President Obama is preparing to release his 2013 budget next month. It should be a document that sets the course for the next year, highlighting prudent cuts, addressing wasteful expenditures, and reforming some of the biggest drivers of our deficit.
But this is Obama and this is an election year which means we’ll likely get the equivalent of a liberal Christmas-list chocked full of redistributist policies that involve bigger government and higher taxes.
Businessweek has already reported that “Obama’s annual budget request due Feb. 6 will probably restate previous proposals” that “include[e] higher taxes for the wealthy.” Former congressional budget aide Stan Collender echoes that belief, saying “What the president will be providing in his budget will be more of a campaign document than it will be a real budget.”
Of course we don’t know exactly what will be in Obama’s budget just yet, but if it is anything like last year’s budget, we’re in serious trouble.
The main point of disagreement is what should happen in the short term. With economic growth still sluggish, there is legitimate debate over whether deep spending cuts could harm any recovery. Conservatives, like us, tend to believe that the enormous deficits aren’t doing much to improve the situation because they are poorly targeted, destabilizing, and pull money out of private sector investment. And they may actually be doing great harm by threatening to drive up interest rates on U.S. debt.
But Democrats like Obama truly believe that Washington must do its best to fill the gap in aggregate demand left by families who are either earning less or saving more. That explains why last year’s budget proposed running deficits of $1.4 trillion in 2011 and $1.2 trillion in 2012. From the liberal perspective those deficits at least make sense.
However, there should be no disagreement on what should happen in the long-term – we must reduce our national debt. Even Austan Goolsbee, former chairman of President Obama’s Council of Economic Advisers, believes as much.
“The true fiscal challenge is 10, 20 and 30 years down the road,” Goolsbee writes in a recent Wall Street Journal op-ed. “An aging population and rising health-care costs mean that spending will rise again and imply a larger size of government than we have ever had but with all the growth coming from entitlements. . .”
Given that we agree on the long-term fiscal challenge we face, can we agree on what we should do about it? If Obama’s budget from last year is any indication the answer is clearly “no.”
In fact, Obama’s 2011 budget included $8.7 trillion in new spending, hiked taxes by $1.6 trillion, and most tellingly for this exercise, added $13 trillion to the national debt. Under the President’s budget, debt held by the public would grow even faster than the CBO’s baseline, zooming from $10.3 trillion in 2011 to $20.8 trillion in 2021. Our debt is set to double in a decade!
Even worse, all those scary sounding numbers are the rosiest of scenarios. Indeed, the CBO projected that the debt would rise $2.3 trillion more than the president’s projections because of his reliance on overly optimistic economic forecasts that likely overstated growth.
So as President Obama prepared to release another budgetary blueprint, hopefully one that actually includes a plan for our debt and not just a roadmap to reelection, be sure to pay close attention to the long-term. It’s where Republicans and Democras both agree that changes must bt made, but it’s where Obama just can’t seem to bring himself to make any cuts.
Not only is that dishonest…it’s dangerous.