Obama Changes His Stripes to Become a Deficit Hawk…or Not
Posted on 26. Jan, 2010 by James Devere in American Politics, Political News
Faced with a devastating defeat in Massachusetts, Obama stated this week that he will propose a three year budget freeze in his State of the Union address. Obama will tout his new-found fiscal stewardship of our debt on Wednesday. The well-crafted plan that he lays out will sound tough on spending and may even include a panel of experts to direct the President in his deficit reduction efforts. Words will turn a spending freeze into a deficit reduction; it will be the same type of language used to promote massive spending increases in healthcare that were somehow (through some accounting tricks that would make Enron proud) pitched as deficit-cutting acts.
Looking a little further into the spending freeze that is proposed, it is obviously a ploy to impress the angry voters and suppress the momentum that their anger has gained over the past 12 months. To start at the beginning, the 2008 federal deficit was a staggering and alarming $410 billion, including discretionary, non-discretionary, and military spending for two wars. The spending freeze that Obama proposes would save in the realm of $250 billion over ten years. What the Administration has not addressed to date is that the 2010 fiscal deficit is projected to be between $1.35 trillion and $1.8 trillion.
A spending freeze sounds aggressive, it sounds prudent; it even sounds conservative. But in reality it will lock in the massive spending increases in the 2010 budget. There is no way to show fiscal responsibility without addressing the deficit. This move will assure that the deficit continues to spin out of control. If you bought a new Porche last year and can’t afford the payments, cutting your extra cup at Starbucks won’t make up the difference.
In what has to be an embarrassment to the President, and yet another example of his inexperience, the idea of a spending freeze was part of John McCain’s campaign. This proposal was lambasted by Obama. In his adoption of a spending freeze, he has jumped on the bandwagon a year too late. Had he adopted this measure when he took office it would have saved roughly $1 trillion per year. Now it is just the tip of the government’s spending iceberg.
To further exacerbate our deficit problem, weakness in the economy will reduce tax revenue by roughly $50 billion in 2010. There is one place to start in order to improve our debt situation and that is strengthening the economy. On this point, Obama will hail the stimulus as the savior of the economy. Obama will point out figures that show we are getting back on our feet. After all, it is hard to spend hundreds of billions of dollars and have nothing to show for it…
Back on our feet economically would include a reduction in the unemployment trend, an increase in GDP, and it would provide a path in the near future for a budget surplus. It will be interesting to see what the teleprompter comes up with tomorrow night; true fiscal conservatism is most likely not in the cards.
He was combative, defiant, and really had nothing new to say during the 1 1/2 hour long SOTU.
He even went there, and blamed "the previous administration", and rightly got laughed at! He is beyond a joke. More like a very bad dream that will not end for another 3 years!