It seems debt is all the rage in Washington these days, and with good reason. The federal government only stays open on debt, and unless Congress and the President can agree soon, we’ll hit that limit and…well, who knows what will happen next.
Originally, negotiators were looking at a deal to cut deficits by about $2.5 trillion over 10 years.
But as the deadline approaches, Obama has raised the stakes. The goal he is now pushing for — as much as $4.5 trillion in deficit cuts over the coming decade — would require changes both in taxes and in the government’s basic safety-net programs.
“There’s going to be pain involved politically on all sides,” Obama told reporters after the White House meeting.
Not a moment too soon! But wait–why now? What about last year? You know–when the President’s party controlled both houses of Congress, in addition to the White House. Why, with the economy dragging at 9.2% unemployment, 16.6% if you count the underemployed and discouraged, did the President wait to act until now?
As Krauthammer puts it, this President has
• Ignored the debt problem for two years by kicking the can to a commission.
• Promptly ignored the commission’sDecember 2010 report.
• Delivered a State of the Union address in January that didn’t even mention the word “debt” until 35 minutes in.
• Delivered in February a budget so embarrassing — it actually increased the deficit — that the Democratic-controlled Senate rejected it 97 to 0.
• Took a budget mulligan with his April 13 debt-plan speech. Asked in Congress how this new “budget framework” would affect the actual federal budget, Congressional Budget Office Director Doug Elmendorf replied with a devastating “We don’t estimate speeches.” You can’t assign numbers to air.
It is difficult to expect that a President who has focused his efforts on massive government programs and spending can not be relied upon to be serious about debt reduction. It’s not that I don’t believe federal spending shouldn’t increase–it always increases. But federal spending increases in step with GDP, not in spite of it. Revenues are not our problem.
Even with the Bush tax cuts, the boogie man the Left loves to deride as the cause of the federal deficit, tax revenues continued to surge through most of the Bush Administration. In fact, but for the massive costs attributable to national security costs (including the “War on Terror,” Afghanistan, and Iraq), revenues and spending might have aligned. In other words, we don’t have a revenue problem.
We have a fiscal problem.
Starting with this recent recession, federal spending has been growing in almost the opposite direction of federal revenues, which during the recession dropped and have just started to stabilize. (For a great piece on this, check “Do we really have a revenue problem?“)
Rather than mirroring the drop in economic growth in the economy, the federal government has spent as if revenues were tied to the launch of the space shuttle, and Congress enacted the healthcare laws and subsidized failing motor companies while failing to pass a budget. The sitting Congress effectively spent, then passed on the job to pay for it to a future generation.
Meanwhile, the President chides Congress for not doing its homework as well as his daughters. (Of course, that ignores that the Republican House passed a budget on April 15, but why let details get in the way of a snide remark at your opponents?)
Speaking of details, let’s go back to Krauthammer’s for a minute. Earlier this week, the President ribbed Republicans for holding fast to tax cuts for private jets and oil companies.
“The tax cuts I’m proposing we get rid of,” President Obama said, “are tax breaks for millionaires and billionaires; tax breaks for oil companies and hedge fund managers and corporate jet owners.” Fantastic. And how close will that get us to balancing the budget?
If you collect that tax for the next 5,000 years — that is not a typo — it would equal the new debt Obama racked up last year alone. To put it another way, if we had levied this tax at the time of John the Baptist and collected it every year since — first in shekels, then in dollars — we would have 500 years to go before we could offset half of the debt added by Obama last year alone.
Obama’s other favorite debt-reduction refrain is canceling an oil-company tax break. Well, if you collect that oil tax and the corporate jet tax for the next 50 years — you will not yet have offset Obama’s deficit spending for February 2011.
That’s what I call long term budgeting. Too long for me.
Remember, this is the same guy who thought finding and cutting $100 million was a job well done, rather than a small fraction of a 1 percent of the federal budget (no, that’s not typo).
I’m glad the President is at the table, now, but I find it insincere, a day late and dollar short. If he is to return for a second term in 2012, he’s going to have figure out how to grow the federal government less and get out-of-the-way of the private sector more.
That’s a lot of jobs.
(h/t to Ed Morrissey for his graphs)
- Obama Is Clearly In Over His Head, This Column Proves It (rantsandrage.com)
- (BN) Obama Summons Lawmakers for ‘Hard Bargaining’ on Debt Reduction (momentrixreport.com)
- “Let’s Get Real About Our National Debt” (alicelinahan.net)
- Obama’s debt plan fails the truth test (blog4hillaryvillagers.wordpress.com)
- CBOs Elmendorf: Debt Default Would Be ‘Dangerous Gamble’ (blogs.wsj.com)