President Obama has presented
the most irresponsible budget in US history.
His fiscal year 2010 budget projects federal
spending of $3.5 trillion and a federal deficit of
$1.75 trillion. In other words, 50 percent of the
government`s budget consists of red ink.
And Americans are angry that
sub-prime borrowers took mortgages they couldn`t
The bald fact is that the US
government is going to have to borrow–or
print–half of the money it intends to spend in
Obama`s first budget. This fact has fallen through
the cracks as New York Times headlines proclaim
"A Bold Plan
Sweeps Away Reagan Ideas." It certainly
does sweep away Reagan ideas. No Reagan budget
ever presumed that the federal government could
borrow half of its annual expenditures.
Indeed, Obama`s budget deficit for 2010 alone
exceeds the totality of
Deficits" for Reagan`s two terms of office.
As presidential budgets are
marketing devices rather than financial statements,
they are imbued with optimistic assumptions.
Obama`s budget is based on optimistic assumptions
about the extent of decline in GDP. A more
realistic projection of GDP decline would reveal
that Obama`s budget is the first since World War II
in which more than half of the government`s
expenditures must be financed by red ink. I suspect
that the red ink component of the FY 2010 budget
will surpass World War II budgets.
To whom can the US government
turn for $1.75 trillion for FY 2010, on top of $1.2
trillion for FY 2009?
Not to taxpayers. Obama`s net
tax increase comes to $170 billion over 10 years, or
$17 billion a year, a drop in the bucket. A
supply-side economist could have told him that not
even these paltry revenues will be realized.
Not to private savers.
Americans are over their heads in debts.
Not to foreigners. Thanks to
Clinton/Bush financial deregulation and Wall Street
and bankster greed, the rest of the world is in
financial turmoil and hasn`t $1.75 trillion in
savings to lend. Possibly, the stock market
will collapse further, and whatever remaining wealth
Americans have will flow into
The only other alternative is
the printing press. Printing press finance would
destroy the dollar as reserve currency and ignite
high inflation. The US would be unable to pay for
its imports, and Americans whose incomes do not rise
with the rate of inflation would be plowed under.
This prospect is not a
terror" scare tactic like
The economic catastrophe that
the US faces is very real. But there is no
awareness of this reality in Obama`s budget.
The crux of Obamanomics is the assumption that the
economy can run forever on consumer loans, if we can
just get the banks to lend, and the federal
government can run forever on loans from China,
Japan,and Saudi Arabia.
Obama is requesting $130
billion for wars in Iraq and Afghanistan during 2010
plus a $75 billion supplemental request for
the wars during 2009. This $205 billion is on top of
$534 billion for the Pentagon in 2010, for total
military spending of $739 billion.
The Chinese government`s budget
shows China`s military spending at $59 billion in
2008. (The Pentagon claims Chinese military
spending is between $97 billion and $139 billion.)
Russia`s military spending in 2009 is projected to
be about $50 billion.
In the midst of the greatest
economic crisis in US history when trillions of
dollars are being added to US national debt, Obama`s
budget spends more on two pointless wars than
the total military spending of China and Russia
combined. Obama`s wars serve only the profits
of the military/security complex and the promotion
rate of military officers. The longer the wars
continue, the larger the number of officers who can
retire at higher ranks, thus further swelling future
annual deficits and the national debt.
Moreover, as is becoming
apparent, the Bush/Obama war in Afghanistan cannot
be fought without fighting a war in Pakistan.
As if this isn`t enough war,
Obama parrots Dick Cheney`s charge, totally
unsupported by any evidence, that Iran is making
nuclear weapons. The chances are high that the
new White House Moron will have us at war in
Afghanistan, Pakistan, Iran, and Iraq. As
Obama`s wars expand, the $205 billion for war in
Iraq and Afghanistan will become $400 billion
annually and then $600 billion annually.
withdrawal" from Iraq has proved to be just
another con job. Obama has announced that the
withdrawal doesn`t include the 50,000 US soldiers
who will remain in Iraq indefinitely–like the US
troops that have been kept in Japan and Germany for
64 years and in Korea since the early 1950s,
Meanwhile Medicare is on the
ropes. The latest Medicare trustees report says that
Medicare`s funds for hospital payments will be
exhausted in 10 years. To make ends meet,
Obama proposes cutting payments to Medicare
Obama`s plan is to make doctors
and patients pay for Medicare. One way to get
National Health is to make it uneconomic for private
health care to service Medicare patients. Already
many doctors will not accept Medicare patients
because of the low payments, endless paperwork, and
risk of prosecution for
"over-billing." Looking at one recent
Medicare patient medical bill, Medicare and
supplemental insurance paid 29 percent of the billed
amount, requiring the doctor to eat 58.5 percent of
his charges and the patient to pay 12.5 percent.
The doctor was paid $93.16 on a $320.89 bill.
And Obama wants to reduce payments to providers?
What is Obama thinking? A
country that can`t afford Medicare can`t afford
National Health. Medicare provides only for the
elderly, and it provides very little. A person
pays the Medicare tax as long as he earns and on the
totality of earnings. For the rich the
Medicare tax can exceed the cost of a gold-plated
private insurance policy.
Basic Medicare leaves a person
unprotected. To provide better coverage, it is
necessary to enroll in Medicare Part B for which the
premium is $308.30 per month or
$3,699.60 per year. On
top of this, a person needs a privately supplied
supplemental policy to complete Medicare coverage.
AARP`s policy, which, after deductibles are met,
covers half of drug costs, cost the
protected" elderly $ 273.50 per month or
$3,282 per year. The drug prescription plan
passed by Congress costs the individual yet more.
The two supplements to Medicare
cost the Medicare patient $6,981.60 per year. In
addition, if the Medicare patient has much
retirement income besides Social Security, he pays
income tax on 85% of the $3,699.60 Medicare Part B
premium as it is part of taxable Social Security,
which for someone in the 25% bracket is another $925
In the late 1970s, Democratic
Senator Russell Long, Chairman of the Senate Finance
Committee, told me that as Social Security was
collected as a tax on wages and salaries, the US
government had promised never to tax the benefits.
So much for any commitment that the US government
makes to the American people.
A top Social Security income,
net of Medicare Part B premium, is $23,220 per year.
Deduct the AARP policy, and the elderly who have
paid in maximum Social Security taxes, get $20,000
per year. Of course, few Social Security
retirees receive the maximum payment. AARP`s
Public Policy Institute reports that in 2006 the
average annual Social Security benefit for a retired
worker was $12,372. Such a worker would have
little left after paying the Medicare Part B premium
and an additional premium for a supplement.
have destroyed employer-provided health coverage for
millions of employees. Private health care
coverage can cost as much as one-third and even
one-half of a person`s earned income, and some
people are not insurable. National Health
seems to be in the cards–only there is no money for
it. All the money is being spent in pointless
wars and on bailouts of financial fraud.
The Obama budget puts bankster bailouts and
pointless wars ahead of the health of the American
National Health advocates
emphasize that a single-payer system is less
expensive because it eliminates layers of profits.
It is also less expensive for a less promising
reason. Unless there is a parallel private
health care system, National Health systems limit
health spending to what is provided in the
government budget. Over time, health care has
to compete with everything else in the budget. Every
part of the budget has its partisans and special
interests. It is fantasy to assume that
National Health will always be well funded.
Just look at the state of the National Health
Service in the UK.
Obama`s plan to tax the rich is
another con job. Obama`s budget defines the
rich as a person with a $250,000 before tax income.
This is a rotten joke. The rich are the
banksters, such as Hank Paulson with his $160
million annual bonus, and heads of hedge funds with
their $1,000 million annual incomes. To
confuse the struggling middle class with the real
rich is criminal. A person with a $250,000
income before tax does not come close to being rich.
Obama`s "tax the rich" scheme will devastate the upper middle class and
leave the super rich undamaged.
The only change we have from
Obama and the Democrats is for the worse.
Bush`s FY 2008 budget deficit was $450 billion.
The FY 2009 deficit is projected at $1.2 trillion.
The budget deficit in Obama`s first budget is $1.75
trillion, a fourfold increase in two years.
Obama`s projected budget
deficits are an understatement. For example, Obama`s
budget assumes a less steep economic decline than
the economy is experiencing, and it projects that
war costs will drop to $50 billion annually
beginning in 2011–this despite Obama sending more
troops to Afghanistan and recent congressional
testimony of Lt. General David Barno, former head of
US forces in Afghanistan, who said the war in
Afghanistan could last until 2025.
terror" will never end, because the moronic US
government has defined everyone who resists US
hegemony as a
"terrorist." The great danger to American
civil liberty is that the US government regards as
terrorists American citizens who realize that the
neoconservative dream of American hegemony is a
fantasy. As the Obama regime has not repealed
the Bush regime rule–
"you are with
us or against us"–Americans who oppose
hegemonic war are lumped into the
There seems little chance that
civil liberties will be restored. Obama and his
Justice (sic) Department have sided with Bush/Cheney
on every important civil liberties issue. Yet,
the ACLU sees
"hope" in Obama`s rhetoric!
On February 21 Yahoo News
"President Barack Obama`s administration has sided
with predecessor George W. Bush on the rights of
detainees at Bagram air base in Afghanistan, saying
they cannot challenge their detention in US courts.
In a two-sentence court filing Friday, the US
Justice Department said "the government adheres to
its previously articulated position" of denying
habeas corpus rights to Bagram detainees, backing a
similar decision by the Bush administration."
month," Yahoo News reports,
administration backed another Bush anti-terror
policy when it urged a federal court to dismiss a
lawsuit accusing Boeing Company of helping fly
suspects to secret CIA detention centers overseas.
The Justice Department said the case should be
thrown out to protect state secrets."
Do you remember the illegal
spying? The US telecom industry succumbed to
Bush regime pressure and broke the law together with
President Bush. The illegal act made the US
telecom industry subject to lawsuits, but the Bush
regime placed its co-conspirators above the law.
Now Obama has sided with the
Bush regime. On February 26,
Justice Department continues to stand behind a Bush
era law meant to prevent lawsuits against
telecommunications companies accused of illegally
sharing private customer information with
intelligence agencies. In
a brief filed late Wednesday obtained by Raw
Story, the Department of Justice provided its views
to Chief U.S. District Judge Vaughn Walker, after
the San Francisco federal judge
questioned the constitutionality of the
wide-sweeping law and whether it gives the U.S.
Attorney General too much power in deciding whether
a company is immune from lawsuits after it has
shared information with federal agents."
On February 26 antiwar.com
reported that the
director (Leon Panetta) declares nothing has
changed, nothing will change." Panetta
declared that the US policy of conducting war on
Pakistan`s sovereign territory
continue." The attacks, Panetta claimed,
successful." For the CIA, claims of
success equal legality. Did the Bush regime
ever express greater arrogance and hubris?
With Rahm Israel Emanuel, an
Israeli dual citizen, in charge of the White House
and Obama`s schedule, Obama will have an even less
independent foreign policy in the Middle East than
Bush. Somehow someone among the Obamacons
managed to put forward an appointment that could
challenge the Israel Lobby`s stranglehold.
Charles Freeman, former US ambassador to Saudi
Arabia, former top Pentagon official, and president
of the Middle East Policy Council, was chosen by
Admiral Denis Blair, Director of National
Intelligence, to head the National Intelligence
The neocons went berserk.
Steve Rosen, formerly of AIPAC, currently
indicted as an Israeli spy, Gabriel
wants the New
York Times indicted for
allegedly violating the Espionage Act for
reporting the Bush regime`s illegal spying, Daniel
Pipes, who sees Muslim terrorists under every bed,
Michael Rubin of the warmonger American Enterprise
Institute, and Frank Gaffney, possibly the goofiest
person in America, damned Freeman`s
"deeply troubling," because Freeman has an open mind on the Middle
In other words, if you are not
on Israel`s side, you are disqualified.
There is no more certain
indication of continuing war in the Middle East on
Israel`s behalf than for Freeman`s appointment to be
Pay close attention to this
one. If Obama succumbs to the Israel Lobby and nixes
Blair`s appointment of Freeman, the US will
have to finance interminable wars on top of trillion
dollar bailouts and massive unemployment.
The US might not even make it
to 2012 before it is a banana republic.
Paul Craig Roberts [email
him] was Assistant
Secretary of the Treasury during President Reagan`s
first term. He was Associate Editor of the Wall
Street Journal. He has held numerous academic
appointments, including the William E. Simon Chair,
Center for Strategic and International Studies,
Georgetown University, and Senior Research Fellow,
Hoover Institution, Stanford University. He was awarded
the Legion of Honor by French President Francois
Mitterrand. He is the author of
Supply-Side Revolution : An Insider`s Account of
Policymaking in Washington;
and the Soviet Economy and
Meltdown: Inside the Soviet Economy,
and is the co-author
with Lawrence M. Stratton of
The Tyranny of Good Intentions : How Prosecutors and
Bureaucrats Are Trampling the Constitution in the Name
of Justice. Click
here for Peter
Brimelow`s Forbes Magazine interview with Roberts
about the recent epidemic of prosecutorial misconduct.