Time For A Fiscal Examination Of President Obama

Here we stand at the gate of yet another general election campaign, but this time around the very existence of America and our constitution are at stake. The U.S. has never before had a President who thinks so little of the American people that he imagines he can win re-election running on the opposite of reality. But that is the reality of President Obama today.

It became apparent some weeks ago when the President talked on the stump about an essay by a fellow who said spending growth, under Obama, is actually lower than that of previous Presidents.  This was startling to a lot of people, who looked into it and found the man had left out most spending from 2009, the first year of Mr. Obama’s Presidency. The President was deliberately using a misleading argument to paint a false picture!  But you know, why would he go out there waiving an article that could immediately be debunked?  Maybe because he thought it was true.  That’s more alarming, isn’t it, the idea that he knows so little about the effects of his own economic program that he thinks he really is a low spender.

President Obama promised to reduce the federal budget deficit by the end of his term, in the fiscal year 2013, to something more than $5 trillion. That would be roughly half of what it was projected to be when he took office. His blueprint for getting there, however, mostly reflects economic growth and the end of stimulus spending, not significant program reductions.

          

He said he would reinstitute a pay-as-you-go rule that calls for spending reductions to match increases and would shun what he said were the past few years' "casual dishonesty of hiding irresponsible spending with clever accounting tricks. He called the long-term solvency of Social Security "the single most pressing fiscal challenge we face by far" and said reforming health care, including burgeoning entitlement programs, was a huge priority.

The president’s biggest challenge is the unsustainable long-term fiscal imbalance, driven by fast-growing health care costs. Obama has said his health care initiative would be a big step toward fiscal reform because the changes he proposed would begin controlling costs for Medicare and Medicaid. He also promised to address the government’s third big entitlement program, Social Security, but Democratic Congressional leaders are opposed.

In a sense, the economy’s problems provided him an opportunity to make progress on other campaign pledges through the $787 billion two-year stimulus package that Congress passed a month after he took office. Beyond relief for the unemployed and hard-hit states, it included down-payments on a raft of Mr. Obama’s promises, for energy, education, environmental and health programs, and for tax cuts for the middle class and small businesses.

But the tax cuts and the domestic programs were squeezed after 2010, when the stimulus ran out. Now, Mr. Obama is under pressure to reduce annual budget deficits projected to average over $1 trillion a year through the next decade.

President Obama campaigned on the promise of a sharp break from the Bush era on social issues like abortion, embryonic stem cell research and gay rights. He has only partly delivered with his defense of marriage act and the repeal of “Don’t ask don’t tell.

Mr. Obama moved quickly to lift Mr. Bush’s limits on federal funding for embryonic stem cell research and to repeal the so-called Mexico City rule, which prohibited tax dollars from going to organizations that provide abortions overseas. But while he promised to work for legislation codifying a woman’s right to have an abortion, he now says that is “not my highest legislative priority.”

On gay rights, Mr. Obama fulfilled a major campaign promise in late October, when he signed legislation expanding the federal definition of violent hate crimes to include those based on sexual orientation. But the Defense of Marriage Act, which allows states to refuse to recognize same-sex marriages performed in other states, remains on the books despite Mr. Obama’s pledge to work to undo it. And the president has acted on the promise most important to gay rights advocates: reversing “don’t ask, don’t tell,” the policy that bars gays and lesbians from serving openly in the military.

The CBO did not calculate the gross debt, but Obama's budget shows it rising to $17.1 trillion in 2013 and $23.1 trillion in 2019. The 2019 figure will be more than 100 percent of the estimated gross domestic product, the largest percentage since just after World War II, we’ll owe this debt to ourselves, our children and grandchildren.We'll also owe it to foreigners, mainly the Chinese, who are firing shots across our bow that they may not keep acquiring our debt.

The Federal Reserve is buying U.S. Treasury bills to keep interest rates artificially low. If foreigners refused to buy,  as what occurred with British debt in 2009, interest rates would surge, damaging prospects for economic growth and investment.

Republicans have been charging -- almost chanting -- that Obama's budget spends too much, taxes too much and borrows too much, but they shamelessly ignore Bush's irresponsibility and their own, when they were in control of Congress.

Obama has held an "entitlement summit, there he promised not to "kick the can down the road" and to kill government programs that don't work, but even he admitted in his press conference that he has not supplied details. 

While the president and his minions play smear games against Romney and Ryan, the economy is figuratively burning down. The nation will be plunged into a deep recession during the first half of next year if Congress fails to avert nearly $500 billion in tax hikes and spending cuts set to hit in January, congressional budget analysts said.

The massive round of New Year’s belt-tightening, variously known as the fiscal cliff or Taxmageddon, would disrupt recent economic progress, push the unemployment rate back up to 9.1 percent by the end of 2013 and cause economic conditions that will probably be considered a recession, the nonpartisan Congressional Budget Office said.

But the president refuses to deal with that mess until after the election, by then, we’ll be well on our way to the recession. The irresponsibility is staggering, unemployment would go over 9 percent as the economy contracts another .5 percent.

The Obama team seems convinced that it can win the election on smears and tactics, It’s either in denial or oblivious to the fact that actual events, and real things like the economy may motivate voters. And it seems never to have dawned on the team that it needs concrete policies of its own. 

Refusing to play on that terrain, the Romney-Ryan team has latched onto a smart strategy, talk about issues, point to evidence in the real world, offer actual policies and rebut forcefully the merits of the Democratic spin. That might not work. But it’s nice to think that facts and reality matter more than bile, despite hundreds of millions of dollars spent to bamboozle us. Really, if that isn’t the case, our democracy has bigger problems than the recession.

The Federal Reserve's balance sheet has tripled bailing out financial institutions, it's buying long-term government debt. It's printing money, which can lead to inflation, a weak dollar and high interest rates. Our entire economic ship has got to be turned around from borrowing to saving. It's going to be hard.  It's going to be hard. Obama has got to take concrete steps to demonstrate that his promises have meaning and reassure China and other creditors -- and do it soon.