This story was written by Allysia Finley, The Stanford Daily
Before becoming a civil servant, one should have to pass a fiscal responsibility exam. Lets call it the FRE. My guess is that most of our politicians would fail.
Despite the federal governments $455 billion deficit (it is expected to reach over a trillion in 2009), Obama supported a $10-billion expansion of a pre-K education program, a $150-billion renewable energy investment and a government healthcare plan that the non-partisan Tax Policy Center estimates will cost $1 trillion over the next 10 years. All in all, Obamas policy plans would add another $3.6 trillion to the deficit by 2018, according to the Tax Policy Center.
But to be fair and honest, its not just Obama. Bush has topped the list of presidents on almost all kinds of spending, including regulatory spending. According to Richard Viguerie, a principal architect of the Reagan Revolution, the federal government budget increased by 33 percent during Bushs first five years in office. Discretionary spending grew at a faster rate than under Lyndon B. Johnson, and pork-barrel earmarks skyrocketed by 121 percent.
Lately, the Capitol has become the finance sectors ATM, as ravenous lobbyists from banks, savings and loans associations and insurers line up for their piece of the pie. When they blow through their billions, theyll just come back for more, like AIG. After already giving the Big Three American automakers a $25-billion loan, Democrats are pushing for a $50-billion stimulus for these same companies. Theres no accountability.
But since the feds seem quite willing to bail out almost anyone and everyone, why dont they bail out California? After all, California desperately needs it. The state right now is running a $27.8 billion deficit. Despite Gov. Arnold Schwarzeneggers promises to exercise fiscal discipline, hes succumbed to the Democratic legislature on most spending measures and has become a typical, tax-borrow-and-spend liberal. When times were flush, California made huge financial contracts and outlays, and now when times arent flush, the state wants to continue spending as if it is still reeling in the money.
On the last ballot, Schwarzenegger supported the $19.4-billion high-speed railway, the $2-billion childrens hospital bond and the $1.8-billion veterans bond. All of these, of course, were worthy causes, but so are many other things. Increased grant money for disadvantaged students and funds for cancer research are also worthy causes. But taxpayers cannot afford to subsidize every worthy cause much less to subsidize unworthy, incompetent, bankrupt businesses like the Big Three automakers. Where is all the money going to come from?
Taxes? Schwarzenegger has proposed a 1.5-percent increase in sales tax and the extension of the sales tax to services. Rather than wrangle with unions and cut state employee benefits (which are better than almost anywhere in the private sector), hed rather distribute the costs of the states fiscal irresponsibility over the entire population. Obama, on the other hand, would rather concentrate the costs of the federal governments irresponsibility on the wealthy.
Under Obamas tax plan, 48 percent of people will not pay any income tax and many of these people will even receive a check from the government. Those who earn more than $250,000 will see their tax burden increase by 11 percent, even though the top one percent already pay 40 percent of the nations income taxes while earning 21 percent of the nations income, according to the Tax Foundation.
But if Obama taxes the rich too much, they are going to leave. This is in essence what has happened to California, as the states steep business taxes and highly progressive income tax have caused many wealthy people and businesses to move out of the state or shelter ther money. And now, during the economic downturn, the state is facing an even bigger shortfall since income and business taxes are lower than expected. Thats the problem with relying so heavily on the wealthy for revenue. When their pocketbooks suffer, so does our governments purse. Under Obamas plan, the financial fate of the wealthy and that of the nation will just become even more entwined.
Gov. Schwarzenegger, President Bush and President-elect Obama need to start exercising their veto power and requiring that legislatures spend within their means, without expanding their means. If people and most businesses (except for those pleading for bailouts) have to do it, so should the government.