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Health & Fitness

Obama Playing a Dangerous Game

Obama is risking our economy, our future, and our 401Ks so he can push his class warfare campaign.

The world stock markets are volatile because of concern about government debt. The latest country on the hot seat has been Italy, which is running a deficit over 9% of GDP and borrowing around 20 cents of every dollar they spend.

Our turn on the hot seat is coming, possibly before 2012 elections. More likely, we have some time yet to restore confidence to bond markets, but the clock is running. We are also running a debt around 9% of GDP, but we are borrowing 40 cents of every dollar we spend. Given this backdrop it is unacceptable for Obama’s continued sabotage of making any progress on real reform. That is my focus here, first on how Obama has been ensuring nothing gets done, and second why he is doing it.

There are three ways Obama has undermined any chance for real success in debt reduction, pushing more spending, demanding tax increases, and refusing to consider any entitlement reform.

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Ever since the debt ceiling deal was complete, Obama has focused on promoting more wasteful spending ideas masked as a “jobs program." If these programs were really focused on short term job creation, instead of buying and/or paying off supporters, he would not have shelved the Keystone XL pipeline that would have created thousands of jobs without a massive government investment. Knowing that debt is the biggest threat to economies in Europe and in the United States, a real leader would be out their pushing ideas to cut non-defense spending.

The next way he has undermined any chance of success is by demanding tax increases. Last year in Italy, they increased top tax rates 5% and their debt situation was no better a year later. We will not collect as much as people hope from such tax increases.

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On top of that, the numbers the debt committee were working with, already assume ending all of the Bush tax cuts in 2013. Long term, we cannot raise taxes high enough to pay for the unfunded liabilities in the entitlement programs, so this plan is a destructive way to kick the can down the road.

Democrats keep saying they want everything on the table, but they are being hypocrites and dishonest. Democrats would not allow repeal of Obamacare to be put on the table. Recently they rejected a deal to increase taxes and make real spending cuts as offered by Pat Toomey. Both issues, taxes and Obamacare, should be part of 2012 elections.

For as little the committee was tasked with saving, it should be easy without dealing with either issue. Given that Tom Barrett’s Trolley is still being planned, I do not think any rational person would suggest they have even tried to cut wasteful spending.

The biggest way Obama undermined real progress on dealing with our debt was when he said he stated he will not allow reform of Social Security to be part of any deal. In Europe and here, bondholders are looking for real reform of the drivers of the debts, the entitlement programs. Without these reforms it is mathematically impossible to ever seriously deal with our debt issues.

Obamacare steals $500 billion from Medicare, and achieves cost reduction through a panel of 15 people that will determine what services not to provide to seniors. This makes fixing Medicare impossible until Obamacare is fixed or repealed. This battle is going to the Supreme Court. Then we will see if we are still a free country with limited government or we now have a government with the power to mandate how we spend our money.

Medicaid is also wrapped into Obamacare. States face increases unfunded mandates under Obamacare, making fixing Medicaid without bankrupting states difficult. Even though the health care entitlements are the bigger issue, the differences are too great to fix now, we need that to be the main focus of 2012 elections.

On the other hand, Social Security is solvable now, both sides know the solution will involve increasing retirement age, and cutting wealthier people out. It must be done without raising taxes. That is just continuing to steal more from each succeeding generation until it all falls apart. Dealing with Social Security now would have the advantage that the effect would be in the out years, while still bringing more confidence in our bonds more than the actual short term savings would suggest. To get it done, both parties have to support it.

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