companies and creating jobs ... they'll move their wealth to tax-sheltered investments, or move them to a country where capital receives better treatment. (That's why Kennedy, Reagan, and Bush saw that tax cuts led to increased tax revenues. Counterintuitive, yes, but proven three times in our not-so-distant past.)

In short, this budget will spend like mad (leading to inflation), and slow down the economic recovery. Some of this can be undone, with a change in the make-up of Congress. However, some of it will become new "entitlement" programs that are next to impossible to get rid of.

That's not the "change we need!"