Last night was President Obama's first speech as President to the United States Congress. Everyone knew it was going to be a masterful speech and a chance to see Candidate Obama and his firery rhetoric in all it's Capitol and Congressional glory. President Obama did not disappoint in his that regard.
And I too want better healthcare, better education, a better economy, a better America. And after listening to all these priorities, and with multi-trillion dollar spending cuts (over a decade), there was one statement that was never said in the rostrum of Congress, but is perfectly clear. Everyone's taxes are going UP.
I have prepared enough budgets in my life without being a financial wizard to tell you that to do all that we want to do, spending cuts will not be enough. What we will need is new sources of revenue. And how does the United States government obtain new sources of revenue? Economics 101, governments increase revenue by increasing taxes.
Not just a rise in taxes on the richest 2% of American's that make over $250,000, that won't do it. Ending the war in Iraq will not be enough "savings" either. American's don't want to cut the defense budget and American's want their entitlement programs (Social Security, Medicaid, and Medicare). The question is, when will President Obama take this on? He would have to get re-elected and do it in his second term. If he even mentions higher taxes he will be a 1 term president in 2012. But make no mistake about it, the "era of responsibility" is about to mean the beginning of higher taxes.
And poor Wall Street took it on the chin last night. The financial industry will never return to it's golden days. The last time Wall Street got beat up was in the 80's, but the destruction to the overall economy was not nearly as bad as it is this time. Bankers will be making reasonable salaries with reasonable bonuses now. Which begs the question, if so many smart young American's migrated to Wall Street for easy money, where will they go now that Wall Street is no longer easy or fast money, but just a respectable career with respectable pay?
And my #1 question of the evening....what was former Presiddent George Bush thinking and saying watching President Obama's speech to Congress last night?
UPDATE: The New York Times David Leonhardt has an excellent article articulating my not so original point: http://www.nytimes.com/2009/02/25/business/economy/25leonhardt.html?hp
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