But the President’s designation of April as a month of fiscal responsibility was made with a straight face, as he explained, "Together, we can prepare young people to tackle financial challenges–from learning how to budget responsibly to saving for college, starting a business, or opening a retirement account.” In light of Obama’s budget finally being released this week, much can be learned about what Obama actually intends for our nation’s young adults.
Obama’s budget troubles start with the long-delayed release. This is the fourth time in five years that President Obama has failed to produce a budget on time. This year he earned the dubious distinction of being the first president in the modern era to fail to produce a budget before Congress produces one—the last time being in 1921. Such a late release essentially guarantees his budget will not be voted on by the Senate, which perhaps is a good thing for the President– given that his 2012 and 2013 budget proposals failed to garner a single vote in the Democrat-led Senate.
Predictably, the Obama budget contains $580 billion in higher taxes. After his $620 billion tax increase on those pesky "rich" Americans and his $115 billion payroll tax on that ever shrinking portion of the American population actually holding down a job all as part of the fiscal cliff debacle back in early January, the President was not about to slow down the tax train. All this while the Labor Department reported last week reported that the percentage of Americans actually participating in the labor force is down to a modern low of 63.3 percent.
While Obama’s fondness for raising taxes may not be likely to light an entrepreneurial fire in the hearts of American citizens, at least it will solve the problem of runaway deficit spending and bring the budget into balance, right? Wrong. In contrast to Paul Ryan's budget that balances in ten years through entitlement reform, lower tax rates and reining in government overspending, Obama’s budget simply ignores the idea of actually ever balancing.
No wonder President Obama is on track to preside over the top five worst deficits in American history. Not to worry though, since economic growth, he reminds us frequently, is all that matters and the only way to get there is through government spending.
So how is the economy reacting to Obama’s record spending? After four years of the Obama doctrine, the U.S. economy grew just 0.4 percent in the last quarter of 2012. Last month only 88,000 jobs were created – a number that doesn’t even keep up with population growth. The economic outlook isn’t much better. Forecasters with the Obama administration estimate U.S. economic growth of 2.3 percent this year. At the same time, our budget shortfall is an estimated $845 billion, or 5 percent of the economy.
It’s well known that one of the primary drivers of our growing national debt is entitlement programs such as Medicare, Medicaid and Social Security. President Obama deserves some credit for an attempt at controlling the cost of these programs, which earned him a rather stern rebuke from Richard Trumka of AFL-CIO, but these reforms are not up to the task of actually fixing the problem. Even if Obama’s plan were put in place, entitlement spending would still grow over the next ten years, from 13.6 percent of GDP this year to 13.9 percent in 2023.
Obama’s willingness to at least bring up the politically-charged topic of entitlement spending is admirable, but ultimately his plan is ineffective. House Budget Chairman Paul Ryan already addressed this problem and got it right. For those young people concerned about future retirement, the Obama plan warrants an attendance ribbon, but the Ryan budget actually gets the job done.
One last irony of the Obama budget must be pointed out. While the President's April proclamation urges young people to "budget responsibly," the President's budget actually discourages fiscal responsibility by capping retirement accounts at $3 million. With life expectancy increasing, meaning longer retirement years, and with many young people realizing that both Medicare and Social Security are on a sure road to bankruptcy, the President is attempting to cap Americans Individual Retirement Accounts or IRAs. Rather than promote financial discipline and self-sufficiency, Obama feels the right to determine when you have enough money, and penalize any future savings.
Despite poor timing, neither Obama’s proclamation naming April the month of financial responsibility or his budget proposal were intended as pranks. But in both cases the joke really is on us.