Mr Obama To “Stop Spending” In His State of the Nation Speech, vs. Economics 101: Moral Hazard

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Which Obama will show up for his first State of the Nation speech Wednesday?

Will it be Das HopenChange Obama?

Or will it be “ve shall neffer moof, ve shall neffer halt, Das HopenChange vill be ze mantra, ObamaKare Uber Alles!” — ? Will it be “Nehmen Sie Keine Gefangenen” Obama?

Will it be contrite, understanding, all-encompassing, Mr Middle Class Obama — who, to quote someone from the past — “feels your pain” and is willing to take a new course tack?

Already, Our Hero, in “stage prep” for his Big Day intimates, from The Washington Post:

Under mounting pressure to rein in mammoth budget deficits, President Obama will propose in his State of the Union address a three-year freeze on federal funding that is not related to national security, a concession to public concern about government spending that could dramatically curtail Obama’s legislative ambitions.

On the other hand, Our Hero specifically campaigned against any sort of spending freeze, at least four times.

How did we get here? Perhaps you might wish to spend a minute or so on this video:

(Thanks to cj at Angry American for a tip to the video below:)

Glenn Beck recently said that it’s the “Progressives” inside the Demorat Party that are currently undermining and corroding its power, and that there are “Progressives” in the Republican Party as well — and that the GOP is next in line for corrupting Progressive corrosion.
Is it an “amazing coincidence” that Our Hero seems to have changed his tune in, say, the space of less than two days?
You tell me.
Ladies and gentlemen: this is a Head Fake.

BZ
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17 thoughts on “Mr Obama To “Stop Spending” In His State of the Nation Speech, vs. Economics 101: Moral Hazard”

  1. BZ,
    Good call. It’s a head fake for sure. Obama hopes that he’ll quell the growing dissent by promising something he has no intention of allowing to be delivered. He has no power to curtail spending.

    He’ll just blame it on the congress when they refuse to go along with his proposal. A perfect strategy when you throw in an adoring media and a legion of lemmings who will follow him off any cliff. Good pick-up.

  2. I’ve heard it said that this will only save about 25 billion a year, so big wup.
    There will be no real cutting until we wrap up the two wars and downsize the military. Big military = big debt.
    The reason the “bi partisan” debt reduction task force tubed in the senate is because democrats and republican senators had no stomach for cutting social security and medicare, which eat up most of federal spending (that is, besides interest on the debt and the military). Social programs and overseas aid, while pilloried by the right wind are merely a drop in the bucket to the three other areas that I just mentioned.

  4. Social Security: 21.05%
    Medicare: 13.34%
    Medicaid and SCHIP: 7.32%
    Unemployment Comp/Welfare: 11.77%
    Total: 53.48%
    (More than half!)

    Deptartment of Defense: 16.85%
    Ref. here.

    When ignorant people rant using bad numbers, other ignorant people can be led to true ignorance.

  5. Grey Beard, let’s look at some actual numbers:
    Mandatory spending: $1.89 trillion
    $644 billion – Social Security
    $408 billion – Medicare
    $224 billion – Medicaid and the State Children’s Health Insurance Program (SCHIP)
    $360 billion – Unemployment/Welfare/Other mandatory spending
    $260 billion – Interest on National Debt

    Discretionary spending: $1.21 trillion
    $515.4 billion – United States Department of Defense
    $145.2 billion(2008*) – Global War on Terror
    $70.4 billion – United States Department of Health and Human Services
    $45.4 billion – United States Department of Education
    $44.8 billion – United States Department of Veterans Affairs
    $38.5 billion – United States Department of Housing and Urban Development
    $38.3 billion – State and Other International Programs
    $37.6 billion – United States Department of Homeland Security
    $25.0 billion – United States Department of Energy
    $20.8 billion – United States Department of Agriculture
    $20.3 billion – United States Department of Justice
    $17.6 billion – National Aeronautics and Space Administration
    $12.5 billion – United States Department of the Treasury
    $11.5 billion – United States Department of Transportation
    $10.6 billion – United States Department of the Interior
    $10.5 billion – United States Department of Labor
    $8.4 billion – Social Security Administration
    $7.1 billion – United States Environmental Protection Agency
    $6.9 billion – National Science Foundation
    $6.3 billion – Judicial branch (United States federal courts)
    $4.7 billion – Legislative branch (United States Congress)
    $4.7 billion – United States Army Corps of Engineers
    $0.4 billion – Executive Office of the President
    $0.7 billion – Small Business Administration
    $7.2 billion – Other agencies
    $39.0 billion(2008*) – Other Off-budget Discretionary Spending

    Mandatory spending (soc sec, medicare, medicaid, chip, unemployment, and INTEREST ON THE DEBT which you left out of your figures) is nearly 61 percent of spending.

    Discretionary spending (DoD, WoT,NASA, AG, DoT, ED, Energy, everything else you can basically name) accounts for 1.21 trillion or 39% of the budget. The military (DoD, GWoT) accounts for over half of that spending, or over 600 billion. Your 16.85% figure excludes the Global War on Terror, so the real figure for military spending is actually more like 21.3 percent. I’m using your pie chart, so if you can’t even do simple addition and take everything on face value, who is ignorant? And if you are not ignorant, why are you purposely leaving out data? To bolster your weak argument? Just because somebody has an honest disagreement with you regarding budget priorities does not make it an ignorant rant. Would you run your mouth like that in polite company?
    If we were not fighting these wars, (and let’s keep in mind that this is BEFORE ramping up in Afghanistan this year) we would be spending 145 billion less in the federal budget. Combine that with some more cost cutting at DoD and I’m pretty sure we could get that down to 250 billion. Even if we completely elininated Ag, VA, and a bunch of other line items, we are getting nowhere near that close.

  7. The only way that I see is to reduce the scope of the Federal government to its Constitutional powers, which are actually quite limited. Because so many people are dependent on the government handouts we can’t do it overnight but the scope, cost, and power of the Federal Government has to be seriously reduced.

  8. Fascinating stuff this spending. Now which are mentioned as Constitutional affairs or are necessary as part of the federal government to just run the government?

    Service on the debt, DoD, VA (due to DoD connection and what happened after the Revolution), only a few parts of DHS (ICE, Border Patrol, USCG), DoJ, Treasury, 3 branches (Judicial, Legislative, Executive), USACE (via DoD), and a few minor things like GAO, GPO, BLM, USGS, NOAA… call it $800 billion.

    All the extras not mentioned? $2.3 trillion.

    Tell ya what, kill SSN and give everyone who wants it a lump sum payment of what they paid in, tax free.

    Add up Medicare/Medicaid, kill both, add the amount, divide by 2, and block grant that to the States for medical services by population. No strings attached.

    Anything that is a threat to the public can go to DoJ or DoD.

    You gotta figure we would double the National Debt at one shot, say triple that line item, add the $300 billion from the block grant, and have a running budget of $1.5 trillion or so. The federal workforce is cut at one shot to something pretty damned small, the amount needed to pay for all of this is well within current taxation, and if we make medical savings accounts have roll-overs and pay no taxes on that, plus give full tax deductibility for all medical services so you can write them off, we can have lots more health care, take care of the poor without it via the States, protect the Nation, cut the deficit to zilch, dump cash back to everyone who paid into SSN so they can decide what to do with it, and maybe even cut taxes just a smidge.

    I’ll vote for that.

    Back to basics government.

    Get it out of my life, my bedroom, my wallet, and stop it from trying to tell me how to live my own life. I am more than willing to give what little I have as spare cash to charity, as I already do, and damn if that would go further with 100% deductibility too… instead of ‘spreading the wealth around’ why don’t we let folks who earn it, keep it and exercise their own judgment over what needs to be done?

    The scolds, nannystaters and those that worry about every damned little thing that people SHOULD DO spend too damned much time doing that and not DOING ANYTHING GOOD THEMSELVES… thus making the problem worse, not better. And getting folks like me fed up with the scolds, finger waggers, worry warts and ‘there really ought to be a law…’ idiots. I can do a better job with my money doing good works than government will ever be able to do. So can you… if you can get out of the ‘we just HAVE TO do X’ where X changes every other Tuesday and twice on Sunday.

    But then I’ve been employed by the federal government inside DoD… I am a bit biased.

  11. “Spending Freeze”, I gues so after increasing the budgets in virtually all departments–now lock in those increase. Why three years, oh that will take us past the 2012 election. This will be nothing but smoke and mirrors tonight, sadly a few will buy the magic elixer sold by this forked tongued snake oil salesman. I’m sick of this phoney and his double talk. Das hopeandchange ist kaputt!

  12. Ron hit my point on the head – after jacking the budget up to an obscene level he now wants to freeze spending?

    This is nothing but smoke and mirrors designed to deflect the criticism that resulted in Brown’s victory in Massachusetts. It isn’t gonna work.

    cjh

  14. And Pelosi thinks the Defense budget should be part of this ‘freeze’. In the middle of fighting two wars, she wants to freeze funding for our military.

    It leaves me speechless.

    cjh

  15. TexasFag- Go back to Crawford for another helping of W’s mangravy. I hear you do your best “consulting” on your knees.
    GB- If you just ignore me, after trying to prove my comment wrong, I must be right. You have proven yourself to be an arrogant boor.

    Shoprat- I agree with you that I would love to slowly wind down the burden the Federal Government places on Americans. Cutting “Defense” (why don’t we just be honest and call it the War Dept. like we used to? We’re “defending” nothing)spending for useless wars like Iraq, yet another aircraft carrier, sleath bombers and a bunch of other stupid war machines that do NOTHING to win the war we are fighting in Afghanistan (which probably is unwinnable if your definition of winning is ridding that shit hole of the Taliban and finally killing off Bin Laden and his group of thugs once and for all). Start there. Reform healthcare and get some savings there. Rasie the Soc. Sec retirement age to 70 for everybody who is not disabled (sorry BZ, we’ll need you to work an extra five years to pay for those wars and the Wall St. bonuses) and reduce the benefit by 10%. And means test it. If you are a millionaire you don’t need to collect the benefits.
    AJ- I don’t agree with everything you said, but I like some of your ideas. They’ll NEVER give you your money back for Soc. Sec., face it: it’s just another tax. The “lock box” on “your account” has been a lie since the 60’s. They are paying for Grandma with “your” money.
    Cutting healthcare by half and letting the states administer it would be a disaster.
    Problem with the two parties as I see is this: Democrats stay out of your bedroom but want in your wallet. Republicans stay out of your wallet but want in your bedroom. Both want to spend more money than the taxes allow. Democrats want to raise taxes, Republicans just “charge it” and run up the debt. Niether want to cut anything. Truth is niether does anyone here. If it affects them.

  16. Tim – Coming out of the 1980’s I knew that I would see nothing from SSN: it would be dead by the time I reached retirement age. It will be lucky not to bankrupt us by 2020.

    Block granting money to the States works far better than Federal overhead. Consider that 30% or so of the money in federally subsidized healthcare goes to overhead… well, if it was well run it would, but on average its 55%. I say that having been a federal bureaucrat who had to find those numbers for programmatics, and HHS doesn’t even get to 45% efficiency, so the 55% overhead is being nice to them. When I say block granting half the money to the States is better than running it via the federal government, I mean it.

    Our healthcare system from the subsidies given for insurance (which we do via the tax code for businesses and individuals) means that the actual cost of that insurance is not absorbed by those using it. Thus, when allowing for money to be written off people feel that they are getting a ‘bargain’ and when they do that they do not use sense to contain personal costs. This makes for abuse of the system which requires more overhead to weed out abuses… which increases the overall cost of the system. Add in defensive medicine to prevent lawsuits, with multiple tests to confirm a diagnosis when one is more than sufficient for the overwhelming majority of cases and you then create a system with extra cost built into it because the costs of lawsuits are so high. Not just to the doctor, carrying malpractice insurance which increases the overhead of the practice, but to the insurance company which needs to ensure it has cash reserves to fight lawsuits and ensure that payoffs for them can be done (either via negotiation or judgment).

    I don’t like this system as it doesn’t work well. Patients should be told that single diagnostic tests are often sufficient for a diagnosis and then sign off on that knowledge when they don’t want further tests. False positives and false negatives causing legal headaches make the system more expensive even though it is a known variable of testing. Generally Regarded As Safe medicines aren’t… sucks, that. Drugs having gone through years of approval, testing and so on, with millions of users safely using it may still have a hundred or so with bad side effects. I have that in spades, but prepared my life for complications due to another medical condition which I knew would have complications at some point, so I was ready for a sudden downturn in my health.

    I prepared my life for bad health and never had the opportunity to plan it for good health. Ever. Yet I am subsidizing, via the tax code and overhead of defensive medicine, those that will not plan for a sudden downturn in health and will not do anything to set aside from good years to prepare for bad. Now our entire society is supposed to pay for that?

    I have even prepared to live to retirement age and beyond, although all the demographics are against me on that point. So I pay for something I know I won’t get, know I won’t live to get it, and have my personal preparations impacted by the insanity of the tax code that limits my good sense in leading my life? A life with poor health to begin with. And yet I felt I needed to give back to society by working in the federal government… and volunteering for experimental medicine from NIH. Then I get folks questioning my commitment to the Nation and our people.

    And I’m getting a rather bad attitude towards people who question that. And who want me to pay for those who can’t damned well plan their own lives because the State will take care of them. They no longer value the priceless and the cost skyrockets. And yet I offer solutions that can help us get out of this mess… it is not an easy road, but it sure as hell beats the one we are on.

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