Posted on 03/13/2012 6:37:09 AM PDT by SeekAndFind
This is a stunner. In the new book The Escape Artists: How Obama’s Team Fumbled the Recovery, journalist Noam Scheiber uncovers this tantalizing tidbit:
In May 2009, the president asked [White House budget director Peter Orszag] to draft a secret memo laying out the government’s options in the event of a fiscal crisis, in which a runaway deficit sent interest rates spiraling upward. No other member of the Obama economic team was even aware of the assignment.
OK, let’s take this step by step:
1. The Obama administration has already conceded it has no long-term plan to deal with rising U.S. debt, driven for the most part by social insurance spending. Testifying before the House Budget Committee recently, Treasury Secretary Tim Geithner told Chairman Paul Ryan the following: “We’re not coming before you to say we have a definitive solution to that long-term problem. What we do know is we don’t like yours.” Even Obama’s ten-year plan doesn’t keep the debt burden from increasing.
2. Yet, apparently, the White House does have a secret plan to deal with a sudden debt crisis. So instead of developing a long-term plan to avoid the worst-case scenario, it has chosen to plan for the worst-case scenario. (This will certainly be a shock to liberal economists like Paul Krugman and Brad DeLong who insist a debt crisis, as evidenced by the current low level of interest rates, is highly unlikely. In fact, they say, we should be borrowing more to boost the economy.)
3. Then there’s this possibility: Maybe the crisis plan is the long-term plan. Maybe it’s something like this: a) do nothing; b) keep implementing the Obama healthcare and environmental agenda; c) wait for markets to finally freak out over rising U.S. debt; d) break the glass and grab the 2009 Orszag plan.
4. And what exactly is in the Orszag memo? Well, as they say in Washington, personnel is policy. Here’s what we know about Orszag, who now works for Citigroup. He thinks America is undertaxed. Elsewhere in Escape Artists, Scheiber writes that “[Orszag] believed the only practical way to balance the budget was to repeal all the Bush tax cuts, not just the upper-income variety.” That is a $4.5 trillion tax hike right off the bat.
And here is Orszag just last month:
… to significantly reduce the deficit over the next decade, additional revenue will be needed. The administration’s budget proposal projects revenue to reach 20 percent of gross domestic product by 2022, about 1 percentage point of GDP more than what is projected with no policy change. The administration deserves credit for proposing even that, given the antipathy to any tax increases. But in the end more revenue will be needed. And since the administration’s budget probably shows the outer limit of what’s plausible in terms of taxing high-income households, the implication is that middle-income households will have to pay more, too.
And how to best tax the middle class? Like most left-of-center economists, Orszag loves the idea of a VAT:
Although hardly anyone wants to admit it, we’re not going to solve our budget problem over the next decade unless revenue is part of the equation. … One possibility would be to establish a new source of revenue, perhaps through revenue-increasing tax reform, and possibly including a modest value-added tax (that is, a V.A.T. of 5 percent to 6 percent). This approach has many potential benefits, including the opportunity to improve our tax code by cutting back on loopholes and shifting toward a consumption-based tax system.
So I think it’s reasonable to assume that the secret Obama-Orszag memo contains some options on massively raising taxes to send markets a signal that the United States is getting its fiscal house in order, ASAP.
Orszag, when he worked for Obama, was also the guy behind the creation of Obamacare’s Independent Medicare Payment Advisory Board. Starting in 2015, IPAB will have the power to making binding recommendations to cut Medicare provider payments if Medicare costs rise too quickly. As Orszag has put it: “This could well turn out to be as consequential for health policy as Federal Reserve policy was for monetary policy. The commission will put its proposals forward and if Congress does not act on them, or if it votes them down and the president then vetoes that bill, they will automatically take effect. Huge change.”
So perhaps the plan recommends giving the powerful IPAB technocrats even more power, not to just limit Medicare spending, but all healthcare spending in the age of Obamacare, public and private. In effect, use IPAB to fully nationalize U.S. healthcare and then ration care, as they do in the U.K., to reduce spending.
But again, this is all just speculation. Mr. President, how are you going to deal with a debt crisis? What’s in the Orszag memo?
You are on to something. It will just be in degrees. There have already been proposals to Federalize IRA/401k type accounts in the guise of "protecting" the account holder from adverse market conditions. The government would take all of the private account balances and replace them with a government guarantee of a low, but allegedly safe, rate of return. I think some of the EU countries have flirted with this idea, as well.
Solve their problems for a year or so maybe...
The plan was a VAT all along, but the 2010 election derailed it.
It’s probably “secret” cause it turns out to be something like “Can’t we just pay it off with a credit card?”
sfl
He’ll pay it from his stash...
Most would-be tyrants are very clear and open about their plans well in advance.
Raise Taxes, Borrow More, and then Apologize Blame Bush.
Fixed that for ya...
They can always manufacture more problems that require the peasants to sacrifice more of their freedom.
LOL! Does he have any of that left after paying for everyone’s car and rent in the hood?
Who says manufacturing is dead in the US?
If you mean that we have been deficit spending for a better portion of the last 50 years, then yes, we have a "spending problem".
All of us have certain programs which Uncle Sugar has implemented that we don't want done away with - AND - a vast majority of us are not willing to pay for them from current revenues. So we allow the Congress, year after year, decade after decade, to spend more than it recieves.
Liberals always want to tax and then spend more.
The Republicans are as much to blame as the Democrats here. Since we would tend to vote for the Republican, maybe we need to finally clean our own house first ....
The economy is already reeling with gas prices continuing to rise thanks to Obama, so adding new taxes will just push us over the edge.
While politically expedient, blaming Obama for the gas prices is not entirely accurate (but it is a lot of fun to throw the same mud back at them that they threw just a few short years ago :D ). It doesn't help us actually solve the problem.
Obama won’t rest until the US is in a new Great Depression with half the country standing in government bread lines.
We are already there, and have been for quite some time. The Government has been using deficit spending to pump GDP - remove the deficit spending from the equation (including trickle down via consumer spending that would not occur without handouts) from the GDP charts of the last 30 years and see how much "growth" really occured ...
I support Obama on this and would also like him to install a VAT and raise gasoline to European levels.
Why? Simply because the alternative (a totally crashed US dollar) is much, much, worse. If Americans (including half of FReepers) are not willing to budge an inch on Social Security and Medicare (i.e., make it means-tested), then the we might as well suck it up and start actually paying for it. We’ll be MUCH BETTER off that way.
Welcome to Federal Jeopardy.
For $15 trillion, here’s the answer.
This is the solution to any conceivable problem of mankind.
BZZZ What is give the executive more power?
YES!!!
Since it was done under a similar economic circumstance, maybe the US government has in the economic plan to, at some point, confiscate privately held gold bullion. The reason will be to support the dollar’s value to assure repayment to the creditors.
Why do people think the president, or anyone for that matter should ‘manage’ the economy?
That’s just saying they think we should have a command and control economy.
The country has drifted stunningly far from the idea of freedom.
Those who do not learn from history are yet again repeating it.
"Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery? Forbid it, Almighty God! I know not what course others may take; but as for me, Give me Liberty, or give me Death!"
That is why they have not passed a budget in 3 years!!!!
They just pass continuing resolutions AT CURRENT LEVELS locked-in at the +stimulus amounts.
If they passed a real budget it could only increase from 2008 levels (+ 6% per year since then)
There is no secret. DC is going to burn like Rome. History ... is the truth.
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