Second verse, same as the first!

Herman’s Hermits, with their most famous song, “I’m Henry VIII, I am,” on the Ed Sullivan Show, in 1965.

After the first verse was the famous line, “Second verse, same as the first!” Which brings me to this story from

Budget to Call for Taxes on Wealthy

By Jared A Favole and Damian Paletta

WASHINGTON—President Barack Obama on Monday will propose a multi-trillion-dollar U.S. government budget that seeks to spur job creation and impose higher taxes on the rich to help reduce the deficit, laying down a clear election-year marker of his priorities.

The budget’s broad themes, according to a draft outline viewed by The Wall Street Journal, contrast sharply with Republican proposals for smaller government and lower tax revenue.

Mr. Obama repeats many of his previous budget prescriptions, resists sweeping cuts to government programs, preserves the structure of Medicare and Medicaid, and calls for close to $1.5 trillion in tax increases on higher-income Americans over 10 years.

He is likely to use his proposal for government spending in fiscal year 2013, which begins Oct. 1, as a rallying cry for middle-class support on the campaign trail.

Much more at the link. But the President’s proposed FY2013 budget1 is very much second fourth verse, same as the first: he proposes higher taxes on the top producers and more rather than less government spending, on another absurd stimulus program even though his first one failed miserably, as measured by the markers he set up for it himself,2 and his second one3 was rejected by the Congress.

the new budget proposal projects a final FY2012 budget deficit of $1.33 trillon, higher than the FY2011 deficit of $1.296 trillion4, higher than the $1.15 trillion deficit projected by the Congressional Budget Office and also higher than the $956 billion deficit projected by the Obama Administration last September. The JOURNAL article did not specify what deficit the President is projecting for FY2013, but, from the graph, it’s roughly $900 billion.

The JOURNAL article concluded with this paragraph:

In September, his administration projected the government’s annual budget deficit would fall to just 2.7% of GDP—seen as a healthy level by many economists—in 2014. In the budget to be released Monday, according to the draft outline, the deficit wouldn’t fall to that level until 2018. This is likely because the White House has shifted its focus to boosting the economy as well as changing economic conditions.

The problem with that notion is that, now we are well beyond the first stimulus program, the economy is starting to pick up on its own. The unemployment rate is down to 8.3% — though a significant part of the rate reduction is due to the decline in workforce participation5 — and economic growth is increasing. According the Bureau of Labor Statistics, we’ve seen 3,565,000 jobs created since January of 2011. Further, that means an additional 4,082,000 jobs were created in the private sector, while government jobs were slashed; this is a good thing. We are up to 83.4% of all non-farm, non-military employees being in the private sector, up from 82.8% a year ago.

Now, that job creation rate isn’t what we’d like it to be yet, but the last thing we need to do is meddle with an improving economy; now is the time to leave it alone, and let the economy — in reality, the billions of economic decisions taken by over 200 million economic actors — adjust to current conditions. A fresh economic stimulus plan will only increase the deficit — and thus the ever-growing national debt — but won’t actually improve the economy or the job market.

Nor do we need to be postponing deficit reduction: as the last quoted paragraph noted, President Obama would push back deficit reduction another four years. That is the kind of thing which has Greece about to go bankrupt, and the European Union looking for bailout solutions for several troubled member nations; even France, the second-largest economy in the EU, and the fifth largest economy in the world, is starting to get into trouble. Too many countries have lived too far beyond their means for too many years. The United States isn’t in quite as bad a shape as some of the European economies, but that does not mean we ought to keep doing the same things until we do get in that kind of condition.

Of course, actually passing a budget at all would be something of a novelty these days.

  1. To be submitted a week after the statutory deadline.
  2. When you fail a test that you are grading yourself, you know you’ve failed!
  3. The American Jobs Act
  4. The second highest on record thus far.
  5. Tyler Durden noted: “A month ago, we joked when we said that for Obama to get the unemployment rate to negative by election time, all he has to do is to crush the labor force participation rate to about 55%. Looks like the good folks at the BLS heard us: it appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that’s not a typo: 1.2 million people dropped out of the labor force in one month! So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased (to) 242.3 million meaning, those not in the labor force surged from 86.7 million to 87.9 million. Which means that the civilian labor force tumbled to a fresh 30 year low of 63.7%.”

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