The Detroit News
Credit counselors offer standard advice to clients overwhelmed by debt: Tear up the credit cards and start paying down the balance before spending another dime on nonessentials.
That’s just common sense. Yet President Barack Obama is trying to sell us on the opposite approach for an overextended federal government. He wants us to issue him another credit card while he keeps spending as if the bills will never come due.
Obama has no credibility in the current showdown over raising the debt ceiling because he’s pitching a bundle of fibs to cover the reality that he doesn’t believe government spending is a problem.
His says he’s put on the table a balanced approach to reducing the deficit that combines nominal spending cuts with taxes on the rich. There’s nothing balanced about a plan that trims just 10 percent from the $1 trillion in new spending Obama added to the budget, while raising taxes to preserve the bulk of that bigger government. Hitting high incomes with punishing taxes won’t erase the deficit; the real purpose is to fulfill Obama’s campaign promise to spread the wealth.
The president wants us to believe that cutting any more from the budget will result in a social catastrophe that will starve old people and babies and bust the college dreams of our youth. He doesn’t mention that he’s still shopping for goodies. Before squeezing seniors, why not kill the high-speed rail boondoggle and bogus green energy subsidies?
Obama hiked spending by one-third in three years without improving our lives; he can cut it by an equal amount without destroying them.
His promise to slash waste from the federal government remains unfulfilled. Instead, he’s grown the federal payroll by 15 percent. This is not a president who stays awake at night worrying about our tax dollars.
Obama’s deficit reduction plan is built on false assumptions. To get the reductions he promises, an economy staggering along at below 2 percent annual growth must more than double that performance and interest rates must stay near zero.
Interest rates are bound to rise, unless the president is willing to risk inflation, and robust growth is not likely, particularly if Obama raises taxes on investors.
High taxes are not compatible with high growth — look to the institutionalized stagnation in Europe and Japan for proof of that. If the economy doesn’t hit Obama’s growth projections, and if interest rates rise even slightly, all of the savings he anticipates from tax increases and spending cuts will be wiped away and the deficit will actually get bigger.
Of course, you’d have to ignore the history of Congress and this president’s ideological bent to believe that even if savings were produced, the money would be applied to the debt. What happened to the bailout cash the banks and automakers repaid?
It’s going to the same place any new revenue would go — to fund other big government programs.
Each one of us — rich, middle class or poor — owes roughly $58,000 in federal, state and local debt. We can’t get out from under that burden without greatly shrinking government.
The $14 trillion in accumulated debt — soon to be $19 trillion — won’t be covered by a few rich guys writing bigger tax checks.
A president who pretends it will is not likely to lead us to fiscal responsibility.