Bush's Red Ink, Obama's Problem
There's some much-needed straight talk about the deficit on the front page of today's New York Times: A reminder that it's mostly George W. Bush's fault -- but that it won't go away until the government raises taxes or cuts spending.
Neither raising taxes nor cutting spending are good medicine in a recession, of course. So the question is: When will it happen? When will President Obama -- and Congress -- summon the political will to do what really needs to be done?
I'm thinking second term.
New York Times business columnist David Leonhardt
writes with admirable succinctness:
There are two basic truths about the enormous deficits that the federal government will run in the coming years.
The first is that President Obama's agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying. The second is that Mr. Obama does not have a realistic plan for eliminating the deficit, despite what his advisers have suggested.
Leonhardt crunches the numbers to track exactly how the Clinton-era predictions of surpluses gave way to prophecies of massive deficits. His analysis places 90 percent of the blame on the business cycle, Bush's policies, and policies from the Bush years that are scheduled to expire but that Obama hasn't tried to snuff out. That leaves Obama responsible for 10 percent of the projected deficits: 7 percent from the stimulus bill -- and only 3 percent Obama's agenda on health care, education, energy and other areas.
Nevertheless, Obama now has 100 percent of the responsibility for fixing this mess, and what is he doing about it? Leonhardt writes that his talk about cutting health care costs is not yet entirely convincing -- and that it's not enough, anyway.
The solution...is no mystery. It will involve some combination of tax increases and spending cuts. And it won't be limited to pay-as-you-go rules, tax increases on somebody else, or a crackdown on waste, fraud and abuse. Your taxes will probably go up, and some government programs you favor will become less generous.
That is the legacy of our trillion-dollar deficits. Erasing them will be one of the great political issues of the coming decade.
Indeed, as Leonhardt suggests, Obama's endorsement yesterday of pay-go is really more nice talk to the Blue Dogs than serious medicine.
Lori Montgomery writes in The Washington Post:
President Obama called on Congress yesterday to enact pay-as-you-go budget rules to help tame a deficit forecast to top $1.8 trillion this year. But even as some Democrats applauded the plan, others complained that it would give a free pass to expensive policies that would sink the nation trillions of dollars deeper into the red over the next 10 years....
Obama would exempt an array of expensive policies currently in effect. For example, lawmakers could extend the tax cuts enacted during the Bush administration past their 2010 expiration date, restrain the growth of the alternative-minimum tax and continue to forestall scheduled payment cuts for Medicare physicians without consequence.
Sheryl Gay Stolberg writes in the New York Times that
the announcement — just one day after Mr. Obama lauded the billions of dollars his administration was spending to save or create what the White House estimated as 600,000 new jobs this summer — quickly turned into Round 2 of an escalating war between the White House and Republicans over Mr. Obama's claims of fiscal responsibility.
"President Obama and Congressional Democrats telling Americans they are committed to budget discipline is like Charles Ponzi telling people to trust him with their money," the Republican National Committee said in a statement to reporters.
Yes, it's going to get really nasty. That's because, as Manu Raju writes for Politico:
Republicans on Capitol Hill think they've finally found Barack Obama's Achilles' heel: rising public concern about government spending and the federal deficit.
While Obama's overall job-approval ratings are up over the past month, a Gallup Poll out this week has a 51 percent majority of Americans disapproving of the president's efforts to control federal spending and a slim 48 percent to 46 percent disapproving of his handling of the federal deficit.
Those are the only areas where Obama has negative approval ratings — Americans approve, by double-digit margins, the way Obama is handling his overall job, foreign affairs, terrorism, the Middle East and North Korea. But the GOP will take what it can get.
At yesterday's East Room event for pay-go, however, Obama was typically unflappable, expressing supreme confidence that he is making the right call now, and will make the right calls later.
The reckless fiscal policies of the past have left us in a very deep hole. And digging our way out of it will take time, patience, and some tough choices. I know that in the face of this historic challenge there are many across this country who are skeptical of our collective ability to meet it. They're not wrong to feel that way. They're not wrong to draw this lesson after years in which we've put off difficult decisions; in which we've allowed our politics to grow smaller as our challenges grew ever more daunting.
But I think everybody understands this is an extraordinary moment, one in which we are called upon not just to restore fiscal responsibility, but to once again live up to the broader responsibilities we have to one another. And I know that we can summon that sense of shared obligation; that we have the capacity to change, and to grow, and to solve even our toughest of problems.
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