As President Barack Obama enters his seventh year in the White House the nation’s economy is much stronger than it was when he first took office, a fact Mr. Obama has rightly celebrated. But his seventh budget proposal, like his first, is still focused on the near term and what government can do to promote employment — not on the nation’s long-term economic health.
The administration’s plan promises higher taxes, higher spending and higher deficits, all in the name of “middle class economics,” while putting off the difficult choices that will have to be made to avoid a fiscal disaster in the next 25 years.
As such, it represents a lost opportunity. With the economy growing and unemployment decreasing, the nation has gained the breathing room it needs to consider how to deal with what Douglas Elmendorf, the director of the Congressional Budget Office, describes as “a trend that cannot be sustained” in federal borrowing, driven by the long-term rising costs of entitlements such as Social Security and Medicare.
President Obama’s budget gives a sort of back-handed response to Mr. Elmendorf, claiming that the long-term budget can be stabilized with a few tweaks, such as health care price controls, higher taxes, more immigration and a smaller defense establishment.
Such changes would give us a very different kind of government in the future, one that is more intrusive, costs much more, encourages greater dependency and is less capable of looking after the national interest in a dangerous world.
Even in the relatively short term of the 10-year budget forecast based on the president’s proposals, as the Committee for a Responsible Federal Budget points out, the costs of Medicare, Medicaid and Social Security will grow 75 percent and interest on the national debt will soar from less than $230 billion to nearly $800 billion.
Over the next decade Mr. Obama proposes to raise taxes by $2.1 trillion, cut defense spending by nearly $1 trillion and reduce the Medicare budget by $431 billion, while increasing other entitlement spending by over $800 billion.
The Medicare budget supposedly would be reduced, in part, by unspecified “investments to reform Medicare physician payments,” which sounds a lot like the inadequate reimbursements to physicians that require the annual intervention of Congress to fix.
Given the rise in the number of retiring Baby Boomers, any real reduction in Medicare over the next decade or so would be nothing short of miraculous.
Overall government spending would rise by more than $700 billion under the Obama budget. If adopted by Congress (the prospect is thankfully dim), the president’s plan would accelerate the dangerous trend of unsustainable spending because almost all of the increases he has proposed would be mandatory entitlements.
The president dubs his proposed spending and tax incentives “middle class economics,” meaning that they are designed to help the middle class.
But the foundation of true middle class economics has ever been, and still is, to spend less than you make and invest the savings in your future.
President Obama’s plan, just as when he first took office, is to borrow and spend, then borrow and spend some more.