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Obama’s State of the Union Address Dampens Hope for a Real Budget Action

Posted By Kathryn Nix On January 29, 2010 @ 2:57 pm In Ongoing Priorities | Comments Disabled

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In his State of the Union Address [2], President Obama made several commitments to fiscal responsibility in the years to come. What do they really mean though?

President Obama’s proposed three-year discretionary spending freeze [3], excludes defense, homeland security, veterans’ and international affairs, is somewhat promising. The savings won’t be large — these programs comprise only one-eighth of the budget ($420 billion), and a freeze might save perhaps $20 billion (0.5 percent of the federal budget). Furthermore, these programs can still feast on their 19 percent hike over the past two years, plus their additional $311 billion in mostly-unspent stimulus funds.

Though the President deserves credit for picking some of the low-hanging fruit on spending control, if he is serious about righting the fiscal ship, he needs to take tougher actions like canceling TARP, ending the stimulus program, and turning his attention to the tsunami of entitlement programs that threaten to swamp our economy [4] in the years to come. At a time when the deficit is $1.4 trillion and we face a sea of even more red ink [5], such a freeze is tantamount to bailing out the Titanic with a dixiecup.

The key question is whether the President’s freeze represents a first small step towards real fiscal responsibility or an attempt to divert nervous taxpayers’ attention away from larger spending increases elsewhere. The President’s continued support for a trillion-dollar health care expansion as well as yet another expensive stimulus bill suggests the latter.

The President also offered proposals which would expand government and budget deficits (more student aid, health care, energy, and “stimulus”). Yet his accompanying calls to rein in budget deficits were weak: deficit commissions, pay-as-you-go budget rules, and pledges to “go through the budget line by line”. Once again, President Obama is tipping the scales towards more spending, higher taxes, and larger budget deficits.

Finally, The President’s proposed entitlement commission would have no teeth to tackle surging entitlement spending. It is a hollow gesture, designed to buy time for Congress to kick the can down the road again in an election year so they can pass another huge budget filled with new spending while the Commission dithers away behind closed doors.

Americans must watch the President closely in the months to come to observe whether or not Wednesday night’s rhetoric makes the transition to reality.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2010/01/29/obama%e2%80%99s-state-of-the-union-address-dampens-hope-for-a-real-budget-action/

URLs in this post:

[1] Image: http://www.foundry.org/wp-content/uploads/entitlements_07-580.jpg

[2] State of the Union Address: http://www.whitehouse.gov/the-press-office/remarks-president-state-union-address

[3] three-year discretionary spending freeze: http://www.foundry.org/2010/01/26/is-obamas-underwhelming-spending-freeze-a-fakeroo/

[4] the tsunami of entitlement programs that threaten to swamp our economy: http://www.heritage.org/Press/ALAChart/alachart-detail.cfm?customel_datapageid_244663=269355

[5] a sea of even more red ink: http://www.economics21.org/commentary/red-ink-tsunami-why-old-ideas-cant-fix-new-government-perma-crisis

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