Here is what I think the president should do as he gets ready for the health care summit this week: he should drop this new plan he’s just introduced:

http://www.usatoday.com/news/washington/2010-02-22-health-care-revision_N.htm

Wasn’t the whole purpose of the summit to start over on health care? Then why is the president trying to resurrect bad ideas like raising fees and fining small businesses?

And what does it say about the president’s willingness to work with Republicans that he is already announcing a plan before the meeting is even held?

Today we continue our series on what Obama should do next, particularly with the budget.

Of course, a big part of the budget is taxes. Here is an interesting fact: in 2011, the Bush tax cuts from 2001 will expire. That means that marginal tax rates will increase, capital gains tax rates will increase and dividends tax rates will increase. In other words, a huge tax increase is coming.

But Obama could change that. He could call for extending the Bush tax cuts, or better yet, making the tax cuts permanent. At a time of great economic challenge, we need lower taxes now more than ever.

Today we continue our series on what Obama should do in his budget. One thing he shouldn’t do is raise taxes:

http://ca.news.yahoo.com/s/reuters/100201/us/usreport_us_budget_backdoortaxes

Unfortunately, it looks like this budget might attempt to raise taxes using the “back door.” Here is how: the Bush tax cuts of 2001 are schedule to expire in 2011. If Obama lets them expire, taxes will go up for millions of Americans.

Are you an investor? Your taxes will go up. Are you an income taxpayer? Your taxes will go up. Are you a teacher who uses an education tax credit? Your taxes will go up. Trying to inherit your family’s land? Your taxes will go up.

President Obama can and should stop this right now by calling for the continuation of these tax cuts…otherwise we’ll all be paying more.

This week, we continue our series on what’s next for President Obama. And the timing couldn’t be better.

President Obama will soon unveil his new budget. I’ve got some ideas on what should and shouldn’t be in there. After all, politics is about money. So the budget is the place to look to see how a president wants to lead and where he wants to go.

Check back in each day this week for more on what President Obama should do next.

Today we conclude our series on what Obama should do next.

And this is maybe the most important step: he needs to return to being the Obama of 2008. On the campaign trail, Candidate Obama promised a new kind of politics, where he would focus on solutions, not ideology. Sadly, as  President, he has not always been well-served by his staff or by his friends in Congress who have pushed him to the left.

It’s time to return to a solutions-based politics. Now that would be change we can believe in!

What else should Obama do now?

He should confront his base. Every great political leader has the courage to tell his/her followers when they are wrong. Think of Reagan negotiating with Gorbachev when most conservatives were furious about it. Turns out Reagan was right.

Unfortunately, in the first 12 months of the Obama presidency, we have not seen many examples of this kind of presidential leadership. In fact, we’ve seen the opposite. Perhaps the best example was the stimulus package, where the White House essentially let Speaker Pelosi and Senator Reid write the bill.

If President Obama will start being more forceful with his own party, he will start to win back some of the independent voters that he has lost in the past year.

Here is something else to expect in 2010: higher health care premiums.

One of the rules of Washington is the law of unintended consequences. By passing more mandates on private insurers, the federal government has guaranteed the cost of health care will go up. Why? Because health insurance companies will pass on the costs to consumers.

So the great irony about Obama “bending the cost curve” is that he has bent it…only it’s going to go up, not down.

As we end our week of blogging about Congress, I thought we would again show some perspective on how out of control Washington spending is:

http://finance.yahoo.com/news/Federal-deficit-higher-in-apf-3876319127.html?x=0&.v=5

Here’s a question for you: what other business can you think of that can spend more than it receives? Much more than it receives. If you or I tried to run our businesses this way we’d be bankrupt.

Instead, Congress keeps spending money it doesn’t have.

Here are the key paragraphs from the article:

“The July deficit reflected government spending of $332.2 billion, a record amount for any month and up from outlays of $263.3 billion in July 2008. Of that increase, about $25 billion reflected the fact that Aug. 1 was a Saturday this year, requiring many government benefit checks to be sent out earlier and counted as spending in July.

“Government receipts totaled $151.5 billion, down 5.6 percent from a year ago. It marked the 15th consecutive month that government receipts have been lower than the same month in the prior year, illustrating how deep the recession has cut into tax receipts.”

So government brought in $151.5 billion and spent $332.2 billion. Incredible.

I hope the American people remember this recklessness the next time they go to the polls in November 2010.

Remember last fall when the car executives flew in private jets to Washington to ask for money from Congress?

One Congressman was so outraged that he compared it to a homeless man showing up at a soup kitchen in a top hat and tuxedo. Congress was right to criticize the car executives for this extravagance. But hypocrisy is not limited to the car industry.
It turns out that members of Congress like private jets, too:

http://online.wsj.com/article/SB124986067095218079.html

According to the Wall Street Journal:

“The resistance to buying eight Gulfstream and Boeing planes comes as members of both chambers of Congress embark on the busiest month of the year for official overseas travel. The plan to upgrade the fleet of government jets, which was included in a broader defense-funding bill, has also sparked criticism from the Pentagon, which has said it doesn’t need half of the new jets.”

So let me get this straight: Congress criticizes the car executives for flying on jets, then orders more jets for the government to use than the Pentagon even asked for and does so while many of its members are getting ready to fly around the world on overseas travel.

It reminds me of what Will Rogers once said: every time Congress makes a joke it’s a law and every time Congress makes a law it’s a joke.

So the Obama budget has arrived. And the reception has not been too good.
This week, the stock market reached its lowest point since the 1990s.
Think about that: ten years of stock market gains are gone.

This week, one of Obama’s biggest supporters on the internet criticized
his budget.  Andrew Sullivan, a right-of-center blogger who passionately
supported Obama for president, wrote this:

“If you believe, as I do, that withdrawing from Iraq won’t happen as
promised, then there is close to no actual spending restraint anywhere in
sight. We are being presented with what can only be described as a
massive increase in government spending and power with the only fiscal
balance being wringing much more money from the successful. The president
predicted a tight budget and spending control in his non-SOTU, and he
appealed to fiscal conservatives by promising a long-term attack on
entitlement spending. I see nothing here yet that fulfills that promise.”
http://andrewsullivan.theatlantic.com/the_daily_dish/2009/02/obamas-long-ter.html

The reality is, no president can balance the budget without reforming
entitlements.  And Democratic president is going to do that.  There are
too many powerful constituencies in the Democratic Party who won’t allow
it.

And so, as Obama promises more government, he doesn’t promise much in the
way of controlling spending.  In my line of work, that’s a bad business
plan.

-Randy Hill

A funny thing happened on the way to passing the stimulus package. Congress can’t convince itself to pass it:

http://www.cnn.com/2009/POLITICS/02/08/congress.economy/index.html

It seems that the more people keep looking at this bill, the less they like it.  As previously stated on this blog, I support passing a stimulus bill.  Just not this one. The problem with this stimulus bill is that it doesn’t have enough stimulus but it leaves a big bill for our kids and grandkids to pay.  Here is how John McCain described it:

“We need to spend money on infrastructure and on other programs that will immediately put people to work. But this is not it.”

No, it’s not. What’s worse, it may end up hurting our economy more than it helps.  According to the nonpartisan Congressional Budget Office:

“…the long-term effect of that much government spending over the next decade could ‘crowd out’ private investment, lowering long-term economic growth forecasts by 0.1 percent to 0.3 percent by 2019.”

It’s not too late for Washington to do the right: scrap this bill and start over. We need a bill that will mean dollars for our economy and will make sense for our future.

-Randy Hill

On Monday, I told you the good news about Obama’s stimulus plan: tax cuts.  Today I want to tell you about the bad news: spending.

http://www.realclearpolitics.com/articles/2009/01/fiscal_follies.html

According to reports, the President-elect wants to spend just under $1 trillion in his stimulus package.  To put that in perspective, that’s more than double the entire Defense budget.  Plus, the Congressional Budget Office is likely to soon announce that the current federal budget deficit is $950 billion.  So the President-elect wants to add another $1 trillion onto the $950 billion deficit we already have?

Who will pay for this?  You will and I will.  Eventually, Obama will have to raise taxes to pay for this.  But even worse, Obama seems to be forgetting the important link between interest rates and deficits.  The Federal Reserve Board, which sets interest rates, religiously watches the size of the budget deficit.  In the 1990s, when President Clinton worked with a Republican Congress to balance the budget, the Fed viewed that as a healthy sign for the economy and kept interest rates low.  Today, interest rates remain low, but only because the Fed is trying to breath life into the economy.  Once the economy turns around, the Fed might decide its time to raise interest rates, which will be another tax on you and me.

Obama is right to cut taxes.  And he’s right to spend some money.  But $1 trillion is too much.  We need a stimulus plan that not only spends dollars but makes sense.

-Randy Hill