Three years ago this month, President Obama announced that he would halve the deficit by the end of his first term. Judging by Obama’s latest attempt at a budget, he has decided to disregard any deficit reduction.
On Monday, Obama released his fiscal-year 2013 budget, a political document straight from his reelection campaign headquarters in Chicago. The nearly four trillion dollar budget has zero chance of passing Congress, and the President’s team knows this. Even Senate Majority Leader Harry Reid (D-NV) has gone on the record saying, “we do not need to bring a budget to the floor this year.” The budget will not only fail to pass, it will not even come up for a vote in Congress.
Releasing the budget was about scoring political points, and helping the Obama reelection campaign focus its message. Upon releasing the budget, Obama called his proposed tax increases and supposed spending cuts “a reflection of shared responsibility.” This, in political speak, is to promote Obama’s class-warfare rhetoric and appeal to voters struggling through tough economic times.
Obama also claimed the tax increases proposed in the budget would move the tax structure toward the “Buffett rule.” Millionaires would be required to give a minimum of thirty-percent of their income, including capital gains, to the government under the rule.
Obama wants to campaign on taxing the rich to solve the budget deficit problem and paint himself as a representation of middle-class America. This “solution” to America’s severe budget deficit is not a solution at all. The tax increases cover even more spending under the proposed budget, despite the budget deficit and the debt that continues to mount. There are not enough millionaires in the United States for this amount of tax increase to begin reducing our massive $15 trillion debt at all.
The budget makes no attempt to cut the deficit in half. Obama’s budget increases spending by $47 trillion over the next ten years, with only $1 trillion in new cuts and $1.5 trillion in new taxes, according to economist Larry Kudlow. The $4 trillion in cuts claimed by the Obama administration includes many cuts we already knew were occurring, such as the $1.2 trillion from the supercommittee’s failure to reach an agreement.
At the current rate, the United States will have to spend hundreds of billions of dollars each year just to pay off the interest on the debt we have accumulated. The $47 trillion in spending for the next ten years does not even account for the amount of interest we will have to pay on spending in the future. There is a reason America’s credit rating was downgraded by Standard and Poor’s.
The argument made by the administration and liberal economists is that running large deficits is necessary to spur economic growth and prevent further job losses. Even if you accept this flawed economic logic, this claim makes no mention of the federal debt, an issue that cannot be ignored. Over time, a large federal debt will cause interest rates to rise further, costing the government more to borrow, slowing the economy and placing a large tax burden on future generations.
If the United States continues on its current debt projections, it is difficult to fathom how the debt will actually be repaid. At some point, we have to do more than just pay the interest on our debt, or the interest is going to keep increasing and consuming our budgets each year. Deep cuts that impact all levels of American society will become necessary to pay for the government malpractice happening now.
Obama’s budget does not address this debt load, instead including flowery projections of economic growth that project a halving of the deficit by 2018. There are many good reasons to think this will not happen. First, the growth projections are lower than those put forward by the Congressional Budget Office, and are characteristic of this administration’s economic team’s notorious rosy forecasts. Second, the cuts in Medicare and other programs proposed by the President will probably never occur for political reasons. Remember though, this budget will never even be considered by Congress, so these cuts are only included to make the President appear fiscally responsible.
The entire budget is a political stunt to make President Obama appear as some sort of “budgetary superman,” able to cut spending and increase spending at the same time, tax the rich to save the middle-class and the poor, and bring America’s deficit under control. Playing politics does not reduce the deficit.
White House economic adviser Gene Sperling challenged House Republicans to create a budget that balanced tax increases and spending cuts. This would require serious entitlement reform that Democrats would never agree to implementing. The new taxes would be used for new spending, just as the taxes are used in Obama’s budget. Passing both tax increases and spending cuts would be about raising taxes, not reducing spending.
President Obama is not serious about changing the out of control spending culture in Washington. He fails to grasp the seriousness of the issue, regarding deficit reduction as a talking point rather than a real need.
We can debate how to stimulate economic growth. We can debate how different policies impact the economy. We can even debate how the government should spend the American people’s money. But until we can get our debt under control, it’s barely worth the conversation.
Tyler is a sophomore. You can reach him at firstname.lastname@example.org.