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→Economic Policy: 2012 Budget
==Economic Policy==
==Economic Policy==
The Obama administration initially followed what fiscal conservatives and libertarians call [[Obama administration fiscal policy|ruinous fiscal policies]] and [[Obama administration monetary policy|reckless monetary policies]].
The Obama administration initially followed what fiscal conservatives and libertarians call [[Obama administration fiscal policy|ruinous fiscal policies]] and [[Obama administration monetary policy|reckless monetary policies]].
[[File:Varvel-11-19-09.jpg|thumb|330px|left|Gary Varvel pokes fun at VP Biden's outlandish claims]]
[[File:Varvel-11-19-09.jpg|thumb|330px|right|Gary Varvel pokes fun at VP Biden's outlandish claims]]
===Backdrop===
===Background===
Following the [[Recession of 2008]] Obama declared that failure to pass his [[Economic stimulus]] would turn a "crisis into a catastrophe," and promised [[Unemployment]] would not rise above 7.8%.<ref>[http://www.time.com/time/business/article/0,8599,1910208,00.html Obama's Stimulus Plan: Failing by Its Own Measure,] Stephen Gandel, ''TIME'', July 14, 2009.</ref><ref>[http://www.msnbc.msn.com/id/31165217/ Obama promises economic relief this summer], AP, 6/8/2009.</ref> The House on Jan. 28 passed a stimulus package of $819 billion in new spending and tax increases, despite unanimous Republican opposition. A revised bill passed the Senate with three Republican votes. A compromise bill known as the "[[American Recovery and Reinvestment Act of 2009]]" was passed, providing for $789 billion in new spending and stimulus.
Following the [[Recession of 2008]] Obama declared that failure to pass his [[Economic stimulus]] would turn a "crisis into a catastrophe," and promised [[Unemployment]] would not rise above 7.8%.<ref>[http://www.time.com/time/business/article/0,8599,1910208,00.html Obama's Stimulus Plan: Failing by Its Own Measure,] Stephen Gandel, ''TIME'', July 14, 2009.</ref><ref>[http://www.msnbc.msn.com/id/31165217/ Obama promises economic relief this summer], AP, 6/8/2009.</ref> The House on Jan. 28 passed a stimulus package of $819 billion in new spending and tax increases, despite unanimous Republican opposition. A revised bill passed the Senate with three Republican votes. A compromise bill known as the "[[American Recovery and Reinvestment Act of 2009]]" was passed, providing for $789 billion in new spending and stimulus.
Detroit spread gloom on Feb. 17 as GM starkly warned of impending bankruptcy unless it gets more aid. By August, both Chrysler and GM had entered bankruptcy, and come out again in much smaller size, as they closed a fourth of their dealerships, slashed wage rates, and repaid creditors with 29 cents on the dollar. The government gave Chrysler away free to Fiat of Italy, which acquired ownership without investing any money. Meanwhile the part makers, which employ more workers than the Big Three automakers, verged on disaster and begged for billions. The "[[cash for clunkers]]" proved to be a boondoogle for the rich at a cost of $3 billion to the Treasury.
Detroit spread gloom on Feb. 17 as GM starkly warned of impending bankruptcy unless it gets more aid. By August, both Chrysler and GM had entered bankruptcy, and come out again in much smaller size, as they closed a fourth of their dealerships, slashed wage rates, and repaid creditors with 29 cents on the dollar. The government gave Chrysler away free to Fiat of Italy, which acquired ownership without investing any money. Meanwhile the part makers, which employ more workers than the Big Three automakers, verged on disaster and begged for billions. The "[[cash for clunkers]]" proved to be a boondoogle for the rich at a cost of $3 billion to the Treasury.
===2010 Budget===
===Policies problematic, say economists and public===
The Democratic contorlled Congress by a party line vote in late April passed the budget Obama proposed in late February. It called for $3.4 trillion in new spending, not counting the $787 billion in stimulus spending approved in February, nor the trillions in loan guarantees to banks. The 2010 budget allocated $1.2 trillion for defense, and an additional $130 billion for the wars in Afghanistan and Iraq. Nondefense spending increased by 8% or $40 billion. The budget allowed the Obama health plan, which had not yet been written, to move through Congress on a fast track with no risk of filibuster.
In the view of 51 mostly conservative economists polled by the ''Wall Street Journal'' in July 2009, the Obama administration's economic program is problematic. President Obama and Treasury Secretary Geithner both got an average grade of 70 out of 100 for their handling of the financial crisis, but those grades varied widely.<ref>Obama scored 59 in March 2009, Geithner 51, and Bernanke 71. See Phil Izzo, "Obama, Geithner Get Low Grades From Economists," [http://online.wsj.com/article/SB123671107124286261.html ''Wall Street Journal'' March 11, 2009]</ref> Former President Bush and ex-Treasury chief Paulson received average grades of 50 and 60, respectively, when economists were asked how they handled the crisis while in office. By contrast, Fed chairman Bernanke scored much better, with an average grade of 85.<ref>Phil Izzo, "Few Economists Favor More Stimulus," [http://online.wsj.com/article/SB124708099206913393.html ''Wall Street Journal'' July 10, 2009] </ref>
[[Image:Stim1.jpg|thumb|380px|Cartoonist Chuck Asay summarizes the debate]]
The economists were pessimistic, predicting the economy would shed another 2.8 million jobs over the next 12 months after the presidents program was passed.<ref>uThe Unemployment rate climbed to 9.5% in June 2009, then hit 10,2% in October, as the GDP fell at an alarming -6.4% annual rate in the first quarter of 2009.</ref> Economists see a one-in-six chance that the U.S. will fall into a depression, defined as a decline in per-person GDP or consumption by 10% or more. They gave equally poor marks to the efforts of other countries to end the recession.
The economists, however, were broadly supportive of the Federal Reserve. Over 85% agreed that its proliferating lending programs are well-designed, well-executed and helping the economy.
In June 2009 public opinion was favorable toward Obama personally, but increasingly dubious about his plans to overhaul health care, bailout the auto industry and close the prison at Guantánamo Bay. With a positive job approval rating of 63% , Mr. Obama had the backing of Democrats and independents alike, with only 23% of Republicans expressing approval. Support for Obama's foreign policies and terrorism policies originally was high at 57-59%.
Billionaire [[Warren Buffett]], former Federal Reserve Chairman Paul Volcker, and former Clinton Treasury Secretary [[Robert Rubin]] constituted Obama's transition team of Economic Advisers.<ref>[ http://www.bloomberg.com/apps/news?pid=20601110&sid=aSzNv81CYh0c Obama to Meet With Buffett, Daley, Economic Advisers], Bloomberg, Nov. 6 2008.</ref> Rubin was being sharply criticized for his role in the collapse of [[Citigroup]] which needed $45 billion in federal [[bailout]] money.<ref>[http://www.reuters.com/article/topNews/idUSN0930738020090109 Robert Rubin quits Citigroup amid criticism], Reuters, Jan 9, 2009</ref> Buffett, after the inauguration, spoke out against the administration's declared objective of not allowing "a crisis to go to waste" [http://www.swamppolitics.com/news/politics/blog/2009/03/buffett_hits_obama_congress_on.html] and Obama's massive tax increase on the needy and those least able to afford it. [http://greeninc.blogs.nytimes.com/2009/03/09/buffett-cap-and-trade-is-a-regressive-tax/]
====2010 Budget====
[[Image:Budget-cbo.jpg|thumb|250px|left]]
The Democratic controlled Congress by a party line vote in late April passed the budget Obama proposed in late February. It called for $3.4 trillion in new spending, not counting the $787 billion in stimulus spending approved in February, nor the trillions in loan guarantees to banks. The 2010 budget allocated $1.2 trillion for defense, and an additional $130 billion for the wars in Afghanistan and Iraq. Nondefense spending increased by 8% or $40 billion. The budget allowed the Obama health plan, which had not yet been written, to move through Congress on a fast track with no risk of filibuster.
The Tax Foundation says that 44% of all tax filers have no tax liability and most of those will get a check from the government, especially from the Earned Income Tax Credit (EITC)<ref> EITC is a conservative idea first proposed by Milton Friedman, enacted under Republican presidents Ford and Reagan.</ref> and credits for college tuition and child care. The ''Wall Street Journal'' noted about Obama's plan that, "Once upon a time we called this 'welfare'". <ref>http://online.wsj.com/article/SB122385651698727257.html</ref>
The Tax Foundation says that 44% of all tax filers have no tax liability and most of those will get a check from the government, especially from the Earned Income Tax Credit (EITC)<ref> EITC is a conservative idea first proposed by Milton Friedman, enacted under Republican presidents Ford and Reagan.</ref> and credits for college tuition and child care. The ''Wall Street Journal'' noted about Obama's plan that, "Once upon a time we called this 'welfare'". <ref>http://online.wsj.com/article/SB122385651698727257.html</ref>
The Budget assumes a federal deficit of $1.75 trillion for 2009, or 12.3% of GDP--the highest deficit in percentage terms since World War II. The budget reordered priorities to provide national health care and raise the federal spending on schools.
The Budget assumes a federal deficit of $1.75 trillion for 2009, or 12.3% of GDP--the highest deficit in percentage terms since World War II. The budget reordered priorities to provide national health care and raise the federal spending on schools.
The Congressional Budget Office (CBO) estimates the Obama plans will raise the national debt far more than Obama admitted. The CBO says the Obama plan will cause total deficits over the next ten years of $9.3 trillion, compared to Obama's estimate of "only" 7 trillion. The annual GDP by contrast is about $15 trillion.<ref> Jackie Calmes, "New Deficit Forecast Casts Shadow on Obama Agenda," [http://www.nytimes.com/2009/03/21/washington/21deficit.html?th&emc=th ''New York Times'' Mar. 20, 2009]</ref> Senator Jedd Gregg says that Obama's budget will double the national debt in five years and triple it in ten. <ref>http://www.politifact.com/truth-o-meter/statements/2009/mar/25/judd-gregg/judd-gregg-says-obamas-budget-doubles-national-deb/</ref>
Obama proposed a carbon [[cap and trade]] system, increasing taxes for families and businesses. The cost to energy consumers would be an additional $645 billion between 2012 and 2019, which will result in higher prices. Rep. John Boehner said, "Let's just be honest and call it a carbon tax that will increase taxes on all Americans who drive a car, who have a job, who turn on a light switch, pure and simple."<ref>see [http://online.wsj.com/article/SB123566843777484625.html comment from conservative newspaper]</ref>
Obama proposed a carbon [[cap and trade]] system, increasing taxes for families and businesses. The cost to energy consumers would be an additional $645 billion between 2012 and 2019, which will result in higher prices. Rep. John Boehner said, "Let's just be honest and call it a carbon tax that will increase taxes on all Americans who drive a car, who have a job, who turn on a light switch, pure and simple."<ref>see [http://online.wsj.com/article/SB123566843777484625.html comment from conservative newspaper]</ref>
The chairman of the Senate Budget Committee was conservative Democrat [[Kent Conrad]] of [[North Dakota]], a deficit hawk who said he was "very uncomfortable with the build-up of debt" and urged Obama to make good on his promise to overhaul federal retirement and health-care programs. Conrad called for "more discipline on the spending side."<ref> [http://www.washingtonpost.com/wp-dyn/content/article/2009/02/28/AR2009022801960.html?hpid=topnews ''Washington Post'' Mar. 1, 2009]</ref>
The chairman of the Senate Budget Committee was conservative Democrat [[Kent Conrad]] of [[North Dakota]], a deficit hawk who said he was "very uncomfortable with the build-up of debt" and urged Obama to make good on his promise to overhaul federal retirement and health-care programs. Conrad called for "more discipline on the spending side."<ref> [http://www.washingtonpost.com/wp-dyn/content/article/2009/02/28/AR2009022801960.html?hpid=topnews ''Washington Post'' Mar. 1, 2009]</ref>
The Obama Administration based its domestic policies on the assumption of a rapid economic recovery generating the tax revenue needed to fund permanent new spending program for [[Obamacare]] and "greening the economy". Administration forecasts were more starry-eyed than private sector forecasts. Both parties agree that stimulus spending is needed to deal with the recession but Congress is unlikely to approve permanent new spending programs unless the economy improves, since a large number of conservative Democrats were elected who may vote with Republicans to keep down spending and deficits.<ref> Peter S. Goodman, "Sharper Downturn Clouds Obama Spending Plans," [http://www.nytimes.com/2009/02/28/business/economy/28recession.html?_r=1&th&emc=th ''Washington Post'' Feb. 27, 2009]</ref>
====2012 Budget====
Obama was roundly criticized for ignoring recommendations of his own Deficit Reduction Commission in his proposed 2012 Budget. Obama's proposals did nothing to address the burgeoning budget deficit responsible for lagging job creation and the persistent [[unemployment]] which has become the hallmark of his time in office. In response to [[Republican]] counter-proposals, rather than address substantive issues of reform, Obama descended into ''[[ad hominem]]'' attacks against advocates of improving the delivery of government services.<ref>http://www.mcclatchydc.com/2011/04/24/112725/obama-paints-rep-ryan-as-the-gop.html</ref><ref>http://www.realclearpolitics.com/articles/2011/04/23/the_unhappy_president_109638.html</ref>
===Obama Care===
:''Main article : '''[[ObamaCare]]'''''
With a monopoly on power in Obama's first two years, the Democratic Congress moved to create a government run insurance program that would put private sector insurers out of business. Obama proposed funding the program with higher taxes "on wealthy Americans". <ref>http://www.latimes.com/news/nationworld/nation/la-na-health-care26-2009feb26,0,1056744.story</ref> The new law mandates private citizens to purchase health insurance under the threat of legal sanctions for non-compliance.<ref>http://www.foxnews.com/politics/2009/07/02/senate-democrats-trim-cost-health-care/</ref> Critics dubbed the law [[Gestapo care]].
Obama was unconvincing to most Americans. Few saw any advantage in his proposals, and everyone can see the monumental costs. Contrary to his campaign vows for openness and transparency in government, Obama cut closed door back room deals with big drug companies and insurers, and was not upfront with the American people. Polls show a steady decline in support for [[Obamacare]] as the public learned more about it. (By contrast, he had 57% approval on health issues in April 2009).<ref> ''Washington Post'' July 20, 2009</ref> Conservative Democrats in Congress--who call themselves "[[Blue Dog Democrats]]"---were reluctant to sign on to any proposal costing a trillion dollars over the next decade. The controversy lowered Obama's overall approval and was a major factor in the [[2010 Midterm elections]] which ousted the Democratic majority from the House.
===Bailouts ===
===Bailouts===
After spending over a trillion dollars in cash and guarantees (by Bush and Obama combined), the [[bailout]] of the financial system by October 2009 seemed to have rewarded the big banks but failed to stimulate the economy and job creation. Obama started to decline in the polls, as independents and Republicans became increasingly critical. A firestorm erupted in March when it was learned that AIG insurance company, now 80% government owned, was paying $165 million in bonuses to the traders that had caused $60 billion in losses. Geithner was appointed to the Treasury largely on the basis of his work at the New York Fed, where his most important action was to design the bailout of AIG. Under Geithner AIG received $170 billion from the government.
After spending over a trillion dollars in cash and guarantees (by Bush and Obama combined), the [[bailout]] of the financial system by October 2009 seemed to have rewarded the big banks but failed to stimulate the economy and job creation. Obama started to decline in the polls, as independents and Republicans became increasingly critical. A firestorm erupted in March when it was learned that AIG insurance company, now 80% government owned, was paying $165 million in bonuses to the traders that had caused $60 billion in losses. Geithner was appointed to the Treasury largely on the basis of his work at the New York Fed, where his most important action was to design the bailout of AIG. Under Geithner AIG received $170 billion from the government.
[[Image:Toxic-assets.jpg|thumb|300px|left|Geithner plans to sell toxic assets to Wall Street]]
[[Image:Toxic-assets.jpg|thumb|300px|left|Geithner plans to sell toxic assets to Wall Street]]
The General Motors bailout, which Obama promised would make taxpayers money, resulted in an $11 billion loss;<ref>http://www.outsidethebeltway.com/taxpayers-to-lose-at-least-11-billion-on-general-motors-bailout/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+OTB+%28Outside+The+Beltway+%7C+OTB%29</ref> however Democratic Congressional seats in the areas affected that recieved the aid, remained Democratic in the [[2010 Midterm elections]] despite the persistent high unemployment among workers who were not directly employed in the auto industry in those same districts.
The General Motors bailout, which Obama promised would make taxpayers money, resulted in an $11 billion loss;<ref>http://www.outsidethebeltway.com/taxpayers-to-lose-at-least-11-billion-on-general-motors-bailout/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+OTB+%28Outside+The+Beltway+%7C+OTB%29</ref> however Democratic Congressional seats in the areas affected that recieved the aid, remained Democratic in the [[2010 Midterm elections]] despite the persistent high unemployment among workers who were not directly employed in the auto industry in those same districts.
===Education===
===Education===