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A Key Issue in 2010 Elections – Health Care Reform Revived
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Update on Pennsylvania Senate Race
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White House Says Unemployment Down Yet Actual Unemployment Up
The actual unemployment numbers show an increase from 9.7% to 10.6%.
Table A-1.Employment status of the civilian population by sex and age
HOUSEHOLD DATA
Table A-1. Employment status of the civilian population by sex and age
Numbers in thousands
Jan. Dec. Jan.2009 2009 2010TOTALCivilian noninstitutional population 234,739 236,924 236,832Civilian labor force 153,445 152,693 152,957Participation rate 65.4 64.4 64.6Employed 140,436 137,953 136,809Employment-population ratio 59.8 58.2 57.8Unemployed 13,009 14,740 16,147Unemployment rate 8.5 9.7 10.6Not in labor force 81,293 84,231 83,876Persons who currently want a job 5,866 5,939 6,108
the rate dropped from 10 percent the previous month because it revised the total payrolls to show there were 930,000 fewer jobs last March.
The actual unemployment in the economy did not go down, it’s just the data was revised. When you have a revision in the data like this, you really have to wait until next month, at least, to get a clear picture of what’s going on.
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Capitol Comment 433
To download the PDF of this article, please click here.
With unemployment remaining high at around 10 percent, one would think that President Obama's FY 2011 budget would focus on repairing the ailing economy and reducing the national debt. Not so. Instead, the president has proposed a massive $3.83 trillion budget.(1) His plans include an additional $1.7 trillion worth of spending and could run budget deficits up to 49 percent larger than last year's budget proposal.(2)
Obama's tax and spend agenda is expensive. He is expecting the American taxpayers to foot the bill for his vision. In addition to massive tax hikes, the President's plan includes provisions which will further increase skyrocketing deficits and raise the national debt by an additional 6 percent of GDP.(3)
In his budget, President Obama focuses almost all of his deficit reduction efforts on tax increases. Despite the successful employment of tax cuts to pull the American economy out of past recessions (most notably under Kennedy and Reagan), Obama plans to raise taxes for 3.2 million small businesses and upper-income families.(4) His budget includes nearly $1 trillion in tax hikes.(5) The President also plans to remove tax breaks for charitable giving and the mortgage interest deduction for millions of American families.
Worse still, President Obama still supports health care reform and cap and trade. Both initiatives are only sustainable through massive tax increases. Health care reform will cost $2.5 trillion in the first 10 years of full implementation (2014-2023)(6) and Cap and Trade will cost around $800 billion over the next decade.(7) In total, President Obama tax increases will surpass $2 trillion, a figure that Americans simply cannot afford.
The President’s budget will not only raise taxes, it will also increase the national debt and leave soaring deficits for years to come. In FY2010, the national deficit is projected to hit a record $1.6 trillion.(8) That is $143 billion higher than the 2009 deficit which was fueled by the recession. His plan will leave deficits above $1 trillion as late as 2020.(9) In 2010, 42 cents of every dollar spent by Americans will be borrowed from other nations.(10) Even more shocking, the President's budget will permanently expand the federal government by almost 3 percent of GDP and more than double the national debt.(11)
When Rep. Jeb Hensarling (R-Tex.) asked President Obama if his FY2011 budget would mirror the unprecedented levels of spending in his FY2010 which tripled the national debt and increased the cost of government to almost 25 percent of the economy, the President challenged the facts presented. But, Congressional Budget Office (CBO) reports show that it is Obama, not Hensarling, who has his facts mixed up. The CBO's analysis of the President's FY 2010 budget reveals that, under Obama's plan, the level of debt held by the public will increase from $5.803 trillion in 2008 to $17.126 trillion in 2019.(12) That means that the debt held by the public will be 2.95 times higher than it was in 2008. The same report also reveals that, by 2019, government outlays will rise to 24.5 percent of GDP.(13) Worse still, on average, in FY 2009 and FY 2010, Congress will run monthly deficits that exceed the annual deficits produced by a Republican controlled Congress from 1995-2007.(14)
Despite the President's skepticism, the facts that Rep. Hensarling laid out are clear: Obama's FY 2011 budget will lead to massive tax hikes, an increase in the national debt, soaring deficits and even more economic uncertainty in the future. Such proposals will not solve America's economic woes. In fact, they can only make them much, much worse.
(15)
- United States of America. Office of Management and Budget. Executive Office of the President. Budget of the U.S. Government Fiscal Year 2011. Web. <http://www.whitehouse.gov/omb/budget/fy2011/assets/appendix.pdf>.
- Riedl, Brian M. "Obama's Budget Seeks $2 Trillion More in Spending and Deficits Than Last Year." The Heritage Foundation. <http://www.heritage.org/Research/Budget/wm2787.cfm>. (Future references will be noted: Heritage)
- Ibid.
- Ibid.
- Ibid.
- Young, Jeffrey. "CBO: Senate health bill could reduce spending and lower the deficit -." TheHill.com. Web. 07 Feb. 2010. <http://thehill.com/homenews/senate/68609-cbo-senate-health-bill-could-cap-spending-reduce-deficit>.
- Heritage
- Ibid.
- Ibid.
- Ibid.
- Ibid. (See graph—footnote 15)
- United States of America. Congressional Budget Office. An Analysis of the President’s Budgetary Proposals for Fiscal Year 2010. Print.
- Ibid.
- The CBO reports that July 2009’s deficit was $181 billion. It also reports that October 2009’s deficit was $176 billion. Comparatively, according to OMB’s Historical Tables (Table 1.1), Republicans’ last annual deficit in FY2007 was $160.7 billion.
- This graph—released by House Republicans at — shows that the Obama budget will more than double the national debt by 2020.
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Unfortunately, Expanding Pell Grants Likely to Increase College Tuition and Fraud
In Obama’s proposed 2011 fiscal budget released yesterday, he calls for a massive expansion to the Pell Grant program. The Pell Grant, given to undergraduate and some graduate students that can demonstrate financial need, will be expanded to approximately $35 billion. It’s no secret that tuition costs are soaring particularly at public colleges and universities. According to College Board:
most students and their families can expect to pay, on average, from $172 to $1,096 more than last year for this year's tuition and fees.
The rate at which college tuition costs are rising is astounding. The average price of a private four-college is $26,273, an increase of 4.4 percent from the 2008-2009 school year. The average cost of a public four-year college this year is $7,020, an increase of 6.5 percent. The average price of a two-year public college, typically community colleges, has increased 7.3 percent within the last year to $2,544.
All college students and their families are affected by these high and escalating college costs. In order to make colleges more affordable for all students, it’s vital to analyze the reasons why colleges have become so expensive within recent years. In a Cato Institute’s published policy analysis “Making Colleges More Expensive: The Unintended Consequences of Federal Aid” Gary Wolfram states:
One result of federal government’s student aid programs is higher tuition costs at our nation colleges and universities… the empirical evidence is consistent with that- federal loans, Pell grants and other assistance programs result in higher tuition for students.
Dr. Wolfram explains that the unintended consequences of Pell Grants are hurting college students:
The federal government’s financial aid programs cause higher tuition costs, reducing the ability of some students to go to college and causing others to attend a college that is not their first choice. Basic economic theory suggests that the increase in demand for higher education brought about by the system of grants and loans will increase the price of higher education.
Judith Lee of Harvard University found that the Pell Grants are responsible for skyrocketing tuition costs:
private four year college increased listed tuition prices by more than two dollars for each dollar increase in Pell Grants, and public four-year colleges increased tuition by 97 cent for every dollar increase.
In addition, it is reported that hundreds of millions of dollars is susceptible to fraud and abuse in the Pell Grant program. According to John Boehner (R-OH):
The federal government needs to do a better job of ensuring the rights of needy students are protected against abuse and fraud in the Pell Grant program.
Despite the high cost and fraud, Obama plans to increase the program by billions of tax-payers dollars:
The Obama budget will also propose making the Pell Grant an entitlement program like Medicare and Social Security. As an entitlement, the full grant would be guaranteed to anyone eligible, and Congress would be obliged to fund the program for all who qualify.
By drastically expanding Pell Grants, college tuition prices will likely significantly rise for all while fraud will become more widespread. Unfortunately, it is likely that increasing Pell Grants will only worsen the problem of outrageous college costs.
On the other hand, The Heritage Foundation has suggestions on how to make college more affordable for all students:
These trends have the potential to dramatically lower costs and pop what some observers have called the "college tuition bubble." This presents policymakers and the private sector with a better strategy to solve the college affordability problem.
- Lower costs by improving efficiency. Colleges and universities should improve efficiency for students by lowering costs--such as by offering online instruction and credit-by-exam options.
- State governments can encourage innovation. States with multiple public postsecondary institutions could expand course offerings throughout the state through online learning or even offer content online for free--allowing people from all walks of life to benefit from the state's higher learning offerings. States could also expand credit-by-examination options at its state universities.
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