Washington Matters


Nothing Brings Out Hypocrisy
Like a Good Budget Debate

Mark Willen

We're headed for a debt crisis, but no one in Washington really acts like it.



President Obama’s budget plan is scary, indeed. A $1.3 trillion deficit next year, with only modest improvements beyond that, an accumulation of $8.5 trillion in deficits over 10 years that would double the already high national debt. And that’s the optimistic view.

Blame Obama. Blame the Democrats in general. Blame Republicans. Blame labor and business. And don’t forget to blame you and me. Absolutely no one is showing the courage we’re going to need to get out of this mess. It won’t be long before it undermines U.S. economic, military and political power worldwide. Everyone agrees we’re on an unsustainable course, but no one is volunteering to make the sacrifices to change direction.

If you need convincing, consider that we’ll be borrowing $1 out of every $3 the government spends for the next 10 years. As the debt grows and interest rates rise, paying off our loans to China and everyone else who buys our bonds will become more burdensome. And that’s just as entitlement costs, especially Medicare, spiral out of control.

Under Obama’s plan, which is based on the dubious assumption that eventually Washington will act responsibly, deficits decline from 10.6% of GDP this year to about 4% in 2019, and then start back up again. No wonder our allies -- and certainly our enemies -- are wondering how much longer the U.S. will remain the world’s biggest power.

Advertisement

Obama has taken considerable heat for insisting that he has to spend more now to get the economy on more solid footing. His proposal for a three-year spending freeze on a small portion of the domestic economy was greeted with hoots from deficit hawks, who said it was too little too late.

But those same deficit hawks are balking at even the modest restraint Obama proposes. Florida’s two senators -- Democrat Bill Nelson and Republican George LeMieux -- have both staked their reputations on fiscal restraint, but both reacted with horror when they learned the limited freeze meant less money for NASA, which is important to Florida. “We’ve just got to explore the heavens,” said Nelson. “I don’t think it makes any sense,” added LeMieux.

Defense is one area Obama isn’t freezing. He’s actually proposing a 3.4% increase, but he does want to ax production of the C-17 cargo jet. “No way” was the combined reaction of the two senators from Missouri -- Democrat Claire McCaskill and Republican Kit Bond. No coincidence that St. Louis is where the big production lines for the C-17 are located. Other examples of this unusual bipartisanship abound, beginning with opposition from farm state representatives to proposed cuts in agricultural subsidies.

Bipartisan opposition also faces Obama’s proposed revenue increases. Coal state lawmakers are saying no to Obama’s plan to eliminate tax incentives for coal, and oil and gas state reps are furious over similar plans for those industries. Republicans, in general, are against all the proposed tax hikes and Democrats don’t like any of the proposed cuts in social programs. On the other hand, when it comes to Obama’s proposed tax cuts and spending increases, there’s wide approval.

No wonder, then, that Obama is pinning his hopes not on Congress, but on a deficit reduction panel, a bipartisan commission that will supposedly make the tough decisions that Congress and the White House won’t or can’t make. But even forming the commission is proving tough. Lawmakers, who would get an up-or-down vote on the panel’s recommendations of entitlement cuts and tax hikes, don’t want to give up the authority that they’re unwilling to use on their own.

And good luck to the commission if it is formed. Its task is Herculean. Obama has already included the big revenue gainers -- letting Bush’s tax cuts for high-incomers expire and cutting Medicare -- in his budget plan. That won’t leave much wiggle room for a commission that’ll have to save trillions by trimming benefits and raising taxes in other ways, including on the middle class.

This just shows what’s so badly broken in American politics. The people in Washington have heard the populist concern about the rising debt we are creating for our children and grandchildren. But instead of real action, they want a free ticket to join the chorus of denunciation, aiming the rhetoric at the other side. And the public is the enabler, going along with the myth that we can have it all -- lower taxes and the spending we want when we need government help. And nothing will change until the voters change. We have to get real and accept that we can’t fix this mess just with spending cuts or just with tax increases. We need both. And the message we need to send Washington is that we’re grown up enough to live with that, and we want them to live with it, too.




You can get valuable updates like Washington Matters from Kiplinger sent directly to your e-mail. Simply enter your e-mail address and click "sign up."

More Sponsored Links


DISCUSS

Permission to post your comment is assumed when you submit it. The name you provide will be used to identify your post, and NOT your e-mail address. We reserve the right to excerpt or edit any posted comments for clarity, appropriateness, civility, and relevance to the topic.
View our full privacy policy


Advertisement

Market Update

Advertisement

Featured Videos From Kiplinger