There is much one could say about President Obama’s Rose Garden statement on Wednesday announcing his FY 2014 budget. On the plus side, the president endorsed a “chained CPI”–a measure of inflation that is a more accurate way to factor rises in the cost of living into Social Security benefits. It’s a good idea, if quite a modest one (this Wall Street Journal editorial explains why there is less to it than meets the eye). And of course if the president really believed in a chained CPI, he would be a strong advocate for it rather than viewing it as a concession to Republicans. (Jay Carney, in this interview with Fox News’ Bret Baier, concedes that a chained CPI is “is not preferred policy by this president.”)
In any event, the downsides of the record-setting $3.78 trillion budget overwhelm the upside. A quick summary of the budget can be found here, but here’s some of what you need to know: Over a 10-year period it would raise taxes by $1.1 trillion–on top of $1 trillion in taxes from the Affordable Care Act and more than $600 billion from the president’s recent tax hike. It increases spending by $964 billion. And it adds $8.2 trillion to our debt. The debt held by the public as a share of the economy is predicted to reach 78.2 percent in 2014–nearly double what it was in 2008.
I suppose it says something about Washington that the act of voting on a federal budget is now a symbolic exercise with relevance only to the next congressional election’s various campaign advertisements. But we are now represented by a Congress which approaches the budget process with no intention of enacting an actual budget. The only measure of true bipartisan agreement is that President Obama’s ideas are terrible, unable to muster any support on either side of the isle.
So the president has apparently given up. Among the many budget-related stunts and shenanigans this week was a House Republican demand for a vote on President Obama’s 2014 budget–which is currently nonexistent, and therefore a blank page. The Senate, which is controlled by Democrats, has been unwilling and unable to pass a budget; the House, controlled by Republicans, passed a budget today, as they do each year (a novel concept Democrats still don’t seem to understand). Both parties in the House presented budgets they knew wouldn’t pass before approving the GOP budget. That resulted in a frightening moment for the party in power, when they risked accidentally passing a budget produced by their own party that was not the one they actually wanted to enact. As the Hill reported on a Republican Study Committee-produced budget yesterday:
Should the federal government’s balance sheet be treated the way a family approaches household finances? That’s the question at the heart of the renewed debate over Paul Ryan’s budget, President Obama’s spending, and the idea of balancing the federal budget. Conservatives argue that keeping a balanced budget is a basic expression of fiscal responsibility, and they point out that states have balanced budget requirements. Whether this makes it more or less compelling for the federal government to have a balanced budget requirement is up for debate, and the New York Times offers an in-depth survey of economists and experts on what the president derides as balancing the budget for its own sake.
Republicans seem to think that balancing the budget is a good political message to get behind, but they should be wary of how reasonable the other side comes out in stories like today’s Times piece, and they should also take into consideration the sometimes perverse unintended consequences of some efforts to force a balanced budget. Here is how the Times summarizes the two views:
On May 25, 1942, the waters off Norfolk, Virginia played host to a dramatic competition between military landing boats designed by Andrew Jackson Higgins and those used by the Navy. Army Major Howard Quinn, after observing the contest, wrote to his commanding officer that “there was no comparison”–the Higgins boat was the better craft. Quinn was on hand to watch the competition along with a member of the Truman Committee, led by then-Senator Harry S. Truman to investigate waste in the U.S. military’s war production. The contest had come at the behest of Truman, whom Higgins had convinced of the superiority of his boat.
The switch was made; the boats were mass-produced, and were integral to the success of the landing at Normandy. Had the military not had the Higgins boats, Dwight Eisenhower later said, “The whole strategy of the war would have been different.” And it wasn’t just the boats. As William Lee Miller writes in his book about the intersection of the lives of Truman and Eisenhower, Truman claimed to have saved $15 billion with his committee’s recommendations, by tackling “the prodigious waste in constructing camps, the shortage of essential commodities like rubber, magnesium, and aluminum; the protection of the consumer economy and the expansion of the labor pool. The committee also exposed corruption in war production.”
The reason the committee was considered such a success is because it enabled the military to cut wasteful spending while improving military readiness, equipment, and combat capability. Six decades later, then-Senator Hillary Clinton sought to take advantage of the negative reporting and unpopularity of the wars in Iraq and Afghanistan by invoking Truman’s name in a Wall Street Journal column full of righteous anger at perceived corruption and incompetence in war management during the Bush administration. The following year she was serving as the public face of the foreign policy of an Obama White House proposing to make cuts to the military decried by his own secretary of defense and whose devastating effect on military readiness has already begun to encroach on the line separating theory from reality.
The most striking sentence in President Obama’s second inaugural address was his assertion that “preserving our individual freedoms ultimately requires collective action”–by which he means more government. It is a succinct statement of the equation of government with freedom, and of the implicit corollary: the more government, the more freedom it can provide. This is why Obama expressed no concern yesterday about the multi-trillion-dollar government debt he once thought unpatriotic: Medicare, Medicaid, Social Security, and other government spending “empowers our citizens” and “free us to take the risks that make this country great.” When freedom is defined in this fashion, those who want to reduce government spending are striking a blow against “freedom.” They’re unpatriotic.
Obama reportedly said last month that government has no spending problem–only a problem of reducing the cost of healthcare. Yesterday he said we must “make the hard choices to reduce the cost of health care and the size of our deficit”: in other words, deficit reduction means giving government more power to control the cost of providing freedom. Reduce the cost of health care, and the deficit will go down, but do not restrict government itself–that would be restricting freedom. This is why Obama insists on raising tax rates without spending reductions; on increasing the debt limit without spending reductions; and on enacting any future spending reductions only if “balanced” with new revenue (so that if you want him to reduce spending, you must give him more money to spend). Higher tax rates, more debt, and new revenues give government the resources to keep us free–thus the more, the better, by definition.
If you’d like to have your New Year’s Eve thoroughly ruined, I’d suggest taking a look today at Mortimer Zuckerman’s piece over at USNews.com, “Brace for an Avalanche of Unfunded Debt.”
It’s so depressing because it’s true. The federal government keeps its books not in ways that most clearly reveal the true financial picture, but in ways designed, quite deliberately, to obscure that picture. This is for the short-term benefit of politicians and nothing else, the country be damned. And, as Zuckerman notes, unless something is done about this, and soon, that is exactly what the country will be.
In the midst of the fiscal cliff negotiations, the Obama administration has provided us with a perfect example of why we’re in this situation in the first place. The president has put together a $60 billion emergency aid package for superstorm Sandy victims, which needs the approval of Congress. As with any large spending package, it’s filled with pork. ABC News first reported on the specifics of the bill, including the most outrageous requests:
$2 million to repair roof damage at Smithsonian buildings in Washington that pre-dates the storm; $4 million to repair sand berms and dunes at the Kennedy Space Center in Florida; and $41 million for clean-up and repairs at eight military bases along the storm’s path, including Guantanamo Bay, Cuba.
The Small Business Administration is seeking a $50 million slice of the pie for its post-storm response efforts, including “Small Business Development Centers and Women’s Business Development Centers.”
Today Paul Ryan, chairman of the House Budget Committee, released his budget. (For the full budget, see here; and for a summary, see Ryan’s Wall Street Journal op-ed here). About this remarkable document, I want to say two things.
The first is that Ryan’s budget does what Americans generally, and the pundit class in particular, says politicians don’t do. It tackles head on the issue of entitlements. It offers a real path to re-limiting government (over the next 10 years it cuts more than $5 trillion dollars from President Obama’s budget). It makes the “hard choices” that elected officials often avoid.