A Look at Obama’s Economic Plan

10 10 2008

I had a conversation today at work with my boss and his opinion was that economy under Obama will not do worse than under Bush and might even do better. In his opinion McCain is the same as Bush as far as economy is concerned.

But as the conversation continues, it turned out that he did not know much of what the Obama’s economic plan is. For example, he was surprised to hear that Obama will raise minimum wage to $9.50 and index it to inflation (see here). I guess a lot more people are like him – they think that Obama will do good as far as economy is concerned, but when pressed would not be able to tell why.

BTW, I am not really impressed with past performance of Bush as far as economy is concerned. And McCain does not seem to be better.

Anyway, in my opinion both are better than Obama because Obama is so really bad.

Obama’s economic plan is outlined here: www.barackobama.com/issues/economy. Plus of course of the stuff on the issues page will have to be somehow paid for.

[Update: Rather than reading the pretty version of the plan at www.barackobama.com/issues/economy, one should read the full version here (BTW, I am linking to Google Cache because Obama’s website has removed the plan). The full version makes clear that all the tax credits that Obama promises are of the refundable type, i.e., that money will be given also to those who pay no or minimal taxes.]

The first problem with this plan is: Can Obama be trusted? Do you really believe that he will do what he says in that plan. He has a record of changing his opinions the way wind blows. He is a socialist radical at heart, but he will say about anything to get elected — think, e.g. about the Surge in Iraq. First he was with all his might against it, but when it became apparent that it was politically stupid to be against it, he is now for it. This is where his character, his political beliefs and the people he is friends with are so important.

But let’s assume that Obama really believes in what he presents on his website regarding the economy. In Hillary’s words, let’s for a moment “willingly suspend disbelief“, and take the plan at its face value.

First of all, this economic plan is about wealth redistribution. It effectively exempts lower income and senior people from taxes, while taking that money in increasing amounts from the rich and from the corporations. Notice that the groups exempt from taxes are precisely the ones already predisposed to vote democrat.

It encourages financial irresponsibility both at the government and individual level. Why do the states need $25 billion State Growth Fund? Cannot they cut the expenses or raise the taxes on their own residents. I bet Arnold is happy to hear about that. This way California will be able to issues even more bonds as result of stupid Propositions, always knowing that Obama will be there to bail them out.

Notice that Obama in his plan assumes that people are too stupid to take care of their financial matters and therefore thinks that they need help the government. An example here would be mandatory IRA contributions with opt out option and Credit Card rating system — but maybe these things are needed because our educational system, in the firm grip of liberals, is pretty bad.

I noticed that Obama wants to simplify the filing the taxes, so that most people will be able to sign on the dotted line and send the money. This reminds me of the way things are in Europe, when hardly anyone knows what their Net Income is. The only thing that you typically know is your take home salary.  This way it is not obvious how much the Government takes away from you.

As I was reading through the plan, the obvious question is where will Obama get the money for all of this? — All of the new spending that Obama proposes adds up to about $800 billion per year (Obama did not deny that number in the 2nd debate).

One source is those above $250k income, e.g. he “… will ask those making over $250,000 to contribute a bit more to Social Security to keep it sound”. BTW is it called asking if you have no option of saying “no”?

Obama also promises that there will be spending cuts and savings, to offset extra spending promised in his economic plan. Where will those cuts and savings come from?

Obviously, Obama hopes to save $120 billion per year after we surrender in Iraq, but that is still not enough savings.

Obama’s adviser Jason Furman said: “.. he has already committed to reducing subsidies for Medicare HMOs and banks that make student loans, imposing payment limits for high-income farmers, dramatically reducing pork-barrel projects, ending no-bid contracting and eliminating unnecessary and duplicative programs.”

Other new sources of revenue in Obama’s plan include about $80 billion a year from closing tax loopholes.

More detailed information about where Obama will find all the savings and make the cuts is difficult to come by. Plus he keeps saying contradictory things, e.g. regarding NASA:

That is typical Obama — always say the thing that will tickle the voters ears.

What if his savings and cuts do not amount to what he hopes for? Will he change his plans? Will he drastically cut Military budget as hinted in this promise he made?

How much money can he milk out of the Exxons and Chevrons now that oil is below $80 per barrel. I guess the above $250k folks better get their wallets ready – “taxes are patriotic“.

BTW, I am not sure if the $65 billion per year that Obama wants to give to UN as part of the Global Poverty Act is included in the $800 billion. But, what is a mere $65 billion.




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