It’s impossible to know with certainty at this point because we’re only about 30 percent through President Obama’s first term, but I suspect he will be judged quite harshly by history and his countrymen for not simply avoiding but dramatically accelerating the major domestic concern facing the United States: our unsustainable and soon-to-be debilitating deficit and debt.
I don’t lay all, or even most, of the blame on President Obama for the debt he faced upon taking office. While his party, like the GOP, was clearly complicit in the situation, and Obama’s own actions in the Senate (especially blocking reforms of Fannie Mae and Freddie Mac, which played a role in the collapse of the housing market) contributed to what went wrong, much of the river of red ink he inherited was due to a financial and credit implosion for which he wasn’t chiefly responsible.
What I do hold President Obama responsible for is that he took office when it was clear that our debt and deficit had reached crisis proportions. While that situation wasn’t the case when he decided to run for the presidency, it was the situation when he assumed the presidency. And rather than rethink the core purpose of his presidency, he decided to pursue his agenda in a state of denial, as if the financial collapse that began in September 2008 never happened, as if our ominous new fiscal reality had never occurred.
At the moment when history demanded one thing of Mr. Obama, he did another.
What the president should have done, in the wake of market collapse, was to create his own Nixon-to-China moment: trimming and reforming our middle-class-welfare state. It is the type of thing that a Democratic president and a Democratic Congress have much greater latitude to do than a Republican president and a Republican Congress. Instead, Obama used this moment to create a new middle-class entitlement, ObamaCare, at precisely the moment when our other ones are falling into bankruptcy. On top of that, of course, was the president’s $860 billion-plus stimulus package, his $410 billion omnibus spending bill, and his decision to spend hundreds of billions of TARP (Troubled Asset Relief Program) repayment dollars rather than to pay down the deficit.
Consider where we are and where we are headed. The deficit in 2009 was $1.4 trillion — the equivalent of 10 percent of the nation’s economic output and the highest percentage since the end of World War II. The president’s 2011 budget will generate a combined $9.75 trillion in deficits over the next decade. Our publicly held debt, which was $6.3 trillion when Obama entered office, now totals $8.2 trillion. According to the CBO, it’s headed to more than $20 trillion in 2020, equaling 90 percent of the estimated gross domestic product that year. (As a reference point, nations that comprise the European Union are required to keep their debt levels below 60 percent.) Interest rates alone would consume some $900 billion per year, almost five times what they were last year. In addition, the total unfunded liability (the gap between projected assets and benefit obligations) for Medicare and Social Security is $43 trillion; in five years, the total is estimated to grow to $57 trillion. (For more, see this, this, and this.
Confronting figures like this, Mr. Obama should have made spending restraint and entitlement reform his top domestic priority. And yet the president has taken us in exactly the opposite direction, engineering the passage of ObamaCare (over its first ten years of full implementation, it will cost at least $2 trillion). That is the equivalent of dropping plane loads of lighter fluid onto a fire that is raging out of control.
Why Mr. Obama made this fateful decision is hard to tell. He is a person of unusual ideological rigidity. The president is undeniably committed to expanding the size, scope, and reach of government. Like any 21st century Man of the Left, his ambition is to make more and more citizens wards of the state, to create greater dependency on the federal government. That, at least, is what Obama’s actions indicate his intentions to be. But whatever his motivations, the results are what matter. Whether or not we can ever undo the fiscal damage that is being inflicted on us is an open question. It will require us to take steps that we as a society have been exceedingly reluctant to take, including means-testing entitlements and increasing the retirement age. It will require fiscal self-discipline, restraint, and what Adam Smith called “self-command.” (For an enlightening analysis of Smith, see this essay by Ethics and Public Policy Center colleague and National Affairs Yuval Levin.
This is what this moment demanded of this president and this Congress. Instead, we got the opposite. Rather than tapping the fiscal brakes and eventually nudging us into reverse, they have hit the accelerator and are leading us over a cliff. I suppose there are worse things for the political leadership of a nation to do, though it’s hard to come up with them just now.
I have little doubt that Obama, having helped to engineer this fiscal calamity, will, later in his term, try to portray himself as a model of fiscal rectitude and Republicans as the party unconcerned with the mind-bending levels of deficit and debt he’s saddled us with. I am skeptical this trick will work. Family members are surely happy if a gambling addict gives up habit, but they aren’t about to be lectured on financial responsibility by a person whose gambling ruined the family finances.
The majority of the Obama presidency is still before us. Nevertheless, it’s not too early to say that on this vital front, Barack Obama has been, and will eventually be judged to be, a significant failure. He not only missed history’s calling, he mocked it. He placed his own statist ambitions above the needs of the nation he was elected to serve. Soon enough, and perhaps on a scale he cannot now imagine, Obama and his party will be held accountable for having done so.