Monday, August 3, 2009

Middle Class Beware

Beware of things to come as the results of the actions of the Democrat led Congress and Obama’s bold initiatives. The $787 billion stimulus bill and the $1 trillion budget are saddling the United States with a deficit that is expected to be $1.8 trillion next year. The deficit does not include the Cap and Trade and health care reform that are currently being debated on Capitol Hill. Over the weekend Treasury Secretary Timothy Geithner was on ABC’s “This Week” when he said, “We will not get this economy back on track, recovery will be not strong and sustained, unless we can convince the American people that we’re going to have the will to bring these deficits down once recovery is firmly established.”

President Obama’s plan for recovery is not complete until health care reform and cap and trade are passed. Both of these pieces of legislation are exempt from the “pay go” philosophy. It is estimated that health care reform will add another $1 trillion, spread over ten years, to the deficit. When pressed on how the United States is planning to pay down the deficit a campaign promise by President Obama to not raise “any taxes on those making less than $250,000 a year” was put in jeopardy when Geithner said “it is absolutely right” that the middle class tax hike is on the table.

The Senate will be debating whether to approve the $2 billion, which the House of Representatives approved last week, addition to the “Cash for Clunkers” program. The plan is to divert the $2 billion from money already set aside for another program in the Stimulus Bill. As I stated last week, why didn’t someone do the math to start with? It is a bit disheartening when reading the headlines on how “successful” the CARS program has been.

The difficulty is in the details of the program that plagues the claim of success. As displayed by the Ford F150 swap from a 2000 to a 2009 only improves gas mileage by 1 mpg. Please tell me how this gets a gas guzzler off the road. Americans should look at the CARS program and the mounting deficit to see how short sighted Congress and President Obama is right now. As Rep. Lewis stated in the Wall Street Journal, “if this is how the government is going to handle billion-dollar programs affecting all Americans, I ask, whatever will we do if this administration takes control of our health care?”

Rep. Lewis’s concern is valid. It is not just a symptom of Obama’s administration as examples are abound of entitlement programs that government has mishandled. To make matters worse is the manner in which Obama’s administration is moving things through Congress. The Stimulus Bill was read prior to passing and the Cap and Trade bill had about 390 pages added to the bill at 3 am only 5 hours prior to debating and passing it. The kicker on Cap and Trade was as the House debated, the bill was still being assembled and only two copies existed; neither copy was complete when the final vote was tallied.

Ford reported that their July sales rose nearly 1.6 percent over 2008 July sales which Ford attributed to the “cash for clunkers” program giving them the boast. It will be interesting to hear how the Government owned car companies performed in July. Which makes one re-think the role of an ever expanding government under the Obama administration and it is no longer a question if but when will the middle class see a tax hike?