Townhall...
Is
the President in Recovery
By Victor Davis Hanson
7/28/2011
President
Obama does not care much
about deficits -- other than worrying that big debt might matter in his
re-election campaign.
In
his first three budgets, Obama
borrowed nearly $5 trillion. Currently, the government is borrowing
about 45
percent of everything that it spends. Obama’s projected 10-year plan
would add
nearly $10 trillion to existing U.S. debt. This spring he proposed the
largest
annual deficit in U.S. peacetime history, which is why his $3.7
trillion budget
for 2012 was rejected in the Senate by a 97-0 vote.
In
other words, under Obama, the
government during the last three years has borrowed on average about $4
billion
each day. That staggering sum is far in excess of the $1.6 billion per
day
during the eight-year tenure of George W. Bush, who until Obama’s
presidency
had borrowed more than any peacetime president.
Apparently
in Obama’s worldview there
are advantages to deficits that explain his fondness for unprecedented
borrowing. In Keynesian terms, massive government red ink is supposed
to foster
economic prosperity by creating goods and services that a purportedly
less
efficient private sector cannot.
The
administration certainly has added
an additional 100,000 federal jobs and expanded food stamps to nearly
50
million recipients -- and in the process enlarged the pool of
potentially
grateful constituents. This belief in the superior wisdom of the state
explains
why almost all the Cabinet secretaries in the Obama administration came
out of
state or federal government, not from private enterprise.
Massive
deficits not only empower more
federal hiring and entitlements, but at some point lead to higher
taxes. This
gorge-the-beast notion is the flip-side of the Reagan-era idea of
“starving the
beast” of big government by cutting federal revenue through reduced tax
rates
Higher
taxes to Obama are not
necessarily bad if they serve to redistribute income from the affluent
to the
less well off -- a sort of “spread the wealth” government way of
addressing the
supposedly inherent unfairness of private-sector compensation.
So
why, then, has Obama suddenly
turned to deficit reduction?
In
a word, politics: The downside of
massive borrowing finally outweighed the upside of bigger government.
The Tea
Party-inspired midterm election brought Republicans to power in the
House of
Representatives and scared congressional Democrats silly. That’s why
Democrats
in the Senate voted unanimously to reject Obama’s record-deficit 2012
budget --
the sort of intervention that is the fiscal equivalent of a concerned
family
forcing a binging relative into rehab.
That
political anxiety explains why
suddenly Obama is now referencing his long-neglected Bowles-Simpson
commission
on fiscal responsibility and reform -- as if the former public
relations move
is suddenly welcome proof of the president’s long-held fiscal sobriety
and
sincerity.
The
mega-borrowing also did not lead
to the robust economic recovery of the cyclical sort that usually
follows a
steep recession. Unemployment is still at 9.2 percent. GDP remains
anemic.
Energy prices are still sky-high. The housing market continues to be
depressed.
Consumer and business confidence is flat.
Finally,
it is almost impossible to
find any major economist who still argues for greater deficits. Those
who once
advocated printing our way out of the doldrums -- Austan Goolsbee,
Peter
Orszag, Christina Romer, and Larry Summers -- have all left the
administration,
or intend to, about midway through its first term. They seem more
likely to
assign the administration’s 2009-2011 economic record to others than
claim it
proudly as their own.
Note
that there is no current example
that might suggest big deficit spending leads to national prosperity.
The
unsustainable debts of Greece, Ireland, Italy, Portugal and Spain have
nearly
wrecked the European Union. Most consider a fiscally prudent Texas or
Utah to
be a better job creator than debt-ridden blue states such as
California, Illinois
and New York. Scholars who analyzed the 2008 financial meltdown see its
origins
not just in Wall Street greed, but also in massive government
intervention into
the subprime mortgage markets and in misdirected federal efforts to
ensure
capital for bankers to lend to unqualified buyers.
So
opposition to the president’s
budget proposals amounts to more than just a know-nothing rant about no
taxes,
period. The unease reflects genuine puzzlement -- and, yes, anger --
over a
president addicted to debt, who suddenly wants to preach to others
about their
responsibility to pay back what he once so zealously advocated that we
should
borrow.
In
short, those in recovery rarely
make good puritans.
Read
it at Townhall
|