It seems that President Obama’s fiscal policies are modeled after his personal finances:
A close examination of their finances shows that the Obamas were living off lines of credit along with other income for several years until 2005, when Obama’s book royalties came through and Michelle received her 260% pay raise at the University of Chicago. This was also the year Obama started serving in the U.S. Senate. . .
In April 1999, they purchased a Chicago condo and obtained a mortgage for $159,250. In May 1999, they took out a line of credit for $20,750. Then, in 2002, they refinanced the condo with a $210,000 mortgage, which means they took out about $50,000 in equity. Finally, in 2004, they took out another line of credit for $100,000 on top of the mortgage.
Tax returns for 2004 reveal $14,395 in mortgage deductions. If we assume an effective interest rate of 6%, then they owed about $240,000 on a home they purchased for about $159,250. This means they spent perhaps $80,000 beyond their income from 1999 to 2004. . .
The Obama family apparently had little or no savings during this period since there was virtually no taxable interest shown on their tax returns.
In 2003, they reported almost $24,000 in child care expenses and, in 2004, about $23,000. They also paid about $3,400 in household employment taxes each year. And as Michelle stated, they spent $10,000 a year on “extracurriculars” for the children.
These numbers clearly show the Obamas were living beyond their means and they might have suffered financially during the decline in housing prices had they relied on taking ever larger amounts of equity from their home to pay the bills.
But in 2005, Obama’s book sales soared and the royalties poured in. Michelle explained, “It was like Jack and his magic beans.”
Without those magic beans, the Obama family would have eventually suffered the consequences of too much debt.
It seems that the president is relying on magic beans to do the same for our country as they did his family.
BONUS: In light of Mr. Obama’s reliance on magic beans to save his finances, James Taranto sees some chutzpah in Obama’s ASU commencement address:
We’ve become accustomed to our economic dominance in the world, forgetting that it wasn’t reckless deals and get-rich-quick schemes that got us where we are, but hard work and smart ideas–quality products and wise investments. We started taking shortcuts. We started living on credit, instead of building up savings.
(Via Instapundit.)
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