President Obama Demonstrates His Ignorance On Credit
May 8, 2009 • 10:52AM

MAY 8, 2009(LPAC)—President Barack Obama today delivered brief remarks as he released the proposed 2010 Federal budget, demonstrating, among other things, his complete ignorance on the subject of a national credit system. Obama's prepared remarks, overall, were taken straight out of the behavioral economics play book, equating Federal government slashing of vital FDR social safety-net programs with household belt-tightening during hard times. After citing a number of examples of small government programs that are clearly wasteful and are being cut, Obama dropped three carefully worded bomb shells, which imply vicious cuts in vital social welfare programs.

First, the President announced, "We're also going to eliminate the subsidies we provide to the health insurance companies through Medicare, saving roughly $22 billion each year starting in 2012 as part of a broader effort to reduce health care costs—essential to putting our nation on a secure fiscal footing." While the exact meaning is unclear, it appears that the President has ordered $22 billion in cuts in Medicare spending per year—cuts that are certain to be passed on to health insurance purchasers through either increased rates or cuts in services, of the kind being pushed by OMB director Peter Orszag.

Next, President Obama vowed, "All told, by the end of my first term we will cut the deficit in half. Over the next decade we'll bring non-defense discretionary spending to its lowest level as a share of Gross Domestic Product since 1962.... One important step is restoring the 'pay as you go' rule—and I've called on Congress to do exactly that. This rule says, simply, that Congress can only spend a dollar if it saves a dollar elsewhere. This is the principle that guides responsible families managing a budget."

In fact, as our first Treasury Secretary, Alexander Hamilton, spelled out, the Federal government does not function like a household. The Federal government is authorized, under the U.S. Constitution, to incur debt and utter credit for projects in the national interest, that serve the general welfare of the population—like long-term investment in vital infrastructure. "Pay-go" is a euphemism for the kind of brutal austerity and cuts in social services that kill, especially if attempted at this moment.

If there was any doubt where the President and his Schachtian behavioral brainwashers are headed, his final point indicates that he is going for a slashing of health care, and is openly signaling his willingness to reopen the question of Social Security "reform." He stated, "Finally, while these steps will help us cut our deficit in half over the next four years, there are looming challenges to our fiscal health beyond that—challenges that will require us to make health care more affordable and to work on a bipartisan basis to address programs like Social Security. What we are proposing today does not replace the need for large changes in non-discretionary spending."

Back in 2004-2005, Lyndon LaRouche and LPAC led a nationwide campaign to defeat President Bush's efforts to privatize Social Security. At that time, opponents of that privatization/looting scheme, including former Treasury Secretary Robert Rubin, told Congressional Democrats that they should not even consent to discuss changes in Social Security, because the program was not broken. The crisis was the collapse of the economy, not shortfalls in entitlement funds. At that time, despite the best efforts of Peter Orszag and other behaviorists, the Congressional Dems held firm, and the Bush effort was killed. Now it appears that a Democratic President is reopening the Social Security can of worms, and that is a grave danger to all Americans in the lower 80 percent of income brackets.