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  • Obama Belatedly Engages on Budget by Launching a Political Screed

    An editorial headline in today’s Washington Post captured it well: “Late to the Game – Again.”

    President Obama gave what was billed today as a major speech on fiscal policy. The speech, more a partisan campaign blast than an attempt at non-partisan leadership, comes two months after he released his Fiscal Year 2012 budget, which aside from $2.2 trillion in phony policy was largely silent on the near- and long-term budget picture.

    President Obama was driven out of hiding largely by the Path to Prosperity plan released last week by House Budget Committee Chairman Paul Ryan (R-WI). The Ryan plan is chock full of major policy initiatives, all duly scored by the Congressional Budget Office, describing a sound strategy for a sustainable fiscal policy without raising taxes.

    Critics said it couldn’t be done. Ryan did it. Obama’s budget proved he wanted to remain silent. The credibility of the Ryan plan forced the President to engage, late, again.

    The International Monetary Fund (IMF) was exactly right when it observed recently that the United States lacks a “credible strategy” to stabilize mounting public debt. The President’s own deficit commission last December observed much the same. Yet the President ignored his commission’s report, released a budget in February ignoring the problem and his commission, and would continue to ignore the growing deficit threat highlighted by the IMF and his own commission if he could. But he cannot, and today’s speech is the first step in his reluctant engagement toward a credible strategy for stabilizing the national debt. Unfortunately, it still remains far short of being even a wisp of a credible strategy.

    The President’s Stated Strategies

    The surest sign that the President is not serious is that he sets as his defining goal a steady reduction in government debt as a share of our economy beginning in the second half of this decade. In case anyone is curious, that would be beginning in 2016, the last year of the second term the President aspires to gain. The deficit reduction path needs to begin today, not five years from now.

    “Shared Sacrifice” (of a Few). Another sign that he is more interested in partisan jabs and running for re-election than addressing the budget deficit is that he emphasized raising taxes on job creators. A strong economy is not a sufficient condition for adequate deficit reduction, but it is certainly a necessary condition. Higher taxes weaken the economy. So as deficit reduction, his tax policy is pure politics. He talks about “shared sacrifice” but targets a few for special attention.

    Worse, calling for higher taxes on savers, investors, and job creators also means the President hopes to demagogue the deficit, rather than address it. The reason is simple. Raising taxes can do little to reduce the deficit, and raising taxes on “the rich” cannot raise enough to matter to the deficit, even aside from the economic effects.

    Disguising Tax Hikes. The President also called for tax reform that lowers tax rates and raises tax revenues. So, after calling for higher tax rates on upper-income citizens, he then calls for lower tax rates. That’s a neat trick. There’s a simple test to determine whether tax reform is intended to fix the tax system or just to disguise a tax hike: Is it revenue-neutral? Obama is calling for a tax hike in drag.

    It’s almost as neat as his call for Social Security reforms to strengthen the program for the long run while providing more benefits for some and taking benefits “for future generations” off the table. It is very hard to cut spending by taking spending cuts off the table.

    Defense. The President wisely said he would not accept cuts in defense spending that compromise our homeland security or the ability of our military to defend America’s interests around the world. This is a good start, as providing for national security is not just another line item in the federal budget. Yet his budgets would reduce military spending in every way: as a percentage of our economy, as a size of the federal budget, and in real dollars. Spending on defense must be determined by first asking what is required to protect the nation and then determining what capabilities are needed to carry out those missions.

    Medicare. The president’s approach to addressing Medicare’s huge unfunded obligations is, he says, to “strengthen” the power of the unelected Independent Payment Advisory Board (IPAB), created under Obamacare. In addition to its current power to cut the salaries of Medicare physicians, which will decrease the number of doctors willing to see seniors as patients, the IPAB would now be able to make decisions over what kinds of benefits will be favored or discouraged under Medicare. The President also claims he would achieve savings in Medicaid, but actually punts by saying he will ask the Republican-led National Governors Association to figure out the solution.

    Next Step: A Real Plan?

    The President is again late to the party, and he arrives not to help but to blow a great partisan raspberry. The nation needs a serious adult conversation on the deficit this year, the medium term and the long term, resulting in a credible strategy. That debate cannot take center stage as it must without the President’s active and persistent engagement.

    Unfortunately, the President has answered the leadership challenge posed by his own deficit commission, by the Ryan plan, and by the voters and once again gave a partisan speech before voting present. More calls for action are not action. Partisan swipes are not constructive. Ducking is not leading, and orating is not choosing.

    To get to a real long-run solution, the President has called for a grand conclave of political chieftains to hammer out a deal—so much for transparency and accountability. Instead, he should advance his own plan, which should have the detail and credibility of the Ryan plan. That is leadership.

    Then, let the debate begin. But the debate should also have an end. Congress should enact strict spending caps or even debt caps, as the President mentioned, applicable beginning in 2012 (not 2016). Debate should lead to a concrete strategy, which leads to real action, which gets federal deficits and debt under control. The plan will require the “credibility” the IMF says now is missing and that credit markets will demand.

    That strategy should not involve tax increases. The problem is too much spending, not a paucity of revenues. Taxpayers should not bear the punishment for the offense of overspending. The punishment should fall on the offender. Fortunately, we have elections for that.

    Rather than leadership that can rally the country and lead to the confidence necessary to work toward an adult conversation and ultimately to real results, the President’s big economic speech was laced with partisan barbs.  He rejected outright the ideas in the Ryan proposal, while offering almost none himself. And, ultimately, he accomplished little more than to pick an open battle with Ryan and House Republicans.

    The problem is fundamentally a simple one: Projected budget deficits are unsustainable. The voters have already voiced their objections. At some point, credit markets are going to object as well, and express their objections through higher interest rates that will increase the deficit further and weaken the economy. Taxes are projected to resume normal levels and grow from there. The problem is that spending has soared and is projected to soar much further in just a few years as the entitlements wave finally crashes upon us. The problem is spending. Don’t punt, don’t orate—fix the problem, Mr. President.

    Posted in Ongoing Priorities [slideshow_deploy]

    8 Responses to Obama Belatedly Engages on Budget by Launching a Political Screed

    1. Kevin H, college par says:

      Reminds us of the Republicans on health care, right? Talk abotu being late to the game…or never even putting on a uniform.

    2. Lloyd Scallan (New O says:

      Those that say Obama is "not serious" are making a huge mistake. Obama's speech yesterday shows just how "serious" he is to "transform" this nation

      into socialism. Wealth distribution (shared scarifice), Medicare death panels (IPAM). Attack and condemn anyone that disagrees, and the list goes on.

      We all know this is who and what Obama is! But the most frightening results of the speech is the reactions of the Dems. It is now far beyond partisan attacks. It's pure ignorance. In their own words, (not what someone reports they said), in front of cameras, profess an unbelivable disgust of Republicans that borders on pure evil. Many of these Dems don't have enough intelligence to ride the back of a garbage truck. Yet they are in our national capital, passing laws that affect

      every citizen, without knowing what they are passing, only that they are instructed how to vote by their DNC controled leaders.

      Until some of the voting public recognizes that race is not a qualification for election, thing in Washingnton will never change.

    3. Leon Lundquist, Dura says:

      "The Way is shut! It was made by the DINOs and the DINOs keep it! The Way Is Shut!" The Demo-crats will go to absurd lengths to stop Republicans from saving the Nation. I expect a MAD fight (Mutually Assured Destruction) from the Democrats, similar to Wisconsin. They will break the Law, they will ignore the Constitution, they will stoop to violence, they will Demogog, they will promise everything and deliver nothing! That is the crazy fight we have. The Nation is durned well goin' off that cliff! Let me cheer you up, fellow Conservative!

      The Obama Administration is vulnerable to House Investigation! They have so many High Crimes it would take an Indictment the size of the Health Care Bill to cover their unamerican activities. The Nation does not have to go over the Cliff just because the Congress is nullified. The House has the Constitutional Powers to see High Crimes! They have the Power to shut down, defund, suspend and begin the abolishment of Departments and Agencies of the Government. So, this Summer when absolutely nothing can get done to stop the Suicidal Spending? Convict the Departments and Agencies for their crimes, use that to Defund them. Defund the Government in giant chunks! EPA, HHS, Agriculture, Dof Ed, 15 of the 16 Defense Intelligence Agencies, etc. Get it? The Traitors will force it on us, otherwise America is going off the cliff!

      History will read lots better if the TEA Party isn't to blame! It was the Socialist Progressives! Catch them! Prosecute them! Convict them! It is a fact, they are coming after you. I swear to you, they are guilty of endless perpetual crimes! Conspiracy to Treason, they really are bad guys! Obama is the Manchurian Candidate! Communism really is evil!

    4. Roger S., Mass. says:

      What can one expect from a President whose life's major accomplishments have been:

      > To hide as much of its early stages as possible from an interested public!

      > To write books of half-truths so as to hide that he's hiding.

      > To spend as much time as possible vacationing or playing golf.

      > To read from teleprompters as his own speeches written for him.

      > To give long-winded speeches full of platitudes.

      > To grand-stand arrogantly in answer to voters' questions.

      > To vote "present" instead of acquiring knowledge and voting his best judgment.

      > To give "stirring" speeches to appease our sworn enemies while addressing old friends with worn platitudes.

      > To call for "sacrifice" by the increasingly few for the benefit of winning over the increasingly many.

      > To nationalize private property to "gift" his special "friends".

      > To attempt to force free citizens to buy what they neither want nor need.

      > To ignore judicial injunctions and court orders.

      > To ignore electoral misconduct.

      > To decry secret balloting in union elections.

      > To befriend obvious crooks, then publicly deny their "friendship".

      > To befriend avowed America-haters, then publicly deny them as well.

      > To accept unearned prizes for future "global good deeds".

      > To make "(every)thing very clear!

      > To go to war without even consulting congress.

      > To obtain "permission" from an illegitimate entity instead of the above.

      > To call the nation's supreme law an "out-dated document"

      > …….

      Were these actions indicative of integrity? Personal or public? Is it possible to exercise "leadership" without it?

      Would you buy a "used car" from someone like that? How about a used government? A "used" budget?

    5. Pingback: Obama Plays Politics on Deficit with Partisan Speech | The Foundry: Conservative Policy News.

    6. Leon Lundquist, Dura says:

      Thank you for your brilliant piece, Roger S. 'Precedent' Obama has done every one of those things! I say only a Traitor could want these Powers that Judge Vinson calls "Totalitarian" and "Noblesse Noblige." Really, people, even the bloggers have something to be proud of here at Heritage.

    7. Bobbie says:

      you can correct your mistakes by recognizing them.

      The debt correction needs the President's cooperation, The government caused this necessary urgency as the game being played was over time and ignored by government when tax payers came to realize. Thank goodness for all the truthful!

      No thanks to the government members undisciplined, uncontrollable, unethical spending addiction of other peoples money, it's now an urgent matter to this country.

      Mr. President was talking of "everyone has to sacrifice but…" "but…" what? He said it under his breath and couldn't comprehend?


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