The Obama administration made a big deal about its “Russian Reset”—a policy aimed at emphasizing U.S.-Russian relations by basically starting over. The fact that the Russian Reset yielded little more than some embarrassing moments for the secretary of state is a subject for another essay. What’s relevant here is that after some 40 months of President Barack Obama, it’s time for an “American Reset.”
Reset federal spending
President Obama has added $5 trillion in debt. The federal government has spent more than 24 percent of GDP in each of President Obama’s years in the White House, far above the historic average of 20 percent. The federal debt, as a share of GDP, is the highest it has been since World War II—when we had a much better reason to run up record debt. And each and every year he has been in office, President Obama has carried a deficit above $1 trillion—an unprecedented feat.
Not even the president’s friends in the mainstream media can ignore the reality that the Obama administration has engaged in the most profligate spending spree in American history. The Washington Post, for instance, notes that “the compound annual growth rate for President Obama’s spending starting in 2009 is 5.2 percent” and “in every case, the president wanted to spend more money than he ended up getting.”
In other words, Congress actually reined the president in—but not before he spawned the Affordable Care Act. According to his own numbers, the president’s healthcare behemoth will cost $1 trillion. That number will surely grow larger than his actuaries predict. It pays to recall Washington’s poor track record when it comes to out-year projections. The Wall Street Journal reminds us that in 1965, Congress estimated Medicare would cost $3.1 billion in 1970. The actual cost was $6.8 billion. Two years later, Congress predicted that Medicare would consume just $12 billion in 1990. In fact, it was $110 billion.
Given that the president found a way to grow the federal government by 25 percent—with little to show for his stimulus programs, bailouts and government takeovers—returning spending to 2008 levels seems eminently sensible.
Contrary to the president’s recent slip of the tongue, the private sector isn’t doing fine. One of the reasons is the vast web of regulations he has spun in the banking, financial, healthcare and energy sectors. A Heritage Foundation study found that the Obama administration has issued four times as many major regulations—regulations costing $100 million or more—as its predecessor. The result: taxpayers and industry have been forced to cough up $46 billion to comply with new regulations—more than five times the cost of Bush-era regs.
Some of President Obama’s most costly regulations are not even fully realized yet. Take the EPA’s regulations on coal, for instance. As The New York Times reports, 100 of the 500 coal-burning power plants in the United States will be closed in the next few years largely “because new pollution rules have made coal plants more costly.” Retrofitting a coal-electricity plant in Kentucky in order to meet the Obama administration’s coal-killing regulatory requirements will cost $1 billion and has triggered a 30-percent increase in electricity rates, according to the Times.
“This EPA is fully engaging in a war on coal,” as Sen. Joe Manchin (D-W.Va.) argues. The EPA’s war is killing coal-derived electricity, which will have a long-term effect on consumers and their pocketbooks. “Coal-fired power plants,” the pro-market group American Commitment reports, “are now generating just 36 percent of U.S. electricity, versus 44.6 percent just one year ago”—thanks to regs handed down during the Obama administration.
Speaking of long-term effects, the drag ObamaCare will place on the economy is only now beginning to show. The CBO projects that the IRS will need 17,000 new employees to enforce elements of the healthcare law. The president’s healthcare entitlement creates 159 new sub-agencies, committees, bureaus and commissions, each with a regulatory role. All told, according to a Washington Post analysis, between 100,000 and 250,000 new government employees are needed to meet the growing demands of President Obama’s supersized government.
Reset the social contract
The Heritage Foundation reports that “more people than ever before—67.3 million Americans, from college students to retirees to welfare beneficiaries—depend on the federal government for housing, food, income, student aid or other assistance once considered to be the responsibility of individuals, families, neighborhoods, churches and other civil society institutions.” Government dependence didn’t start under President Obama, but it has certainly accelerated. The Heritage Foundation’s Index on Government Dependency concludes that dependence on government has jumped 23 percent since 2008.
Consider some specific examples: Investor’s Business Daily reports that the number of Americans on food stamps, which now eclipses 45 million, is the highest on record. The Wall Street Journal adds that nearly 50 percent of Americans live in a household that receives some form of government assistance—up from 44 percent in 2008, which was up from 30 percent in the early 1980s. The Washington Post reports that some 4 million out-of-work Americans have stopped looking for work, choosing instead to take early retirement (if they are 62 or older) or to try to ride out the worst of the recession on unemployment (which, at up to 99 weeks, is more generous than it’s ever been).