Obama unveiled his deficit cutting proposal yesterday that was long on partisan demagoguery and short on specifics. In what details were given, there is serious doubt that such proposals genuinely put forth practical solutions to the deficit crisis. Elsewhere, the nebulousness of the president’s “plan” left many wondering whether the administration truly has a firm grasp of the complicated factors contributing to the national debt. At the very least, the president’s short-notice, ill-defined speech on the deficit – one that was filled with more political punches than proposals – shows that the White House is on the defensive, trying desperately to make the case that, contra the united Republican front that has co-opted deficit discourse in Washington, incisive budget cuts are not all they’re cracked up to be.
In unusually harsh language, the president began by railing against the GOP’s plan authored by Representative Paul Ryan (R-WI), saying there was “nothing serious or courageous” about cutting $6.2 trillion of government spending over the next decade. He accused Republicans generally of “paint[ing] a vision of our future that is deeply pessimistic.”
As for his own plan, the president proposed massive tax increases on the “rich,” cuts in defense spending, Medicare and Medicaid “reform,” and closing tax loopholes, while continuing to “invest” in clean energy, education, medical research, and transportation. He would leave Medicare and Medicaid relatively untouched, while claiming that his plan would cut $4 trillion over the next 12 years.
Yet, the president offered no specifics on the cuts he was advocating except broad, unrealistic dollar amounts. For example, the president believes we can realize budget savings by cutting $1 trillion from interest payments on the debt over the next 12 years. But interest rates are near zero now, and it is highly unlikely that they will remain that low for the next 12 years, especially given the fact that inflation is rearing its head. Some analysts are predicting debt service payments to rise from its current $196 billion to a whopping $800 billion by 2016 as a result of rising interest rates.
The president’s Medicare proposal is equally unclear. Obama proposed that the Independent Medicare Advisory Board can keep costs down. The president said he would do this by “chang[ing] the way we pay for health care -– not by the procedure or the number of days spent in a hospital, but with new incentives for doctors and hospitals to prevent injuries and improve results.” Obama clearly believes he can slow the growth of Medicare by strengthening the advisory board, which will recommend the best ways to reduce spending while still providing seniors with adequate care. The president claims that these measures will save an additional $500 billion by 2023. If this number is as real as his $1 trillion in Medicare “savings” to come out of Obamacare – savings that are dubious in the extreme – the result will be little or nothing done about an entitlement program that is going broke and could sink the US economy by itself eventually.
Obama offered no specific cuts in defense beyond savings that would occur in winding down the wars in Iraq and Afghanistan and a promise to look into more cuts. He will do this by conducting a “fundamental review” of our “role in a changing world” and examine our mission and capabilities. Practically speaking, he will look to reducing our readiness, which is the easiest and least painful part of the military budget to cut, but the one which is the most dangerous to skimp on.
The president’s plan was claimed to have been based loosely on the report issued by his Deficit Reduction Commission, which recommended broad cuts in government programs and smaller tax increases. Both parties rejected the findings of the commission as unrealistic and unworkable.
Perhaps most disturbingly, the president seems to believe he is scarcely culpably for the deficit crisis himself. Obama’s long, misleading narrative on how the deficit was created at the beginning of his Wednesday speech, completely absolved him of any responsibility for the $4.5 trillion in debt his administration has piled on in just two years. At times, it was a surreal performance, as the president talked about problems with the deficit as if his administration’s increase of nearly 40% in federal spending never happened. He placed the entire blame for our fiscal woes on his predecessor – something he has been doing since he was sworn in.
Besides being dishonest, the president’s political demagoguery was not the way to start off bipartisan negotiations – a goal he claimed was his priority. Republicans reacted negatively to the display. Representative Ryan remarked that the speech was “excessively partisan, dramatically inaccurate and hopelessly inadequate to addressing our country’s fiscal challenges.”
Other Republicans took direct aim at the president’s plan to increase taxes. Senate Minority Leader Mitch McConnell remarked, “[H]e may want to blame others for the problems” that his profligate borrowing and spending have caused, but the American people don’t believe the hype about Democrats being able to maintain entitlement spending at their current levels if only they are allowed to raise taxes. McConnell added, “Americans know that we face a fiscal crisis not because we tax too little, but because Washington spends too much.”
Representative Mike Pence gave the president credit for his “willingness to reconsider his earlier budget proposal,” but warned “[W]e cannot tax our way back to a balanced budget.” Pence also said that the American people are well aware that the way to a balanced budget is to get government spending under control while keeping taxes down.
Clive Crook, senior editor of The Atlantic, was unreservedly critical of the Wednesday speech, writing that it was “weak both politically and substantively.” He continued: “My instant unguarded reaction, in fact, was to find it not just weak but pitiful. I honestly wondered why he bothered.”
Crook’s question has an easy answer: the reason why President Obama gave the speech in the first place was because the Republicans had changed the conversation in Washington on deficit reduction to cutting government spending exclusively. Andrew Malcolm wrote, “Every word of Washington’s political discussion was about cuts in the budget, exactly and only what Republicans wanted to debate.” Malcolm thinks that Boehner’s “well mannered aplomb” in driving the debate on deficits forced Obama to make the speech he gave on Wednesday.
As Malcolm points out, every time the president talks about “cutting” the deficit, he gives a laundry list of spending priorities that promises more of the same. This speech was no different. After claiming to be proposing “tough cuts” in the budget, the president rattled off areas of government spending that would continue to see increased “investment,” promising “[he] will not sacrifice the core investments that we need to grow and create jobs.” Those “investments” include medical research, clean energy, new roads and airport, education, job training and even broadband access. In this way, says Obama, “we will win the future.”
Cato Institute economist Michael Tanner told Investors Business Daily that Obama’s plan “would allow government to continue to grow more or less on the same trajectory that it is now on, rising from 25% of GDP today to 42% of GDP by 2050.” In short, the president’s plan does nothing to curb government growth, pay down our massive national debt, address the ticking bomb of out of control entitlements, create jobs, spur business development, or assure that future generations will have the same opportunities that we have enjoyed in the past.
Mr. Crook was right. Why did he bother?