Obama is on track to become the biggest-spending president since 1930

[I AM NOT THAT GUY 5,715]

Obama Defeats FDR (in Spending Other People’s Money)

After he signed a law last week authorizing the U.S. Treasury to borrow an additional $1.9 trillion, President Barack Obama delivered a characteristically sanctimonious speech. It was about his deep commitment to frugality.

“After a decade of profligacy, the American people are tired of politicians who talk the talk but don’t walk the walk when it comes to fiscal responsibility,” he said. “It’s easy to get up in front of the cameras and rant against exploding deficits. What’s hard is actually getting deficits under control. But that’s what we must do. Like families across the country, we have to take responsibility for every dollar we spend.”

To put Obama’s Olympian hypocrisy in perspective, one need only examine the federal budget tables posted on the White House website by Obama’s own Office of Management and Budget.

They reveal these startling facts: When calculated by the average annual percentage of the Gross Domestic Product that he will spend during his presidency, Obama is on track to become the biggest-spending president since 1930, the earliest year reported on the OMB’s historical chart of spending as a percentage of GDP. When calculated by the average annual percentage of GDP he will borrow during his presidency, Obama is on track to become the greatest debter president since Franklin Roosevelt.

Obama will outspend and out-borrow the admittedly profligate George W. Bush, a man Obama and his lieutenants routinely malign for fiscal recklessness and who, when in office, was often hailed even by his allies as a Big Government Republican. Obama will even outspend—but not quite out-borrow—his fellow welfare-state liberal FDR, who had to contend with both the Depression and World War II.

In determining this was the case, I credited the presidents prior to Obama with the federal spending and borrowing that occurred during the fiscal years that started when they were in office. I credited Obama with the spending and borrowing that his own OMB estimates will occur during the fiscal years from 2010 to 2013, which are the four fiscal years starting during Obama’s four-year term. (Before fiscal 1977, fiscal years ran from July 1 to June 30. Since then, they have run from Oct. 1 to Sept. 30.)

FDR was inaugurated in March 1933 and died in April 1945. He is thus responsible for the 12 fiscal years from 1934 to 1945. During those years of depression and world war, according to OMB, federal spending averaged 19.35 percent of GDP. During Obama’s four fiscal years, OMB estimates spending will average 24.13 percent of GDP. That is about 25 percent more than under FDR.

In the first eight fiscal years of FDR’s presidency, before Japan attacked Pearl Harbor, federal spending as a percentage of GDP never exceeded 12 (despite the Depression). During those years, it averaged only 9.85 percent. Under Obama, annual spending as a percentage of GDP will average almost two-and-a-half times that much.

In fiscal 1942, when the U.S. started dramatically ramping up expenditures to fight World War II, federal spending equaled 24.3 percent of GDP. In 2010, the first full fiscal year of the Obama era, spending will reach 25.4 percent of GDP.

Under current estimates, Obama will not beat FDR’s overall record for borrowing, although he will nearly double FDR’s pre-World War II rate of borrowing. From 1934-41, FDR ran annual deficits that averaged 3.56 percent of GDP. Obama, according to OMB, will run average annual deficits of 7.05 percent GDP. When you include the war years of 1942-45, FDR ran average annual deficits of 9.76 percent of GDP. Even without a world war, Obama’s overall prospective borrowing is at least competitive with FDR’s.

And Obama and FDR share one historic debt-accumulating distinction. By OMB’s calculation, they are the only two presidents since 1930 to run up annual deficits that reached double figures as a percentage of GDP. Obama will run up a deficit this year of 10.6 percent of GDP. The last time the deficit hit double digits as a percentage of GDP was 1945 -- when Germany and Japan surrendered.

The U.S. won the Cold War without ever running a double-digit deficit. President Reagan’s highest deficit was 6 percent of GDP in 1983 -- and he bankrupted the Soviet Union not the United States.

So how does Obama compare with the much-maligned George W. Bush? In Bush’s eight fiscal years, annual federal spending averaged 20.43 percent of GDP, significantly less than Obama’s estimated 24.13 percent of GDP.

Bush ran annual deficits that averaged 3.4 percent of GDP—and that includes fiscal 2009, when the deficit soared to 9.9 percent of GDP and Obama signed a $787 billion stimulus bill (some of which was spent in fiscal 2009) after Bush left office. Obama, according to OMB, will run deficits that average 7.05 percent of GDP—or more than twice the average deficits under Bush.

The bottom line on Obama: He puts our money where his mouth is.

http://cnsnews.com/commentary/article/61454

[alienlovechild 75]

FDR was inaugurated in March 1933 and died in April 1945. He is thus responsible for the 12 fiscal years from 1934 to 1945. During those years of depression and world war, according to OMB, federal spending averaged 19.35 percent of GDP. During Obama’s four fiscal years, OMB estimates spending will average 24.13 percent of GDP. That is about 25 percent more than under FDR.

In the first eight fiscal years of FDR’s presidency, before Japan attacked Pearl Harbor, federal spending as a percentage of GDP never exceeded 12 (despite the Depression). During those years, it averaged only 9.85 percent. Under Obama, annual spending as a percentage of GDP will average almost two-and-a-half times that much.

In fiscal 1942, when the U.S. started dramatically ramping up expenditures to fight World War II, federal spending equaled 24.3 percent of GDP. In 2010, the first full fiscal year of the Obama era, spending will reach 25.4 percent of GDP.

Under current estimates, Obama will not beat FDR’s overall record for borrowing, although he will nearly double FDR’s pre-World War II rate of borrowing. From 1934-41, FDR ran annual deficits that averaged 3.56 percent of GDP. Obama, according to OMB, will run average annual deficits of 7.05 percent GDP. When you include the war years of 1942-45, FDR ran average annual deficits of 9.76 percent of GDP. Even without a world war, Obama’s overall prospective borrowing is at least competitive with FDR’s.

The U.S. won the Cold War without ever running a double-digit deficit. President Reagan’s highest deficit was 6 percent of GDP in 1983 -- and he bankrupted the Soviet Union not the United States.

So how does Obama compare with the much-maligned George W. Bush? In Bush’s eight fiscal years, annual federal spending averaged 20.43 percent of GDP, significantly less than Obama’s estimated 24.13 percent of GDP.

Bush ran annual deficits that averaged 3.4 percent of GDP—and that includes fiscal 2009, when the deficit soared to 9.9 percent of GDP and Obama signed a $787 billion stimulus bill (some of which was spent in fiscal 2009) after Bush left office. Obama, according to OMB, will run deficits that average 7.05 percent of GDP—or more than twice the average deficits under Bush.

All of the people here who complained about Bush's overspending are now cheering Obama on. They really believe he needs to spend even more to get the economy moving.

[Ali G. 37]

They really believe he needs to spend even more to get the economy moving.

I thought that was a given, since a recession is a contraction of the economy.

If repubs have any better ideas, I am all ears.

[Ban Hammer 13,352]

I thought that was a given, since a recession is a contraction of the economy.

If repubs have any better ideas, I am all ears.

tax breaks to businesses for hiring new workers would be a good start.

[scandal 951]

tax breaks to businesses for hiring new workers would be a good start.

Business tax breaks which were included in the Obama stimulus bill.

I should think this one in particular, Charles, would be one you would heartily approve of:

Work opportunity tax credit: The act creates two new targeted groups for the work opportunity tax credit, “disconnected youth” and unemployed veterans (section 51(d)(14)). Employers who hire members of these groups during 2009 or 2010 may be eligible to take the credit

.

Here's the complete list:

http://www.journalofaccountancy.com/Web/Sm...sinStimulusBill

Small Business Tax Breaks in the Stimulus Package

February 15, 2009

The American Recovery and Reinvestment Act of 2009 contains numerous tax provisions aimed at small businesses.

Bonus depreciation: IRC section 168(k) is amended to extend the 50% first-year bonus depreciation through 2009 (through 2010 for certain transportation property and aircraft).

The election to accelerate AMT and research credits in lieu of taking the bonus depreciation (which had been introduced last year by the Housing Assistance Tax Act, P.L. 110-289) is also extended to qualifying property placed in service through 2009. Special rules apply to taxpayers who had already made this election for property placed in service in 2008.

Section 179 expensing: The increase in the section 179 expensing amount to $250,000 and the increase in the phaseout threshold to $800,000 are both extended through 2009. The amounts had originally been temporarily increased (for 2008) by the Economic Stimulus Act of 2008, P.L. 110-185.

Carryback of small business NOLs: Eligible small businesses are allowed to carry their 2008 net operating losses (NOLs) back for five years (section 172(b)(1)(H)). An eligible small business is one that has average gross receipts of $15 million or less (using the gross receipts test from section 448©). The act gives Treasury authority to publish anti-abuse rules relating to this provision.

Small business estimated taxes: Qualified individuals are allowed (for 2009 only) to make estimated tax payments that equal only 90% of their preceding tax year liability instead of 100% (under section 6654(d)(1)). To be a qualified individual, the taxpayer must have adjusted gross income (AGI) of less than $500,000 and more than 50% of the individual’s gross income must come from a small business (a business with an average of fewer than 500 employees).

Work opportunity tax credit: The act creates two new targeted groups for the work opportunity tax credit, “disconnected youth” and unemployed veterans (section 51(d)(14)). Employers who hire members of these groups during 2009 or 2010 may be eligible to take the credit.

Discharge of business indebtedness: The act allows certain businesses to recognize cancellation of indebtedness income over five years, starting in 2014, if the business repurchases specific types of debt in 2009 or 2010 (section 108(i)).

Qualified small business stock: The section 1202 exclusion of gain from the sale of qualified small business stock is increased from 50% to 75%, for stock acquired after the enactment date and before Jan. 1, 2011.

S corporations: The recognition period for assets subject to the built-in gains tax is reduced from 10 years to seven years for S corporation tax years beginning in 2009 and 2010 (Section 1374(d)(7)).

Limitations of loss carryforwards: For businesses that have ownership changes pursuant to a restructuring plan required by a Treasury loan agreement or line of credit under the bailout provisions of the Emergency Economic Stabilization Act, P.L. 110-343, the section 382 limitation on loss carryforwards will not apply.

New markets tax credit: The section 45D new markets tax credit investments limit is increased for 2008 and 2009 to $5 million.

Notice 2008-83 restricted: The act expresses Congress’s doubt about the legal authority of Notice 2008-83 (the “Wells Fargo Ruling”) and states that it is inconsistent with Congressional intent in enacting section 382(m). Therefore, the act restricts the notice’s effect to changes in ownership occurring (or subject to a binding written contract entered into) on or before Jan. 16, 2009. (For more on the questions surrounding Notice 2008-83, see White, “Notice 2008-83: The Ripples Keep Spreading,” Tax Insider (Feb. 2, 2009).)

Energy credits: The act also includes a number of energy incentives aimed at both individuals and businesses, including increases in the section 25C residential energy property credit, the section 25D residential energy efficiency property credit, and the energy investment credit under section 48.

[Ali G. 37]

tax breaks to businesses for hiring new workers would be a good start.

I hear that a lot, however, what use is this when the work is simply not there? No one is going to hire people when the work is not existent. Certainly not in the US, where companies count their dimes. That does not mean that tax breaks will not work, it means that tax breaks must go along with a stimulus of some sort; like the desperately needed large infrastructure projects.

[I AM NOT THAT GUY 5,715]

There is a one shot $35,000 loan, that none of my business buddies are taking. The only ones that it would appeal to are those that can't qualify. In other words, if you are making money, you don't want it, and if you didn't make any money in 2008, or 2009, you can't qualify.

Edited February 18, 2010 by Lone Ranger

[I AM NOT THAT GUY 5,715]

I hear that a lot, however, what use is this when the work is simply not there? No one is going to hire people when the work is not existent. Certainly not in the US, where companies count their dimes. That does not mean that tax breaks will not work, it means that tax breaks must go along with a stimulus of some sort; like the desperately needed large infrastructure projects.

It's not the work is not there. The problem is nobody knows what is going to happen over the next 6 months or so, so nobody is investing in anything.

[Ali G. 37]

It's not the work is not there. The problem is nobody knows what is going to happen over the next 6 months or so, so nobody is investing in anything.

Exactly, contraction caused by fear in investing is a normal part of a recession. Anyone assuming that Reaganomics used during stagflation will work during this great recession is fooling themselves. What businesses need is the government to tender out jobs and fire up the market. Gradually this will start to build trust and momentum again.

The other thing would be for companies to start returning jobs they initially exported to China, in order to save a dime, back to America. However, that is probably not going to happen as profit is more important than the growth of America.

Edited February 18, 2010 by Booyah

[I AM NOT THAT GUY 5,715]

Exactly, contraction caused by fear in investing is a normal part of a recession. Anyone assuming that Reaganomics used during stagflation will work during this great recession is fooling themselves. What businesses need is the government to tender out jobs and fire up the market. Gradually this will start to build trust and momentum again.

The other thing would be for companies to start returning jobs they initially exported to China, in order to save a dime, back to America. However, that is probably not going to happen as profit is more important than the growth of America.

Wrong. What businesses and investors need is consistency. I don't care what the rules are, as long as I can rely on things not changing long enough to make a profit. Congress, and the White House, need to put their hands in their pockets, and shut the #### up for a while. Let capitalists do their thing, and watch the economy turn around in about six months.

[Ali G. 37]

Wrong. What businesses and investors need is consistency. I don't care what the rules are, as long as I can rely on things not changing long enough to make a profit. Congress, and the White House, need to put their hands in their pockets, and shut the #### up for a while. Let capitalists do their thing, and watch the economy turn around in about six months.

Capitalist have done "their thing", hence, America's climatic and embarrassing fall to the bottom. The thought that the same people who have screwed up the country for the last x recessions will be the answer is at most laughable. Furthermore, something straight out of the book of Rush, a dropout.

The capitalist have gotten exactly what they wanted. They have allowed the workforce supply to increase to such a point that they now get to make they rules regarding salaries. Remember, we were convicts rather than pilgrims, as such, I can spot a scam when I see one.

Edited February 18, 2010 by Booyah

[I AM NOT THAT GUY 5,715]

Capitalist have done "their thing", hence, America's climatic and embarrassing fall to the bottom. The thought that the same people who have screwed up the country for the last x recessions will be the answer is at most laughable. Furthermore, something straight out of the book of Rush, a dropout.

The capitalist have gotten exactly what they wanted. They have allowed the workforce supply to increase to such a point that they now get to make they rules regarding salaries. Remember, we were convicts rather than pilgrims, as such, I can spot a scam when I see one.

Go back to yer socialist land of Oz. Just click yer heels together three times, and say, "I am a commie wuss."

[ready4ONE 5,400]

It's not the work is not there. The problem is nobody knows what is going to happen over the next 6 months or so, so nobody is investing in anything.

And in your mind that is entirely Obama's fault how?

Go back to yer socialist land of Oz. Just click yer heels together three times, and say, "I am a commie wuss."

Ah the socialist/commie accusation gambit... Good call!

[ready4ONE 5,400]

Wrong. What businesses and investors need is consistency. I don't care what the rules are, as long as I can rely on things not changing long enough to make a profit. Congress, and the White House, need to put their hands in their pockets, and shut the #### up for a while. Let capitalists do their thing, and watch the economy turn around in about six months.

While one does hate to agree with socialist/communists from Aus, Booyah rightly points out 'capitalists' doing their 'thing' is what caused the mess in the first place. Blame goes to both parties for getting paid to let them do exactly as they wished of course, but I would not place total faith in 'capitalists' to turn this ship around.

Oh and by the way, the problems are world wide, not just here in the USA.

[I AM NOT THAT GUY 5,715]

While one does hate to agree with socialist/communists from Aus, Booyah rightly points out 'capitalists' doing their 'thing' is what caused the mess in the first place. Blame goes to both parties for getting paid to let them do exactly as they wished of course, but I would not place total faith in 'capitalists' to turn this ship around.

Oh and by the way, the problems are world wide, not just here in the USA.

Thanks for proving my point.