The President's budget: whistling past the graveyard

The President's budget: whistling past the graveyard

I chewed on the President’s budget for a few hours today.  Rather than bore you with a MEGO (“My Eyes Glaze Over”) post filled with numbers and charts, I offer a few overall qualitative and strategic impressions.

  • No big surprises here.  The budget tracks the State of the Union address as well as press events and leaks over the past month.  There are a few gems, including a hidden 25-cent per gallon gas tax, a State bailout and unemployment tax increase on almost all workers, and a $315 B unspecified Medicare savings gimmick, but those are to be expected.
  • Spending, taxes, and deficits would reach new plateaus, each well above historic averages.  The President proposes sustained bigger government and bigger deficits and debt.  Much bigger.
  • The numbers are terrifying.  That terror comes not from big new proposals, but from whistling past the graveyard of unsustainable current law.
  • The President says his new goal is “to pay for what we spend by the middle of the decade.”  This clever language suggests he thinks that, since there was existing government debt when he took office, it is not his responsibility to find ways to pay for even the interest payments on that “inherited” debt.  As President, his job is not, however, after eight years to momentarily stop making things worse, as his budget proposes.  It is instead to address the challenges the Nation faces, including those that have been building over the past 70 years.
  • In mid 2009 a smart friend observed that President Obama was pursuing an ordinary liberal domestic policy agenda at an extraordinary time in the economy.  It was as if the severe recession had almost no effect on the President’s outlook.  Indeed his chief of staff argued that the national economic crisis created an opportunity to enact the President’s campaign proposals.The same appears to be true with this budget.  The President is proposing an ordinary liberal spending agenda at an extraordinary time in our fiscal history.  His proposals for increased government spending on infrastructure, technology, and education are straightforward expansions of the role and size of government, in line with what I might expect from a Carter or even Clinton in his more expansive years.  Times have, however, changed significantly since the 70s and the 90s.  What were then long-term fiscal problems are now short-term looming crises.The fiscal problems of current law, which predate but were exacerbated by President Obama’s expansions of government in his first two years, should be driving the policy agenda.  In this budget they are an afterthought.  The President’s budget ignores the problem of entitlement spending under current law, and proposes Medicare and Medicaid savings only sufficient to offset a portion of his proposed spending increases.  Team Obama’s topline message includes dangerous and misleading reassurances that Social Security is not an immediate problem.  Demographics, unsustainable benefit promises, and health care cost growth are the problems to be solved.  The President instead wants to build more trains and make sure rural areas have 4G smartphone coverage.
  • Budgets represent policy priorities expressed as numbers.  It’s easy to focus on the numbers and lose sight of the underlying priorities.  For two years America has been debating whether restoring short-term economic growth or addressing our government’s fiscal problems is a higher priority.  With his State of the Union address and this budget, President Obama  is trying to define a new problem to be solved.  He thinks Americans are at a long-term competitive disadvantage relative to the Chinese because our government isn’t spending enough on infrastructure, innovation, and education.  Suppose you think he’s right (I don’t).  Is this problem more urgent than restoring short-term economic growth?  Is it more important than addressing unsustainable deficits and a federal government expansion that will leave fewer resources for the private sector?  The President apparently thinks it is.  I strongly disagree.
  • The President is choosing both a policy path and a campaign strategy.  He is betting that having no proposal to address the looming fiscal crisis is better for his reelection prospects than having one.
  • The President has made his strategic choice:  we are headed toward a two year fiscal stalemate in a newly balanced Washington.

(photo credit: Todd Hall)

Follow

Get every new post delivered to your Inbox.

Join 6,386 other followers