Even Democrats, like Senate Budget Committee Chairman Kent Conrad, are questioning its seriousness. It makes ridiculous assumptions about the economy growing super fast, while inflation will be super low. It assumes that the private sector can be squeezed for a lot more in taxes, and it adds another 5,000 IRS agents in the budget to keep us all in line. And yet it doesn't do any real cost cutting until after the next election, so that re-election goodies can keep piling up, while debt repayments keep getting pushed off into the future.
Continue Reading Below
But the future is now. Ben Bernanke's Federal Reserve has been buying up so much government debt that the Fed has now jumped ahead of China as the biggest holder of U.S. Treasury bonds.The momentum is building for a big hit from inflation, as the Fed keeps printing more cash to buy up more bonds.
We're already seeing inflation in commodities, which have hit us at the grocery stores. But even bigger hits are just around the corner. Proctor & Gamble (NYSE:PG) just announced that they had to pay $1 billion for all the commodities that go into their products -- twice what they were expecting to pay. Some of these costs will be passed on to you and some will cut into the company's profits. Either way they're going to take a much bigger bite out of the economy than the President's budget admits to.
For the president to ignore all this because of the political games he's playing with Republicans is more than cynical; it's an abandonment of the pledge he took to put the nation's interests above his own plans for re-election.
Of course, Republicans aren't off the hook. We've confronted Republicans on Scoreboard who wanted to keep spending billions on things like fast trains and other money losers. And not many Republicans want to look into saving money on entitlements.
A big exception is House Budget Chairman Paul Ryan, who last summer wrote up a plan to give vouchers to Medicare recipients, giving them more freedom to go out and find medical plans that suit them. So far, Congressmen Ryan hasn't had a lot of support from other Republicans for this.And there's even less support for Sen. Rand Paul's plans to cut half a trillion dollars a year from the budget without even touching Social Security of Medicare.
But even the most modest Republican plan is so more serious that the president's budget plan. He may try to spook Americans into fears of another government shutdown, but we think Americans are more worried about spending and deficits right now.
The Democratic chairman of Obama's debt commission, Erskine Bowles, said the White House budget "goes nowhere near where they will have to go to resolve our fiscal nightmare." The question is where does it all go from here?