♠ Posted by Emmanuel in Cheneynomics
at 1/28/2010 09:31:00 AM
There is much that's objectionable in the American president's address to both houses of Congress from a fiscal standpoint such as expecting that soaking the 2% wealthiest while cutting taxes on 95% of the rest will somehow help remedy the morass it has sunken into. I particularly like this sleight of hand:At the beginning of the last decade, the year 2000, America had a budget surplus of over $200 billion. By the time I took office, we had a one-year deficit of over $1 trillion and projected deficits of $8 trillion over the next decade. Most of this was the result of not paying for two wars, two tax cuts, and an expensive prescription drug program. On top of that, the effects of the recession put a $3 trillion hole in our budget. All this was before I walked in the door.Alright, this part is true enough. Medicare Part D did blow a big hole into America's fiscal picture. However, we need to move into the more important, "OK, so what are you going to do about it?" phase. Obama declares a figurative "war on deficits" by stating the following:
Starting in 2011, we are prepared to freeze government spending for three years. Spending related to our national security, Medicare, Medicaid, and Social Security will not be affected. But all other discretionary government programs will. Like any cash-strapped family, we will work within a budget to invest in what we need and sacrifice what we don't. And if I have to enforce this discipline by veto, I will.That's really great and everything, but it's these non-discretionary spending items which are set to explode as the fabled 80-some million baby boomers begin to retire. Blaming Medicare Part D but not reining it in is, well, disingenuous. Obama admits as much:
Now, even after paying for what we spent on my watch, we'll still face the massive deficit we had when I took office. More importantly, the cost of Medicare, Medicaid, and Social Security will continue to skyrocket. That's why I've called for a bipartisan fiscal commission, modeled on a proposal by Republican Judd Gregg and Democrat Kent Conrad. This can't be one of those Washington gimmicks that lets us pretend we solved a problem. The commission will have to provide a specific set of solutions by a certain deadline.The larger point is that blaming your predecessors will only get you so far. Obama speaks of making tough choices, and we all know what must be done that he does not speak of at all. Moreover, it's hard to see Republicans championing tax increases on this "bipartisan fiscal commission" -
- Introduce a national value-added tax;
- Raise the retirement age;
- Raise income taxes across the board;
- Raise payroll taxes;
- Reduce health care and pension benefits
The problem with the American political system is that it's hard to come up with a Lord High Executioner like the UK's Peter Mandelson. That is, someone insulated from the bellyachers when wielding the axe to make...necessary adjustments. Who will be the Yankee hatchet man during this time when politicos must readjust national aspirations to diminished expectations? Until he does something worthwhile, I think it's fair to say Obama's at least as much a deficit lover as the free-spending fiscal degenerate who preceded him. Perhaps it's a prerequisite of the post in a country that's seen its better days--and certainly looks keen on keeping it that way.
