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                Does the figure $3.8 Trillion sound big or too expensive? Well you may not be surprised to find out that the new Obama budget is exactly proposing $3.8 Trillion dollars in spending. But the question is, will this new budget work? Let’s discuss this question, by breaking down the major parts of the budget.

                The Obama budget proposes a 5.7% increase for the current budget year and a 3% increase for the 2011 budget – which would be $3.83 Trillion. The Obama Administration even admits to the fact that the new budget proposal could add $8.5 Trillion to our National Debt, in the next decade – even with the proposed spending freeze. If that alone doesn’t bother you, the Obama budget will lead to an estimated $1.56 Trillion dollar deficit this year! That would be an increase of 10% from the 2009 federal deficit of $1.41 Trillion. Even worse is the fact that the Obama budget will lead to trillion dollar deficits for three consecutive years – the Administration even admitted this! If this budget goes through, the federal deficit would be 10.6% of the total economy or GDP – a figure unmatched since our great country emerged from the Second World War! Sadly for us, the new budget does not trim the deficit below 3.6% of the GDP. This means President Obama’s budget will fail to meet one of his main promises/goals, which was to lower the deficit to 3% of the GDP by 2015. So on the issue of Fiscal Responsibility, President Obama’s budget FAILS big time.

                So what’s in this massive, $3.8 Trillion dollar budget? The Obama budget includes tax cuts for businesses, a $5000 dollar tax credit for hiring employees, increases in unemployment benefits, $25 Billion dollars for cash-strapped state governments, keep the “Making Work Pay” tax breaks through 2011, extra $250 payments for Social Security recipients, $549 Billion dollar increase for the Pentagon’s main budget, increased education spending, and overall increased defense and social spending. Several things in the budget do impress, however, several things are a bit idiotic. For one, the $5000 tax credit for businesses, which hire more people, will not work. The cost of hiring someone at minimum wage salaries combined with employee’s benefits far exceeds the actual tax credit. It’s a nice idea, which in reality, doesn’t work. The budget doesn’t also mention the Estate Tax, which will reach 50% in 2011, after the Bush tax cut expires this year. The budget also increases defense spending, but it doesn’t cut it in the areas which are considered to be “wasteful”. For one, we no longer need bases in Europe or Korea. We don’t need to be developing new weapons for large conventional wars (Example: F-35C), when we can’t afford to even wage two wars. The U.S. spends more on its military than the next top ten spending countries, combined! Let’s not forget the increased aid to states. States need to strap up and since the failed Obama stimulus, they haven’t done very well. Time to strap up.

                Several other things included in the budget, is tax increases for the wealthiest Americans, who make more than $250,000 dollar per year. The Pell Grant College Tuition Program is also seeing an increase in their budget, an increase from $17 Billion to $35. Now it may sound logical to tax the wealthiest Americans to increase government revenues, but last time I checked, even John Maynard Keynes was against tax increases during a recession. We tried to lower deficits by taxing the rich under Presidents Reagan and Bush Sr., but those attempts failed because spending was never lowered. As for the Pell Grant College Tuition Program, times are tough and we need to learn to cut spending. Private organizations already offer multiple scholarships.

                Overall, there is one major problem the Obama budget presents. Even if the country is pulled out of the recession, the deficits for the next decade are predicted to stay well above $400 Billion. What will happen when China, Britain, and Japan finally get tired of our wasteful spending? What happens when we can no longer borrow money? Although that may never happen, one thing is for sure – tax hikes on the middle class are coming. They came with Reagan on the rich and they came with Bush Sr. We are truly spending and living beyond our means. IF this logic succeeds in the future, what will happen when the next recession hits in ten to eight years? Will we spend trillions again to get out of the problem? Inflation is bound to happen, tax hikes are likely. Will Obama leave us in a situation which could take decades to recover from? It seems that way for now. If this budget is passed and if –or I should say, when the recession finally ends, will Obama be praised for it? Will the far-left forget that President Reagan, who is attacked for his deficits, was able to fix a recession without the government stimuli and bailouts? Will they forget President Clinton never needed to pass a stimulus to get us out of the Bush Sr. recession? Let’s hope our congress doesn’t pass this budget…

Sources:

Associated Press, Obama Budget: Record Spending, Record Deficit, February 1, 2010.

http://finance.yahoo.com/news/Obama-budget-Record-spending-apf-3449890447.html?x=0&.v=6

Albert's America, Failure At its Prime: The Obama Stimulus.

http://albertsamerica.wordpress.com/2009/12/08/failure-at-its-prime-the-obama-stimulus/