Omnibus/Stimulus “double dipping” and Obama’s fuzzy math

There’s something to be said for our Congressional types taking the time to read what they are passing on to the POTUS desk to be signed into law. For example, are they just totally oblivious to the money they’ve already allocated to 122 programs in the stimulus that are slated to receive even more in the omnibus?

Or is this a stealth way to shovel more cash towards programs in the dark of night?

Sen. Mitch McConnell drew attention to the dual funding today in a speech on the Senate floor, as well as questioned the rush to pass the spending without adequate scrutiny.

“During his campaign, the President said he would not sign any non-emergency spending until the American people had at least five days to review it on the White House web site.

“So there is no reason for us to rush through this Omnibus Appropriations Bill when the White House has already promised it won’t sign it without the requisite five-day review.

“Besides, we’ve known about the Friday deadline for months, so any pressure to rush this bill is completely manufactured.

“The responsible way forward is not to rush through another giant bill, but for the House to prepare a short-term CR so we have time to study and debate the Omnibus on the floor.

“Back in January, Republicans urged the President to move the Omnibus before the Stimulus. It’s now obvious why:

“The Omni contains funds for 122 programs that were already funded in the Stimulus. It also represents an 8% increase over last year’s regular appropriations, twice the rate of inflation.

“What all this means is that at a time when most Americans are tightening their belts, Washington is going out and buying a bigger one.

“Just consider the deficit: When we passed the last CR, the deficit was $460 billion. In January, the CBO estimated this year’s deficit would be $1.2 trillion. Now, after the past month, we expect the deficit to be $1.6 trillion.

“Now consider some of the recent spending we’ve done or are contemplating doing around here: Some of us are still dizzy from the $1 trillion Stimulus. We’re trying to conceptualize the $3.6 trillion budget the President sent us last week. We’re bracing for the potentially quarter trillion Housing plan that goes into effect tomorrow. And we’re thinking about the $1 to $2 trillion we expect to be asked to spend on the financial sector.

“So we won’t be rushed to spend another $410 billion without the requisite review.

“We need to slow down, and make sure the American people understand how we intend to spend their tax dollars. The Omnibus is a massive bill, it demands our close attention.”

And that’s just the omnibus… another bill that the Dem controlled Congress is likely to push thru with no consensus from across the aisle. Then… like fiscal ducks in a row, Obama’s formal budget request pops up next. Unless, of course, he’s planning on inserting that joke of a plan – his Homeowners Affordability and Stability Plan – inbetween. There are so many spending bills with billion dollar price tags lined up, it takes a conservative’s breath away.

But back to the non-story of double dipping…. The MSM has not bothered to check the omibus against the stimulus Perhpas they don’t know, of maybe they just don’t and care.

Then again, maybe they’re ignoring the debacle in front of their face now to focus on pouring over next month’s budget debacle. And there’s no dearth of criticism of Obama’s fuzzy math. CNN Money questions the Obama admin assumptions for his budget projection today.

Banking on economic recovery
The assumptions: The economy will start its recovery in 2010, with 3.2% growth in gross domestic product (vs. a 1.2% drop this year). GDP will grow 4.0% in 2011 and 4.6% in 2012.

Reality check: The White House’s GDP estimates, while roughly in line with those projected by the Federal Reserve, are higher than average. Some say the administration is being too optimistic.

One can’t accuse Obama of not being the optimist when it comes to budgets. Obama’s razzle dazzling of Congress and the taxpayers with a rosy view of “savings” and increased revenue from “the wealthy” requires – shall we say – the willing suspension of disbelief.

Remember the same group that helped Obama add up his figures is also the same government forecasters who were quite surprised that an economy they predicted would be shrinking by 3.8% actually shrank 6.2%.

But then what’s 2.4% among fiscal friends and pols, right?

Obama’s rosy revenue projection depends upon an economy not shrinking next year, but growing by 3.2% next year, and 4% the following. Instead, on the news of the more dramatic drop, economists such as Mark Zandi of Moody’s Economy, and Allen Sinai of Decision Economics are revising their predictions for a “mild depression” (as opposed to recession) *up*.

Yet, in drawing up the budget, the White House assumed the economy would expand by a robust 3.2 percent in 2010, with growth accelerating to 4 percent over the next three years.

“It’s a hope, a wing and a prayer,” Mr. Sinai said. “It’s a return to a sanguine view of the economy that is simply not justified.”

If, as is widely anticipated, the economy grows more slowly than the White House assumes, revenue will be lower, forcing the government to cut spending, raise taxes or run larger deficits.

Dean Baker of CEPR also questions Bernanke’s estimate of 8.8% unemployment next year. He thinks it’s more likely to be 12% or higher.

Something else I don’t see accommodated for… nor is anyone mentioning it’s effect… is the inevitable devaluation of the dollar with these large deficits, and ensuing hyperinflation. But what the heck do I know…

Raising taxes on high-income filers
The assumptions: Reduce the deficit by $637 billion over 10 years by letting the Bush tax cuts expire in 2011 for singles making more than $200,000 and couples making more than $250,000.

Reality check: Letting the tax cuts expire has a good chance of happening. But the savings that achieves could be undercut if two other revenue raising efforts don’t pan out.

This one really has me scratching my head… Obama is not really gaining any revenue that will reduce our deficit by doing this, since he’s planning on throwing his estimated $318 bil over 10 years back into the spending chute to fund his health care reform. Since we’ve not seen the details on that, and historically all governments who have budgeted for government provided health care have underestimated the costs, we can assume that $318 bil will also fall short of the real costs of Obama’s “reform”.

And of course, paying down the deficit isn’t even considered as a use for that revenue from the high income (i.e. $250K couples or $200K single) earners. Then again, with the economic indicators and massive layoffs, conditions are not exacatly friendly to “wealthy” earning. Just how many of these “high income” earners will there be left to tax? Perhaps Obama is banking on a segment of earners who will be dimishing in numbers, not growing.

Curbing corporate tax breaks
Assumptions: Raise $354 billion by changing a variety of corporate tax provisions, including repealing some tax benefits for oil and gas companies.

Reality check: The biggest piece of it — estimated to raise $210 billion — is a vaguely worded item called “international enforcement, reform deferral and other tax reform policies.”

Currently, profits earned by a US corporations’ overseas subsidaries is not subject to tax until they bring that cash back into the States. Obama feels it’s proper to tax profits earned in another country’s economy.

I’d say this is a terrific idea – if your goal is to drive corporations from the US bedroom and into another country’s arms. The US’s already world high corporate taxes make it a luxury to stay here as is. Start taxing their foreign earnings, and many corporations will find it more inviting to just pull up roots, and head to the vast amount of other developed countries who have been steadily reducing their tax rates for the past two or three years.

We’ve watched this happen in smaller venues such as California and Oregon, with unfriendly corporate taxes and regulations. Even Barbara Boxer, cognizant of California’s business migration, may not be on board with this. She has, in the past, sponsored bipartisan measures that make it more financially inviting for foreign subsidiaries to repatriate their overseas profits.

This corporate unfriendly tax policy, obviously, will accomplish the opposite.

A more predictable reality is that Obama may enjoy some of this overseas profits tax revenue from corporations – at least until they finish packing up the moving vans.

Winding down the war in Iraq
Assumptions: Obama is planning to pull a large number of combat troops out of Iraq by the end of August 2010.

The White House estimates the troop withdrawal, even as operations in Afghanistan continue, will preserve $1.5 trillion over 10 years that would otherwise be spent.

Reality check: The real savings, some say, is actually going to be less since the administration was measuring its proposals against a baseline that assumes the country would spend what it currently spends in Iraq for each of the next 10 years.

Of all the rosy predictions of “hope”, this one has me laughing the most. It is, of course, the easiest to expose for it’s blatant fraud. And for a more indepth view of the military “fuzzy math” savings, we’ll switch over to a Fox News article today focusing primarily on the military budget.

Critics say the administration at once has both grossly over-estimated the amount of money it will save by winding down the war in Iraq and under-estimated the actual price of the Iraq and Afghanistan wars in the years ahead.

“This budget is a lesson in fuzzy math,” House Republican Leader John Boehner said in a statement to FOXNews.com Monday.

The budget includes a “placeholder” estimate of just $50 billion per year for the wars in Iraq and Afghanistan starting in 2011. By comparison, the total war cost for fiscal 2009 is expected to hit $142 billion.

At the same time, Obama’s budget team projects saving $1.5 trillion over 10 years by scaling back the wars. But this estimate assumes the price tag for the wars would exceed $100 billion almost every year through 2019, despite pre-existing commitments to withdraw U.S. troops from Iraq by the end of 2011.

Boehner said the move creates “phantom savings for money they never intended to spend in the first place.”

The estimate basically assumes the Department of Defense would shell out military spending at current rates. War costs hit a high in fiscal 2008, at $188 billion. But Obama’s budget assumes the government would still be dishing out $183.5 billion in 2019 if his administration didn’t step in to rein in spending.

“It’s like a family trying to claim savings of $10,000 by assuming a family vacation and not taking it,” said Brian Riedl, a senior federal budget analyst with the conservative Heritage Foundation.

Riedl said the estimate is unrealistic and allows Obama to claim massive cuts to spending that was never going to take place anyway.

“There was never any plan for us to have Iraq fully staffed with the same number of troops … in 2019 as there was today,” Riedl said.

Using these and others estimates, the White House claimed last week it was acting to head off a whopping $9 trillion deficit 10 years from now.

Starting from 2011, the war operation is currently budgeted to approx $50 bil annually. Perhaps the jihad movements will be marking their calendars with glee…

Out of Iraq and possibly Afghanistan? Check….
No money allocated to re’escalate? Check…

Does anyone wonder if there’s an emergency contingency fund anywhere? What if we have another 911, Katrina, major devastation for earthquakes or volcano eruptions? And that’s just on our shores. How about foreign aid such as we’ve done with the tsunami in Indonesia etal? Any rainy day fund hanging around anywhere for the god-forbid unforeseen that can happen?

sigh… I guess they think it all works out as long as the Fed keeps a printing press working, churning out the paper money.

Perhaps the most disheartening of all, these illustrations of fuzzy math are only scratching the surface. With a stimulus bill 1000 pgs plus in size, and an omnibus that appears to be either sneaking in more funding (or they didn’t realize they already funded it…), we’re already going unimaginably deep in debt over a month or so time span.

And we’ve only just begun.