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Drowning in red ink with no life-preserver in sight

The papers and blogs are filled with cogent analysis of President Obama's $3.8 trillion budget released yesterday. But read David Sanger's piece in the New York Times and Gerald Seib's piece in the Wall Street Journal if you want to rise above the usual partisanship that comes with a spending plan's release to understand the serious and unavoidable problems facing the U.S.

Sanger discusses the implications the deficits have for U.S. domestic and foreign policy, while Seib focuses on the foreign policy issues. None of it is pretty. Sanger writes, "Unless miraculous growth, or miraculous political compromises, creates some unforeseen change over the next decade, there is virtually no room for new domestic initiatives for Mr. Obama or his successors." Seib says that the budget deficits have become "so large and persistent that it is time to start thinking of it as something else entirely: a national-security threat." He then highlights four areas where the threat is particularly acute.

No one is ready to deal with this -- and that's a problem. As Sanger writes, "Mr. Obama has published the 10-year numbers in part, it seems, to make the point that the political gridlock of the past few years, in which most Republicans refuse to talk about tax increases and Democrats refuse to talk about cutting entitlement programs, is unsustainable." Richard Haass, president of the Council on Foreign Relations told Seib, "We've reached a point now where there's an intimate link between our solvency and our national security. What's so discouraging is that our domestic politics don't seem to be up to the challenge. And the whole world is watching."

Obama deserves plaudits for talking to the American people like adults about serious problems. You can't get any more serious than the alarms sounded by Sanger and Seib.


By Jonathan Capehart  | February 2, 2010; 11:55 AM ET
Categories:  Capehart  | Tags:  Jonathan Capehart  
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Comments

As a dual Canadian/American citizen, I am a bit surprised that the US chooses to provide so many entitlements to the elderly and so few to the most economically productive members of society. Providing health care to all working age people helps companies shed expenses and provides labour market flexibility (people don't stay in jobs they don't like just for the benefits and instead move to more productive jobs or start businesses). While it is important to help the elderly, it is most important to help the economically productive so that they can continue to assist the elderly. The senior citizens in this country - John McCain especially - should be ashamed they continue to ask for an increasing share of the resource pie every year. In the short term, this might be smart. In the long term, it will mean that the working members of society can no longer afford to fund entitlement programs because of years of lack of investment in the working members of society.

Posted by: aksunder | February 2, 2010 1:25 PM | Report abuse

I should also point out that health care is not the only area where working members of society get the short end of the stick. Tax incentives towards education in this country are a joke.

Posted by: aksunder | February 2, 2010 1:27 PM | Report abuse

If unemployment went down and the US gov were able to collect taxes on their income much of this would go away.

Letting Bush's tax cuts expire would help a great deal as well. If I recall there was a surplus when Mr Bush took office. Add the tax cuts to the unfunded wars, horrible economic policies of the GOP years and you get where we are today.

In the years that I have been following politics, it really seems that the deficit scolds come out of the woodwork when a Dem is president but don't make a peep when the supposedly fiscally conservative GOP is in power.

Facts are facts. Since Reagan, the deficits go up fastest when a Republican holds the reins of govt.

Posted by: jswallow | February 2, 2010 2:13 PM | Report abuse

"Obama deserves plaudits for talking to the American people like adults about serious problems." What? As he spends us into oblivion? Delays even his own "freeze on spending" until next year? Is in fantasy-land about actual cuts and savings in the budget? You have got to be kidding? Here is a president who, for the first time, makes a trillion sound routine in federal budgeting.


He may talk to Americans like THEY are adults, but he is spending like a teenage girl on her wardrobe ... with daddy's credit card, to boot.

Posted by: jpfann | February 2, 2010 2:25 PM | Report abuse


Offering something for nothing elects irresponsible politicians who then provide such. Joe six-pack loves it, so here we are.
.


Posted by: Billw3 | February 2, 2010 2:35 PM | Report abuse

"jswallow wrote:
If unemployment went down and the US gov were able to collect taxes on their income much of this would go away."

True; why then isn't the private sector creating jobs? Might it be because the continual "hope and change" we've been seeing lately creates such uncertainty that no one can plan?

"jswallow wrote: Letting Bush's tax cuts expire would help a great deal as well. If I recall there was a surplus when Mr Bush took office. Add the tax cuts to the unfunded wars, horrible economic policies of the GOP years and you get where we are today."

True in a limited sense. When the GOP Congress FORCED a balanced budget on Clinton, we had a few short years where income exceeded outgo for the government. The national debt, however, continued to grow (due to interest growth) as it has since President Jackson (1800's). Have you heard that the Bush II tax cuts affected people earning less than $250,000 / year? Sigh - another campaign promise broken.

"jswallow wrote: In the years that I have been following politics, it really seems that the deficit scolds come out of the woodwork when a Dem is president but don't make a peep when the supposedly fiscally conservative GOP is in power."

I guess you don't remember President Johnson (LBJ); his Great Society and War on Poverty programs raised the bar on Federal spending, and began the practice of raiding the Social Security trust funds to finance pork projects and programs. Several Senators and Representatives complained at the time, but LBJ knew where all the bodies were buried and his House Speaker, Sam Rayburn, could twist enough arms to overcome any opposition (sound familiar?) And David Walker, the former budget official under Bush II, has been touring, lecturing and warning about the deficits for years - since about midway through Bush II's second term, when he quit to advocate for fiscal responsibility.

We cannot spend our way out of this; we cannot regulate our way out of this; and we cannot print (money) our way out of this. The sooner the government figures this out and gets out of the way of the private sector, the sooner we will (if we still can) get out of this.

"jswallow wrote: Facts are facts. Since Reagan, the deficits go up fastest when a Republican holds the reins of govt."

Until this administration. Did you read the article above? Obama's beaten Bush II's (deplorable) eight-year record in his first year!

Posted by: Wanderer13 | February 2, 2010 2:38 PM | Report abuse

Elected officials no longer view fiscal soundness as a critical priority for America. The fiscal good of the country is not good enough to persuade the two parties to come together in common cause to achieve fiscal balance.

America is divided into two camps, and neither camp sees anything particularly good about the other. For either party to make concessions to the other is viewed as a sign of weakness and/or an admission of defeat.

The American people would do well to brace themselves for an even worse economic catastrophe than the one we're still currently trying to work our way through.

Posted by: kenger1 | February 2, 2010 2:50 PM | Report abuse

FELLOW AMERICANS, WAKE UP!!!

OUR COUNTRY AND WAY OF LIFE ARE IN PERIL!!!

www.AMERICAWAKEUPNOW.net

IGNORANCE IS NO EXCUSE!!!

Posted by: AMERICAWAKEUP | February 2, 2010 3:52 PM | Report abuse

There are FUNDAMENTAL, STRUCTURAL problems with the US Economy. We cannot tax cut our way out. We must GROW our way out.

Posted by: jaycee31 | February 2, 2010 4:08 PM | Report abuse

Sanger discusses the implications the deficits have for U.S. domestic and foreign policy, while Seib focuses on the foreign policy issues. None of it is pretty. Sanger writes, "Unless miraculous growth, or miraculous political compromises, creates some unforeseen change over the next decade, there is virtually no room for new domestic initiatives for Mr. Obama or his successors." Seib says that the budget deficits have become "so large and persistent that it is time to start thinking of it as something else entirely: a national-security threat." He then highlights four areas where the threat is particularly acute.

-------------------------------------------------------

Reagan and his acolytes did such a bang up job that they ensured not only that we'd have no maneuvering to provide services to citizens in the future, but to jump into the territory that our debt was so atrocious that we'd be an economic colony to another nation.

If we thought we had working poor now just wait a few more years on this current track. Unions?!? hahaha that'll be like an evaporating fog in our memory. All we'll be seeing are company barracks, gruel, and forced labor.

Kiss those Big Macs goodbye fatty......our new Chinese masters don't tolerate gluttony.

Posted by: theobserver4 | February 2, 2010 4:22 PM | Report abuse

Sanger apparently needs some kind of miricale for a domestic initiative to sit well. In reality, all we need is some of the bloated defense budget, the largest since WWII, to shed some of its waste, fraud and abuse. In reality, spending on domestic initiatives is already at historic lows (read: http://www.epi.org/publications/entry/a_first_look_at_the_budget_freeze/). "Entitlemet" programs do not need to be so costly if they are paid for as they go, a task made easier when we are making sensible decision with regard to our defense spending.

Posted by: MissAnnThropy | February 2, 2010 5:05 PM | Report abuse

Everyday our country gets closer and closer to bankruptcy. If a family spent money the way our federal government does the creditors would be breaking their door down to demand payments from them. It is time America wakes up and demands states add a term limit option on their ballots. Citizens could vote for or against term limits for federal members of the House and the Senate and then the tally would determine the outcome of the vote. These lifers up on Capitol Hill will never agree to term limits so the people must do it for them! Our founding fathers were farmers, lawyers, doctors ,etc., that is why they did not park their fannies in Washington for decades. If these members of Congress knew that they only had a few years in Washington, you could bet your last dollar they'd work together to come up with solutions to the problems our country faces. America's clock is quickly running out of time, and it's only a matter of time before China calls in their notes. What will we use to pay them back when the yahoos in Washington spend all the money in the taxpayer's bank account!

Posted by: jeiken | February 2, 2010 5:20 PM | Report abuse

The wealthy gourged themselves at the troth from 2001 to 2009. It was a feast of true glutony - based on the myth of the surplus even though debts were high prior to the tax cuts.
But now the rich don't want to pay up - they want services cut.

The poor are being told you got hurt the last 8 years and you voted the bums out and now guess what - you are going to get hurt again.

Guess again - not if fair minded men have any say in it - not this time - its the rich man's turn to pay.

Posted by: agapn9 | February 2, 2010 6:12 PM | Report abuse

The republican congress had nothing to do with the Clinton surplus - the Clinton surplus was caused by three things: 1) the tax increases put into effect and passed 51 to 50 with Al Gore placing the deciding vote, 2) Clinton's own management ability, and 3) a bubble in the stock market.

As proof the surplus shrank during Bush's first year before the tax cuts were implemented and the major expenditures took place in Afghanistan and Iraq.

Posted by: agapn9 | February 2, 2010 6:17 PM | Report abuse

Waiting years to get back to operating at $700B in the red is insane. Nobody's got the guts to put together a needed plan. Two main reasons: 1) Military industrialized complex. Every politician has to look tough to win. 2) No real small gov party. There are no checks & balances. Reps are big spenders, Dems are big spenders. They fight on what to spend it on, but neither party is willing to chop.

I think the Bush administration master minded this, before 9/11 with the giant increase in military spending and giant tax cut. Why? To cripple spending on anything else. Without making severe cuts to military or raising taxes significantly (both which look very bad for elections), no other agenda items can be pursued, unless of course, we're willing to operate far in the red (which clearly we are).

Posted by: IndependentOpinion | February 2, 2010 6:54 PM | Report abuse

Adding 200,000 (union members) to the government payroll is being fiscally sound?

Giving Fannie and Freddie a blank check, when they already were given $400 billion, and admit they will never payback more than $300 billion, and still give $6 million paychecks to their executives - that's brave?

Explain how giving the UAW ownership of GM and forfeiting $80 billion in bailouts to the car companies is good economic policy?

What I see is Obama rewards campaign contributors, cuts the funds to middle class, non-union workers. He spend a year finding ways to exempt his special interest donors from a health care plan he told us was so wonderful.

Sorry, I don't think this is tough, adult talk. My children are more responsible with their money and too disciplined to be bought off.

Giving the

Posted by: Cornell1984 | February 2, 2010 7:27 PM | Report abuse

"Obama deserves plaudits for talking to the American people like adults about serious problems."

Are YOU serious? My God, what more does this man have to do to this country before you forget race and report the truth.

Posted by: jpalm32 | February 2, 2010 9:15 PM | Report abuse

A slight correction Mr. Capehart if you please. It's not just that the dems refuse to cut entitlements, it is BOTH parties that refuse to cut entitlements. Although the GOP is strongly criticizing this Obama budget by saying it is bloated and does not make cuts (and appears to be so fiscally restrained), do you hear the Repubs offering advice on what to cut? Of course not, and you won't hear anything from them b/c they know anything they offer up that hurts will be blasted by the American people. Expert budget analysts clearly state the only way out the the current budget deficit quagmire is to 1) make deep cuts in entitlements, esp. social security and Medicare, and 2) selectively raise taxes. Cutting discretionary spending in the fed budget does virtually nothing, even if you cut all of it. That's the fallacy no one understands. Everyone assumes there is fat. With our aging demographics, Mediare and Social Security will become such a drag on our budget in the upcoming years as all the boomers retire that it will require drastic reductions in benefits (or massive tax increases) or the american economy goes kaput. When you have a system where more money is taken out in benefits than put it in tax revenue, it leads to deficits. The current mood in Washington is that neither side wants to take the first step, b/c it will choke election results. Unfortunately, we Americans are very ignorant about the federal budget process. And we are doubly unfortunate our elected congressional officials have no stomach to fix it either. Congress is set up to do one thing: bring home the pork. It's about how individual states can battle and position themselves to get the most out of the federal budget pie each year. Ben Nelson from Nebraska on the recent health care issue is a prime example. Congressional money free for all. Until that changes in both parties, nothing will get solved. We are headed for a crisis of massive proportions of rising interest rates on loans, etc., etc. b/c of our rising deficits and that is the only way we will finally get it and invest energy into fixing the budget problem. It will be crisis management. That's the bottom line.

Posted by: citizen4truth1 | February 2, 2010 10:06 PM | Report abuse

It is unreasonable to exempt 48% of the population from paying Federal income taxes because they are low income. EVERY citizen needs to pay some nominal amount in order to have a stake in our country's governance. I don't care if it's a minimum tax owed of $10/year, it needs to be SOMETHING.
Next, people over 65 (yes, including me!) cannot expect the government under Medicare to pay 100% of the bill for a hospital stay. How about paying just one-half of one percent of the cost of hospitalization? For my most recent stay that would have been $500. It could be paid in installments. We just can't continue with these obscene giveaways: they only encourage obscene costs, like $350 for a pair of compression stockings from the hospital, when you can buy them on the internet for $74.
Enough is enough. Pay up, everybody.

Posted by: SavingGrace | February 2, 2010 10:28 PM | Report abuse

jaycee31 writes: "There are FUNDAMENTAL, STRUCTURAL problems with the US Economy. We cannot tax cut our way out. We must GROW our way out."
____________________________________

Yeah, yeah. If we could only figure out how to do this. Reagan promised 30 years that ago his tax cuts would do this, and look where we are now. I guess something more is needed, like fiscal responsibility and making hard choices. Problem is, no one in Washington, Democrat or Republican, has either the honesty or the courage to take this on. We need to face reality and get our spending under control before the house of cards we're all living in comes tumbling down.

Posted by: kenger1 | February 2, 2010 10:29 PM | Report abuse

If Canadian health care is so great, how come their prime minister is having his heart surgery in the UNITED STATES?

Posted by: JCM-51 | February 2, 2010 10:51 PM | Report abuse

If Canadian health care is so great, how come their prime minister is having his heart surgery in the UNITED STATES?

Posted by: JCM-51 | February 2, 2010 10:52 PM | Report abuse

Mr Capehart... My dear Friend

"Plaudits".... now that's rich. Why didn't you call it like it is Mary, and just stand up snapping you're fingers?

Posted by: Spartann | February 3, 2010 12:01 AM | Report abuse

There is a way out - stop funding this proposed budget and any future expenditures.

Posted by: prossers7 | February 3, 2010 12:13 AM | Report abuse

"Obama deserves plaudits for talking to the American people like adults about serious problems."

If he could just explain it better I'm sure we would agree with him. We're just thick you see, many of us can't see how letting Congress rack up 787 billion on the national credit card then creating a new entitlement plan (while ignoring the insolvency of the old plans) ends up rescuing us from this debt crisis. Not to deny Obama's divinity in any way, but His ways are mysterious to me.

Posted by: robert17 | February 3, 2010 12:40 AM | Report abuse

obama doesn't have 3.8 Trillion dollars
to spend.
i quess he just "DOESN'T GET IT''

if you make 70K and spend 100K,
does that mean you "deserve plaudits"

No, it means you are STUPID.
and about to be Bancrupt.

Posted by: simonsays1 | February 3, 2010 12:42 PM | Report abuse

Since the Reagan administration, I have watched the conservatives behave irresponsibly in budget matters and in regulatory matters. I have watched them lie and open our markets to crooks and cheaters of all stripes. "We won't regulate the banks," said Reagan. What he basically said was, "Go ahead and cheat as much as you want, we're not going to pay any attention." Result - the savings and loan crisis.
Our government has become so underfunded in some areas that we have problems - how many times have there been problems with our food supply lately?
When the people decide that government should spend to help actual working people in need, which these days includes the middle class, instead of corporations, there is a huge outcry from conservatives. Please tell me why the oil companies continue to need subsidies after the record profits they made off all of us -- wait -- that money must have gone to the executives if the companies no longer have it -- the shareholders certainly didn't get any of it.
What I don't understand is why anyone besides multi-millionaires would vote for them -- they support only the very rich, and their view of "family values" includes defending adultery and putting breadwinners out of work.

Posted by: benbury | February 3, 2010 1:18 PM | Report abuse

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