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2012 Budget: “Debt on Arrival”

Posted By Rich Trzupek On February 15, 2011 @ 12:43 am In Daily Mailer,FrontPage | 23 Comments


Alabama Senator Jeff Sessions [2] described President Obama’s proposed 2012 budget as “debt on arrival,” a pithy assessment of a plan that seems to have virtually no chance of being passed. The $3.73 trillion spending plan exceeds the Republican’s budget target of $2.9 trillion by more than $800 billion. Recall that, even with majorities in both houses of Congress last year, the president had a tough time getting his 2011 spending bill passed. With the GOP in control of the House and with national anxiety over unsustainable national debt rising, it’s hard to see how this plan is going to go anywhere.

The Washington Post’s Ed O’Keefe broke down some of the details [3]. Though the plan is supposed to ultimately cut the deficit by $1.1 trillion over the next ten years, that figure falls far short of the $4 trillion in deficit reduction that the president’s own debt commission said was necessary to avoid fiscal catastrophe over the course of the decade. Additionally, most of the $1.1 trillion in deficit reduction comes on the back of $1.6 trillion in new revenue, most of that coming in as the result of higher taxes. The wealthy, businesses, the oil and gas industry, financial institutions and hedge funds would all be subject to higher taxes if this budget were to be passed.

Perhaps most importantly, the president’s proposal does nothing to address the two-headed 800 pound gorilla lurking in the room: Medicare and Social Security, the massive entitlement programs that account for the bulk of federal spending. Most everyone acknowledges that the federal budget cannot be brought under control until someone is willing to step on those two third rails of American politics. The president’s proposed budget makes it clear that he wants and expects Republicans to take the first step in that direction, a political consideration that may prove important when it’s time to play the blame game after cuts are made.

Will the GOP actually have the courage to make a stab at entitlement reform in a counter-proposal? House Majority Leader Eric Cantor says they will. In an interview posted at his website [4], Cantor responded to a question about whether or not the GOP’s proposed budget would include entitlement reforms this way:

Your question about the budget itself and the entitlement inclusion, yes, we will include entitlement reform provisions in our budget, again, unlike the President, and unlike Harry Reid who doesn’t even admit there needs to be any reform of Social Security.

We are going to lead. That is why I said the President missed an opportunity to lead today, to try and address the biggest fiscal challenge we have. And so we are going to lead and include that in our budget.

Some observers think that there is a reason that the president’s proposed budget seems to be so out of step with the mood of the nation: it’s not so much an actual proposal as it is a negotiating ploy. As Chris Stirewalt observed at Fox [5]:

By entering his opening bid on spending so high, Obama is hoping to produce a final result that preserves some of his agenda. Yes, the administration knows that money for high-speed trains and solar panels will likely get shaved off, but as in any negotiation, the administration has come to the table with some padding built in.

That would be entirely consistent with the way that Chicago politics are used in Illinois to produce budgets in the Windy City and in Springfield. You ask for more than you know you can get in the first round, so that you can appear to compromise when you “back down” to get to the spot you wanted be in the first place. There is a limit to the amount of cuts that the president can make before he further alienates his leftist base. Even this proposal, one that includes that most modest of spending cuts, drew criticism from Democrats on the far left. Criticizing spending cuts [6] that affect the Low Income Heating Assistance Program, Senator Joe Tester (D-MT) complained: “This budget proposal raises a lot of questions about where the priorities of this administration are.” Leftist colleagues like Barbara Boxer (D – CA) and Richard Blumenthal (D-CN) were critical as well. As the GOP demands deeper, more meaningful cuts, discontent on the far left wing will inevitably grow.

The president may be playing a dangerous game here. Every time he agrees to make a meaningful cut, his base will likely describe that as him “giving in” to Republican demands. Recall that Obama extending tax cuts to Americans earning more than $250,000 per year sent the Daily Kos crowd into hysterics, with many labeling the president a “closet Republican,” even though the loss of federal revenue resulting from the extension was barely a blip on the radar. The deep cuts necessary to restore the nation’s fiscal health are guaranteed to enrage the far left and they will surely hold “their” president ultimately responsible for whatever government funded goodies are less available. And if the GOP does indeed go after entitlement cuts and the president ultimately agrees to a compromise? Leftist anger in that case will be spectacular to behold.

On the flip side, the millions of Americans deeply concerned over mounting debt and the fiscal health of the nation are not going to be impressed with half measures. A few cuts that turn a $3.73 trillion budget into a $3.5 trillion plan isn’t going to satisfy this group. Thus, by setting himself up to steer a middle course where he ultimately hopes to preserve a good deal of big government spending while giving in here and there, the president may ultimately alienate everyone. How the GOP prepares and markets its counter-proposal will do much to set the stage for the drama to play out over the rest of the year. Except the Republican plan to come out after the Congressional Budget Office scores the president’s proposed budget, most likely sometime in April.

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URLs in this post:

[1] Image: http://frontpagemag.com/wp-content/uploads/2011/02/mediaManager.gif

[2] Alabama Senator Jeff Sessions: http://www.nationalreview.com/corner/259757/debt-arrival-andrew-stiles

[3] some of the details: http://voices.washingtonpost.com/federal-eye/2011/02/federal_budget_2012_initial_ob.html

[4] In an interview posted at his website: http://majorityleader.house.gov/newsroom/2011/02/transcript-majority-leader-cantors-pen-pad-2.html

[5] As Chris Stirewalt observed at Fox: http://www.foxnews.com/politics/2011/02/14/budget-reality-checks/

[6] Criticizing spending cuts: http://voices.washingtonpost.com/thefix/senate/democratic-senators-slow-to-em.html?hpid=topnews

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