A Choice of Two Futures

(Debt as a Share of the Economy)

SOURCE: OMB/CBO

Ryan pointed out that under the administration’s current approach of ignoring entitlement reform and continuing to accrue trillion-dollar deficits, the CBO tells us that the economy “shuts down in 2027.”

Geithner implied that what follows after 2020 is largely irrelevant, that all we should be focusing on today is what happens between 2010 and 2020, and that there is a “pretty small gap” between the two approaches during those years. In other words, the administration’s budget only addresses the next ten years and we’ll deal with what comes after that later.

Ryan would have none of it, saying,

Here’s the point: leaders are supposed to fix problems. We have a $99.4 trillion unfunded liability. Our government is making promises to Americans that it has no way of accounting for them. And so you’re saying, yeah, we’re stabilizing it but we’re not fixing it in the long run. That means we’re just gonna keep lying to people. We’re gonna keep all these empty promises going. And so what we’re saying is, in order to avert a debt crisis, I mean, you’re the treasury secretary... if we can’t make good on our bonds in the future, who’s gonna invest in our country?

We do not want to have a debt crisis. And so it comes down to confidence and trajectory. Do we have confidence that we’re getting our fiscal situation under control and we’re preventing the debt from getting at these catastrophic levels? . . . You’re showing that you have no plan to get this debt under control. You’re saying we’ll stabilize it but then it’s just gonna shoot back up. And so my argument is, that’s Europe. That is bringing us toward a European debt crisis because we’re showing the world, the credit markets, future seniors, people who are organizing their lives around the promises that are being made to them today, we don’t have a plan to make good on this.⁴

Notably, Geithner did not deny Ryan’s point that the administration’s budget is nothing more than a band-aid—if that—to make the fiscal situation slightly less catastrophic over the next ten years, and does nothing to address the years thereafter, when the unfunded liabilities will come due and place the United States in an immediate crisis. “Maybe we’re not disagreeing in a sense that I made it absolutely clear that what our budget does is get our deficits down to a sustainable path over the budget window,” said Geithner.

Ryan then interjected, “And then they take back off.”

Geithner responded,

And . . . let’s talk to ourselves why do they take off again? Why do they do that? Because we have millions of Americans retiring every day and that will drive a substantial growth in health care costs. And so you were right to say we’re not coming before you today to say we have a definitive solution to that long-term problem. But what we do know is we don’t like yours because . . . what yours would do is put an undue burden on middle-income seniors and substantially raise the burden on them for rising health care costs.⁵

Ryan shot back, “We’re fine that you don’t like our path. That’s what politics and Republicans and Democrats and difference of opinions are all about. But if we don’t come up with a plan for this country we’re gonna pull the rug out from under people who are relying on these benefits.”

Ryan also refuted Geithner’s glib argument that Ryan’s plan would allow seniors to wither on the vine, saying, “Now, we don’t agree with your interpretation of our plan because we provide more for the poor and the middle-income and less for the wealthy. And we think that’s the smart way to go on funding these important guaranteed programs.”⁶

“IT’S DEEPLY DISTRESSING THAT THE CUTS WE AGREED TO . . . YOU HAVE ELIMINATED IN THIS BUDGET”

In a separate budgetary meeting before the Senate Committee on the Budget, Geithner was forced by Senator Jeff Sessions to admit that the administration has no plan to address the nation’s unsustainable long-term fiscal path. “Even if Congress were to enact this budget, we would still be left with—in the outer decades as millions of Americans retire—what are still unsustainable commitments in Medicare and Medicaid,” said Geithner. “And we are going to have to find ways to come together and make progress on those commitments.” He claimed that the administration’s plan would make the budget sustainable for the next ten years and “give us some time to figure out how we resolve our major differences and how to make sure we reform Medicare and Medicaid in a responsible way.”⁷

But time is just an excuse. Ryan produced his “roadmap” for restructuring entitlements in 2008, his original Path to Prosperity budget plan in April 2011, and his updated Path to Prosperity 2.0 plan in March 2012, while the administration still has presented no plan to reform entitlements. Obama’s team doesn’t even dispute that Ryan’s plan would restore America’s long-term solvency, but Obama refuses to endorse it because he would apparently prefer to bankrupt the nation before agreeing to a sound, fair Republican plan to restructure entitlements.

Sessions then strongly criticized the administration for having already breached its recent promises regarding budget cuts—which illustrates the futility in compromising with Democrats. Sessions commented, “It’s deeply distressing that the cuts we agreed to six months ago you have eliminated in this budget. And you’re not marking to them, and you increased spending. And even when you count the war savings [billions in illusory savings from withdrawing troops from Iraq and Afghanistan], which are bogus, the CBO will technically agree with that, but we know the other committees haven’t counted those, you will have an increase in spending.”⁸

“THIS WOULD CAUSE U.S. INDEBTEDNESS TO EXPLODE”

Ryan’s warnings to Geithner about the U.S. bond markets deserve attention. James Pethokoukis, the Money and Politics columnist for Reuters, reported that the White House often quotes the outside economic-analysis firm “Macroeconomic Advisers.” But back in July 2011, shortly after Congressman Ryan unveiled his first Path to Prosperity budget, the firm seemed to validate Ryan’s concerns. It issued a statement declaring,

Assuming current fiscal policies remain in force, our economic model suggests that interest rates will rise considerably over the next decade, with the yield on the 10-year Treasury note reaching nearly 9% by 2021. Private interest rates will rise as federal borrowing competes for savings that might otherwise finance private investment. In addition, yields could rise if there is growing risk associated with current fiscal policy. If such risk is systemic, it raises yields generally. If it reflects a growing probability of sovereign default, it raises Treasury yields relative to private yields. Rising rates would be a precursor to something worse: a full-fledged fiscal crisis with further sharp increases in yields, declines in stock prices, and a plummeting dollar.

Pethokoukis then noted,

This is bad. Really bad. The official budget forecasts one typically hears about in the media are from the Congressional Budget Office. And those forecasts assume Uncle Sam can borrow at low interest rates, like, forever. The super-cautious CBO baseline predicts the U.S. government will add an additional $6.8 trillion in debt over the next decade, bringing cumulative debt held by the public to $18.2 trillion. Debt as a share of the economy would be 76.7 percent. The forecast also assumes short-term interest rates 3.3 percent, long-term 4.8 percent.

But, said Pethokoukis, Macroeconomic Advisers thinks long-term rates will reach 9 percent. “This,” he argued, “would cause U.S. indebtedness to explode.”

To confirm all this, Pethokoukis reported, Ryan asked the CBO to forecast how various interest rate scenarios would affect U.S. debt. The results were startling. If interest rates rose to 9 percent, it would add an additional $5 trillion to the national debt by 2021. But even this may understate the problem because the calculations were based on the CBO’s baseline forecast. Many analysts believe that’s way too optimistic and that the debt-to-GDP ratio will already be 101 percent in 2021, even with low interest rates. Furthermore, these static calculations did not factor in the possibility that this astronomical debt would depress economic growth.

In response to Ryan’s questions, the CBO conceded that economic variables would have a dramatic impact on the forecasts. It said that a rise in interest rates of just 1 percent a year could increase deficits by $1.3 trillion over ten years. Likewise, reduced economic growth of just 0.1 percent each year could increase deficits by $310 billion over ten years, and a 1 percent annual rise in inflation could add nearly $900 billion to deficits. The result of this “alternative fiscal scenario” is that our debt-to-GDP ratio could reach 250 percent.⁹ Here is the CBO’s chart illustrating these nightmare scenarios:

Alternative Fiscal Scenerio

SOURCE: Congressional Budget Office.

Contrary to what Team Obama would have you believe, our current deficits do not stem from unduly low tax rates on the wealthy or anyone else; our current taxes are no lower, and in some cases are higher, than under President George W. Bush—and Bush’s deficits were dramatically lower. These deficits largely arise from Obama’s profligate spending— though, it’s important to note, that is not the sole cause. Another important factor, which accounts for hundreds of billions of dollars in budgetary shortfalls, is the sluggishness of the economy, which is contributing to a constricted economic base that generates less productivity and income and thus less tax revenue. Obama’s oppressive tax and regulatory policies across the board are devastating to jobs, economic growth, and ultimately to the budget as well.

To address the problem, we don’t necessarily have to adopt every jot and tittle of Ryan’s plan. But it is specific and warrants serious consideration. We must either implement Ryan’s plan or another that does just as good a job stimulating economic growth, slashing domestic spending, preserving our vital national defenses, and restructuring entitlements while preserving benefits for seniors and others most dependent on them.

Ryan’s Path to Prosperity—both its original and revised versions—deserves more than the administration’s contemptuous dismissals. It is a sound and sensible strategy for stabilizing the economy, stimulating economic growth, and eliminating our looming national debt crisis. The revised version 2.0, which is largely the same as the original except for a few important tweaks such as with Medicare, would:

• Cut $5.3 trillion in government spending over the next decade compared to the president’s budget;

• Eliminate hundreds of duplicative programs, ban earmarks, and aim to bring non-security discretionary spending to levels below those of 2008;

• Reduce government spending to lower than 20 percent of GDP, as distinguished from President Obama’s budgets, in which spending sometimes exceeds 22 percent and even 23 percent over the next decade;

• Dramatically reduce the national deficits and put the budget on the path to balance and actually pay off the national debt;

• Reject Obama’s proposed tax increases and simplify the tax code by substituting two personal income tax rates (10 percent and 25 percent) for the six current rates and by reducing the corporate income tax rate from 35 percent to 25 percent;

• End corporate welfare by stopping taxpayer bailouts of failed financial institutions, reforming Fannie Mae and Freddie Mac, and preventing Washington from picking the winners and losers across sectors of the economy;

• Repeal and defund ObamaCare, thus eliminating some $800 billion in tax increases and the budget-busting spending increases it imposes, which have turned out to be much higher than Obama originally projected;

• Reject Obama’s proposals for across-the-board cuts in national defense funding and provide $554 billion for national defense spending in FY2013, which is a realistic amount to achieve America’s military goals and strategies. This plan allows for future real growth in defense spending to modernize our armed forces. Because of the sequester imposed by the Budget Control Act, our defense budget is in line to be cut by $55 billion in January 2013, pursuant to Obama’s budget. Ryan’s plan would eliminate these additional cuts and replace them with other spending cuts.

• End Obama’s war on domestic energy and remove regulatory and tax barriers on the energy industry;

• Reform Medicaid by converting the federal share of Medicaid spending into a block grant, giving states the flexibility to tailor their own programs to fit their citizens’ needs;

• Restructure Medicare by protecting those in and near retirement and giving younger Americans choices such as a traditional fee-for-service Medicare plan or other options that are currently enjoyed by Congress members;

• Call for bipartisan action to restore Social Security to solvency.¹⁰

The first of the following three charts shows the stark contrast between Ryan’s Path to Prosperity 2.0 and President Obama’s FY2013 budget.¹¹ The second contrasts government spending as a share of the economy under the president’s budget over the next decade with that under the Path to Prosperity 2.0,¹² and the third contrasts the respective spending trajectories of Ryan’s Roadmap and our current spending path over the long term:¹³

A Contrast in Visions

	The President’s Budget	The Path to Prosperity
Spending	Net $1.5 trillion increase to current policy	Cuts spending by $5 trillion relative to President’s budget
Taxes	Imposes a $1.9 trillion tax increase; Adds new complexity and new hurdles for hard-working taxpayers, making it more difficult to expand opportunity	Prevents President’s tax increase; Reforms broken tax code to make it simple, fair and competitive; Clears out special interest loopholes and lowers everybody’s tax rates to promote growth
Deficits	Four straight trillion-dollar deficits; Breaks promise to cut deficit in half by end of first term; Budget never balances	Brings deficits below 3 percent of GDP by 2015; Reduces deficits by over $3 trillion relative to President’s budget; Puts budget on path to balance
Debt	Adds $11 trillion to the debt—increasing debt as a share of the economy—over the next decade; Imposes $200,000 debt burden per household; Debt skyrockets in the years ahead	Reduces debt as a share of the economy over the next decade; Charts a sustainable trajectory by reforming the drivers of the debt; Pays off the debt over time
Size of Government	Size of government never falls below 23 percent of the economy, making it more difficult to expand opportunity	Brings size of government to 20 percent of economy by 2015, allowing the private sector to grow and create jobs
National Security	Slashes defense spending by nearly $500 billion; Threatens additional cuts by refusing to specify plan of action to address the sequester; Forces troops and military families to pay the price for Washington’s refusal to address drivers of debt	Prioritizes national security by preventing deep indiscriminate cuts to defense; Identifies strategy-driven savings, while funding defense at levels that keep Americans safe by providing $544 billion for the next fiscal year for national defense spending
Health Security	Doubles down on health care law, allowing government bureaucrats to interfere with patient care; Empowers an unaccountable board of 15 unelected bureaucrats to cut Medicare in ways that result in restricted access and denied care for current seniors, and a bankrupt future for the next generation	Repeals President’s health care law; Advances bipartisan solutions that take power away from government bureaucrats and put patients in control; No disruption for those in or near retirement; Ensures a strengthened Medicare program for future generations, with less support given to the wealthy and more assistance for the poor and sick

Government Spending

(As a Share of Economy)

SOURCE: CBO/HBC

Federal Government Spending

(As Percentage of GDP)

SOURCE: Office of Management and Budget /Congressional Budget Office

“NO WONDER THAT WE ARE HEADED FOR THE LARGEST DEFICIT EVER”

In contrast to the Ryan and Republican approach, Obama has not seriously attempted to reduce the deficit or debt since he took office, because these problems are necessary byproducts of his addiction to spending and redistribution, as well as his slavish attachment to tired Keynesian economic theories holding that the best way to promote economic growth is through government spending. Even CBO Director Douglas Elmendorf, following a report that the 2011 budget came in at more than $1.5 trillion, in testimony before the Senate Budget Committee in January 2011, admitted what Obama and Timothy Geithner either can’t see or can’t admit: if we want to avert a debt-driven fiscal calamity, we will have to bring deficit spending under control soon. “The longer that you wait to make those policy changes . . . the greater the negative consequences [of the national debt] will be,” he said.

Echoing Paul Ryan, Elmendorf said that waiting too long to curb spending and reduce the debt could make investors anxious about the government’s ability to finance its debt, resulting in higher interest rates, higher taxes, and governmental paralysis in responding to emergencies. Elmendorf warned—and this was in January 2011—that if our current policies continue, the deficit could reach almost 100 percent of GDP by the end of the decade. Committee Chair Kent Conrad, a Democrat, observed, “Spending as a share of our national income is at the highest level in 60 years. Revenue as a share of our national income is at its lowest level in 60 years. No wonder that we are headed for the largest deficit ever.”¹⁴

Yet in his State of the Union speech earlier that week, President Obama’s words on the deficits and debt were, as usual, painfully unserious. He called for a five-year freeze on non-mandatory domestic spending (whatever happened to that?) and waxed eloquent about the need to reform entitlements while offering no specifics (and more than a year later, he had still offered no specifics). In fact, in his speech Obama called for new government spending on infrastructure, education, and research to help boost job creation—funding he would call for again, unimaginatively, in his next State of the Union speech.¹⁵ Far from pleas for austerity, Obama was demanding more profligacy and merely paying lip service to a domestic spending freeze and entitlement reform.

Unveiled a few weeks later, Obama’s FY2012 budget contained the same disappointing features he signaled in his SOTU speech. Illustrating that the deficit and debt problems were low priorities, Obama didn’t mention the word “debt” until thirty-five minutes into his remarks.¹⁶ He again called for the five-year domestic-spending freeze, which Paul Ryan had warned would not be enough to solve the debt crisis. Indeed, Obama’s budget would have reduced budget deficits over the next decade by $1.1 trillion, only a quarter of the amount proposed by his own Bipartisan Debt Commission ($4 trillion),¹⁷ whose recommendations he mostly ignored despite having promised he would be “standing with them.”

Obama touted budget “cuts” that were mere smoke and mirrors and gimmicks. First, he redefined Pell grants as mandatory spending instead of discretionary spending, thus taking it “off budget” for the manipulative purpose of selling his plan. Without this bogus re-categorization, discretionary spending would have increased by $14 billion. He similarly reclassified $54 billion of surface transportation from discretionary to mandatory spending, and he resorted to his all-purpose gimmick of touting “savings” from Iraq and Afghanistan. Obama’s sham accounting on these three items alone made discretionary spending appear to be $106.2 billion lower than it actually was. An honest rendering showed that his budget didn’t cut discretionary spending at all, but increased it by $31 billion.¹⁸

Considering the nation’s financial straits, Obama’s FY2012 budget was disgraceful. He proposed $3.73 trillion total spending for the fiscal year (25 percent of GDP, the highest levels since World War II); $46 trillion in spending over the next decade, including $8.7 trillion of new spending; and $26.3 trillion in total new debt by 2021,¹⁹ including entitlement obligations, which he made no effort to reduce. All in all, as our financial condition became more dire, his approach stayed exactly the same—as it would the following year.

“WE WILL NOT BE ADDING MORE TO THE NATIONAL DEBT”

Grossly mischaracterizing his FY2012 budget as a prescription for austerity, Obama declared that his plan “puts us on a path to pay for what we spend by the middle of the decade.” The statement clearly implied he would balance the budget within four or five years, though as ABC News’ Jake Tapper correctly noted, “At no point in the president’s 10-year projection would the U.S. government spend less than it’s taking in.”²⁰ But Obama claimed, “We will not be adding more to the national debt.... We’re not going to be running up the credit card any more.” I responded in my syndicated column,

Now juxtapose that sentence with the facts, even as he presents them. He has pledged to freeze—at already unacceptably high levels—domestic spending for five years. What cuts he would make over the next 10 years would only total $1.1 trillion—an average of just over $100 billion a year. Look at Obama’s own budget deficit projections for the next decade, beginning with 2012. 2012: $1.101 trillion, 2013: $768 billion, 2014: $645 billion, 2015: $607 billion, 2016: $649 billion, 2017: $627 billion, 2018: $619 billion, 2019: $681 billion, 2020: $735 billion, 2021: $774 billion. Total for 10 years: $7.205 trillion—an average deficit of $720 billion per year.

You simply cannot square these numbers with Obama’s statement that he wouldn’t be adding to the debt, unless he’s actually confused about the difference between “deficits” and “debt,” and that’s almost as scary a thought as the numbers themselves. That is, when you operate at staggering deficits that will add almost three-quarters of a trillion dollars to the debt each year, you are adding to the national debt; you are continuing to run up the national credit card. A third-grader could understand that. So tell me: What do you make of a man who presents a projected 10-year budget that, best case, would add $7.205 trillion to the national debt but simultaneously tells you he won’t add to the debt?²¹

The president’s refusal to address the deficit, debt, and entitlement problems is astonishing given his declaration early in his term, “I didn’t come here to pass our problems to the next President or the next generation—I’m here to solve them.” The administration’s own summary budget tables, comparing budgeted receipts to budgeted outlays year by year, made the point strikingly clear:

2010: Receipts: 2,163 [Billion Dollars] / Outlays: 3,456 [Billion Dollars]

2011: Receipts: 2,174 [Billion Dollars] / Outlays: 3,819 [Billion Dollars]

2012: Receipts: 2,627 [Billion Dollars] / Outlays: 3,729 [Billion Dollars]

2013: Receipts: 3,003 [Billion Dollars] / Outlays: 3,771 [Billion Dollars]

2014: Receipts: 3,333 [Billion Dollars] / Outlays: 3,977 [Billion Dollars]

2015: Receipts: 3,583 [Billion Dollars] / Outlays: 4,190 [Billion Dollars]

2016: Receipts: 3,819 [Billion Dollars] / Outlays: 4,468 [Billion Dollars]

2017: Receipts: 4,042 [Billion Dollars] / Outlays: 4,669 [Billion Dollars]

2018: Receipts: 4,257 [Billion Dollars] / Outlays: 4,876 [Billion Dollars]

2019: Receipts: 4,473 [Billion Dollars] / Outlays: 5,154 [Billion Dollars]

2020: Receipts: 4,686 [Billion Dollars] / Outlays: 5,422 [Billion Dollars]

2021: Receipts: 4,923 [Billion Dollars] / Outlays: 5,697 [Billion Dollars]²²

AN ADDITIONAL $80,000 OF DEBT PER HOUSEHOLD

On top of this already depressing news, the Congressional Budget Office found that Obama’s budget request had significantly understated costs and deficits. Obama projected that his budget would generate $7.2 trillion in deficits—which would have been reckless enough—but the CBO calculated deficits of $9.5 trillion—a staggering figure that exceeds the entire accumulated federal debt from the beginning of the Republic through 2010. While Obama routinely eviscerated President George W. Bush for his annual deficits, Obama’s deficits have dwarfed Bush’s. When Bush implemented his tax cuts, his FY2003 budget deficit was $377 billion, and within four years it had shrunk to $161 billion. ²³ Obama’s deficits for the first four years have exceeded or will exceed $1 trillion, and there appears to be no end in sight. Looking at the next decade, based on Obama’s FY2012 budget proposal (FY2013 would show little, if any improvement), the CBO indicated that his deficits would never fall short of $748 billion and will start skyrocketing again in the out years, reaching as high as $1.2 trillion by 2021—and this assumed there would be no major military conflicts to finance.

This merely confirmed the obvious: that revenues from Obama’s tax increases—he would raise taxes by 1.3 percent of GDP—could never keep up with his spending hikes of 4 percent of GDP, even assuming a static analysis with no suppression of growth based on these tax hikes. As long as he refuses to tackle entitlements, the deficit simply cannot be controlled. Over the next ten years, according to these numbers, Obama would pile an additional $80,000 per household of debt onto American families.²⁴

Try as they might, Obama’s team could not defend his deficits. During her Senate confirmation hearing on March 17, 2011, Heather Higginbottom, Obama’s nominee for deputy director of OMB, was told by Senator Jeff Sessions, “In years 8, 9 and 10 it [Obama’s budget proposal] goes up every year and reaches approximately $900 billion from $600 billion, as a low point in the entire 10 years.” He continued, “The highest debt Bush ever had was $450 billion. You don’t have a single year when the budget falls below $600 billion do you?”²⁵

Higginbottom replied, “That’s correct, and Senator, both the president and the director have talked repeatedly about these being the first steps we need to take, and we need to come together in a bipartisan fashion as the chairman and some of his other colleagues are doing to look at these long-term issues. So this isn’t the end of the road.” She insisted, “The president’s budget is the first step in the budget process.”

While Higginbottom attempted to deflect equal responsibility for these deficits onto Republicans, the figures in question came directly from Obama’s budget. His own proposals out of the gate showed these enormous deficits, so even had Republicans sprinted across the aisle and embraced them in toto, the deficits would remain at these unsustainable levels.

Sessions also asked Higginbottom about assertions by Obama and his budget director, Jacob Lew, that Obama’s budget wouldn’t add to the debt. When Higginbottom began an evasive response, Sessions pressed, “No, I asked you, heard by the American people, is that a true statement or not?” Higginbottom replied, “I can’t express how the American people would hear that. What I can say is of course the interest payments on the debt will add to the debt.”

Higginbottom later tried to deflect this question through a Clintonian parsing of the meaning of words. “I’d like to explain what they are referring to,” she explained. “Both the president and the director are referring to an effort to pay for the programs the government’s operating costs as they’re proposed. That’s a concept of primary balance, which I know you and the director have discussed. That notion doesn’t speak to the interest payments. When the president came to office it was a $1.3 trillion deficit. We have to borrow money to pay on that deficit.”

Sessions responded, “Did Mr. Lew or the president of the United States, when they made that statement, we will not be adding to the debt, did they say, ‘by the way American people, what we really meant is some arcane idea about not counting interest payments that the United States must make as part of our debt?’ Did they say that?” Higginbottom answered, “I’m not sure exactly what they did say.”²⁶

So we were left with Obama’s nominee for this crucial position telling us that when Obama said he wouldn’t add to the national debt, he really meant that he wouldn’t add to the “primary balance”—a manufactured, meaningless term obviously designed to deceive the public by ignoring interest payments that must be made with the very same greenbacks as primary debts or principal payments.

“BLISTERING PARTISANSHIP AND MULTIPLE DISTORTIONS”

For those who believed claims by Barack Obama and his top officials that they sought a bipartisan solution to our fiscal problems, the administration’s venomous response to the unveiling of Paul Ryan’s original “Path to Prosperity” plan must have been a real eye-opener.

In a speech at George Washington University on April 13, 2011, Obama neither soberly considered Ryan’s plan nor presented an alternative one; he just engaged in Chicago-style attacks and insults, actually disparaging Ryan’s and the Republicans’ human decency. “Their vision is less about reducing the deficit than it is about changing the basic social compact in America,” Obama proclaimed. He accused Republicans of pitting “children with autism or Down’s syndrome” against “every millionaire and billionaire in our society.” Claiming the plan would “end Medicare as we know it,” he bitterly remarked, “There’s nothing courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill.” He continued,

They paint a vision of our future that’s deeply pessimistic. It’s a vision that says if our roads crumble and our bridges collapse, we can’t afford to fix them. If there are bright young Americans who have the drive and the will but not the money to go to college, we can’t afford to send them.... It’s a vision that says America can’t afford to keep the promise we’ve made to care for our seniors.... This is a vision that says up to 50 million Americans have to lose their health insurance in order for us to reduce the deficit.... Worst of all, this is a vision that says even though America can’t afford to invest in education or clean energy; even though we can’t afford to care for seniors and poor children, we can somehow afford more than $1 trillion in new tax breaks for the wealthy.²⁷

Obama then outlined his own “plan,” which was no plan at all—there were no specifics, just his usual empty promises, platitudes, and misrepresentations.

In the speech, Obama once again blamed America’s fiscal problems on President George W. Bush and his “two wars.” He also faulted Bush’s prescription drug entitlement, even though the Democrats’ alternative plan at the time was projected to cost far more than Bush’s.²⁸

Obama also had the audacity to acknowledge that “around two-thirds of our budget is spent on Medicare, Medicaid, Social Security, and national security,” yet he showed no real willingness to tackle any of those, save national security. After those categories and interest on the debt, he said, all that’s left is 12 percent of the budget, and that so far the cuts proposed by Washington politicians “have focused almost exclusively on that 12%.” Note that Obama made this charge in response to Paul Ryan’s plan, which comprehensively addresses the other 88 percent and was shrilly denounced by Democrats for that very reason.

The Wall Street Journal’s editorial board called Obama’s jeremiad “extraordinary,” with “its blistering partisanship and multiple distortions . . . the kind Presidents usually outsource to some junior lieutenant.” They noted that Obama’s initial political goal was to defuse criticism about his unseriousness on the debt—unseriousness shown by his $3.73 trillion budget and his dismissal of the fiscal commission’s recommendations, even while reports were confirming that his deficit for the preceding year was at an all-time high.²⁹

When Congressional Budget Office Director Doug Elmendorf was asked in congressional hearings how Obama’s spending blueprint—as laid out in his speech at George Washington University—would affect the budget framework, Elmendorf replied, “We don’t estimate speeches,” which served as a fitting and devastating metaphor for Obama’s approach to the budget.³⁰

In the end, although Obama may have made progress in demonizing Paul Ryan, he was less successful in advocating his own budget plans; despite all his posturing, he couldn’t get even one member of his own party in the Senate to vote for his FY2012 budget proposal, which went down to an embarrassing 97 – 0 defeat in May 2011.³¹ This kind of unanimity is becoming a habit for Obama’s budgets—less than a year later, the House rejected his FY2013 budget proposal by a perfect 414 – 0 margin.³² That alone, in saner times, would have been enough to ensure Obama’s defeat in 2012.

A SHEEP IN HAWK’S CLOTHING

In his budget battles, Obama consistently masquerades as a deficit hawk even as he resists budget cuts and demands more spending. On July 15, 2011, Paul Ryan, referring to yet another of Obama’s feints toward frugality, summarized what Obama had actually done since taking office in 2009. Ryan noted that Obama had initiated a 24 percent increase in non-discretionary spending, which would add $734 billion in spending over the next ten years. Under his budgets, the government was spending some 24 percent of GDP when it had historically averaged slightly above 20 percent. Under his FY2012 budget, according to the CBO, he would never spend less than 23 percent of GDP in ten years, and at the end of the ten years it would climb back to 24 percent. This pattern, it should be noted, would be repeated in his FY2013 budget: applying temporary fiscal band-aids and letting the debt gush out later, after he will be long gone from office.

Ryan provided a table from the CBO to illustrate the reckless allocations Obama has made to increase the base budgets for major government agencies. People tend to forget that while Obama pretends Republicans are demanding extreme austerity and want to cut off essential services, Obama had increased the base budgets for his pet agencies both in his stimulus bill, which should have had nothing to do with such expenditures, and in his yearly budgets. Most of this new spending was special interest spending for domestic government agencies. One “egregious” example, noted Ryan, was that the EPA’s budget increased by 36 percent in just two years, and if you include the $7 billion stimulus injection, it enjoyed a two-year increase of 131 percent. These spending increases are shown in the following CBO table.³³

Table 2: Discretionary Spending By Government Agency

Scored Non-Emergency BA (in Millions of Dollars)

Source: Congressional Budget Office Score of Enacted Appropriations

“THERE’S STILL NOTHING OUT THERE. WHY NOT JUST RELEASE THE PLAN?”

Obama repeatedly claimed that Republicans had offered no plan to reduce the deficit and debt and were only criticizing his plans, which was an extraordinary display of projection, even for Obama. In fact, the GOP-controlled House had advanced numerous substantive proposals, including Ryan’s Path to Prosperity and the Cut, Cap, and Balance Act, both of which Obama and his Democratic colleagues roundly rejected.

When pressed during the budget negotiations, White House press secretary Jay Carney floundered when trying to explain why Obama hadn’t produced a detailed plan to tackle the debt. One reporter asked, “There’s still nothing out there. Why not just release the plan?”

Carney replied, “You need something printed for you, you can’t write it down?”

The questioner retorted, “It’s not a plan. No, it’s not a plan.... It wasn’t a plan the same way that we’re getting a plan on the House side or that we’re getting a plan on the Senate side. It’s not.”³⁴

The House passed Ryan’s plan 235 – 189 on April 15, 2011, with no Democrats supporting the measure and only four Republicans voting against it.³⁵ The Senate voted down Ryan’s plan on May 25, 2011, by a 57 – 40 vote, with five Republicans voting with Democrats, though one of those, Senator Rand Paul, voted no because he didn’t believe the spending cuts went far enough. Paul Ryan later responded that the Senate’s action represented an “irresponsible abdication of leadership.”³⁶

During the acrimonious debt-ceiling debates, the Republican House made certain demands as a condition to agreeing, yet again, to increase the debt ceiling. Democrats argued this was petty partisan politics, but in fact the Republicans, having no majority in the Senate and facing a recalcitrant Democratic president, had limited options to press for fiscal responsibility. Obama and the Democrats bitterly resisted major spending cuts and insisted only on tax hikes on the “wealthy,” which wouldn’t have made a dent in the deficit and would have been devastating to an ailing economy. Among the Republicans’ demands was that the president agree to their cut, cap, and balance proposal. The plan was to cut the deficit in half the next year through discretionary and mandatory spending reductions; implement statutory enforceable caps to align federal spending with average revenues at 18 percent of GDP with automatic spending reductions to be triggered if the caps are violated; and to send the states a balanced budget amendment, which would include protections against tax increases and a spending limitation amendment that would align spending with average revenues.³⁷

Rejecting all the GOP proposals on sight, Obama, in a Today Show interview in June, found a creative scapegoat for the sluggish economy: ATMs. Speaking as if the machines had just materialized since his inauguration, Obama declared, “There are some structural issues with our economy, where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM, you don’t go to a bank teller... or you go to the airport and you use a kiosk instead of checking in at the gate. So all these things have created changes.”³⁸ A few months later, the IBD editorial page listed all the things which Obama had blamed for his economic failures, including President Bush, ATMs, Republicans, gridlock, the media, businesses, and “misfortune.”³⁹ The editors omitted a few others, such as the Gulf oil spill and the Japanese tsunami.

During a presidential press conference on June 29, Obama condescendingly chided Congress for not working out a compromise on the debt ceiling as punctually as his children do their homework, though he had been AWOL for much of the process, and when he wasn’t, he was actually obstructing a reasonably responsible agreement to cut spending. Showing a remarkable degree of self-absorption, Obama detailed how hard he was working to reach a deal, saying he had met Republican leaders and had put Vice President Biden in charge of the effort. Predictably, he concluded that it was all the fault of Republicans; referencing GOP leaders, he exclaimed, “At a certain point, they need to do their job.”⁴⁰

“HE IMPERIOUSLY SUMMONED CONGRESSIONAL LEADERS”

On July 15, 2011, Obama strutted out to a press conference to make an indignant announcement that he opposed the Cut, Cap, and Balance Act as well as a balanced budget amendment to the Constitution. As a counterpoint, he focused on raising taxes, saying, “The American people are sold [on tax increases]. The problem is members of Congress are dug in ideologically.” He said “poll after poll” showed Republican and Democratic voters want “a balanced approach,” including both tax hikes and spending cuts, and warned that the country was “running out of time” to avoid fiscal “Armageddon.” As if he’d not been alternatively obstructing and abdicating any leadership role throughout the process, Obama added, “we should not even be this close on a deadline. This is something we should have accomplished earlier.”⁴¹

Unable to get anywhere with Obama, House Republicans passed Cut, Cap, and Balance on July 19 by an almost straight party-line vote, 234 – 190. Paul Ryan noted that the bill “cuts $5.8 trillion in spending over the next decade, locks in those savings with enforceable caps on spending, and forces Washington to finally live within its means with a Balanced Budget Amendment.” Ryan charged that the White House refused to cooperate with Republicans or offer a credible plan of its own and that Senate Democrats had not passed a budget for over 800 days (and hundreds more days have passed since then—the last time they passed a budget was April 29, 2009). He warned, “The coming debt crisis is the single most predictable economic disaster in the history of the nation.”⁴²

Obama had vowed to veto the bill,⁴³ but that proved unnecessary because the Democratic Senate voted on July 22, by a strict party-line 51 – 46 vote, to table it. Majority Leader Harry Reid spectacularly denounced the plan as “one of the worst pieces of legislation to ever be placed on the floor of the United States Senate.”⁴⁴

Increasingly frustrated that Republicans wouldn’t bend to his dictates, Obama, in the words of columnist George Will, “imperiously summoned congressional leaders to his presence: ‘I’ve told them I want them here at 11 a.m’ . . . . upon what meat doth this our current Caesar feed that he has grown so great that he presumes to command leaders of a coequal branch of government?” Will argued, “The current occupant’s vanity and naiveté—a dangerous amalgam—are causing the modern presidency to buckle beneath the weight of its pretenses.”

Will also provided a trenchant summary of the debt-ceiling negotiations, praising the “87 House Republican freshman” whose “inflexibility astonishes and scandalizes Washington because it reflects the rarity of serene fidelity to campaign promises” and who, by refusing to roll over to Obama’s dictates, had vindicated the separation of powers doctrine and “rescued the nation from Obama’s preference for a ‘clean’ debt-ceiling increase that would ignore the onrushing debt tsunami.” Obama said he wondered whether Republicans “can say yes to anything.” Will answered this too: “Well, House Republicans said yes to ‘cut, cap and balance.’ Senate Democrats, who have not produced a budget in more than 800 days, vowed to work all weekend debating this. But Friday they voted to table it, thereby ducking a straightforward vote on the only debt-reduction plan on paper, the only plan debated, the only plan to receive Democratic votes.”⁴⁵

“I CANNOT GUARANTEE THAT THOSE CHECKS GO OUT”

The administration constantly resorted to demagoguery to cloak its obstruction of Republican proposals to reduce the deficits and national debt. This was all the more appalling considering Obama’s castigation of President George W. Bush for “challenges that have been unaddressed over the previous decade.”⁴⁶ As the government approached the debt ceiling, Obama began fear-mongering about the United States defaulting on its principal obligations. This was always an unlikely occurrence because even with the ceiling reached, enough revenues would still come in to satisfy our primary obligations. Nevertheless, Obama ratcheted up his rhetoric, threatening to withhold Social Security checks. “I cannot guarantee that those checks go out on August 3^rd if we haven’t resolved this issue,” he warned, “because there may simply not be the money in the coffers to do it.”

This was more deception. The government would receive $2.174 trillion in revenues during the year, with Social Security outlays totaling $727 billion, and it had already borrowed money to supplement that $2.174 trillion. So Obama undoubtedly knew there would be plenty of money to service our primary obligations and Social Security benefits.⁴⁷

Meanwhile, Obama invoked class warfare against private jet owners, as if to imply that we couldn’t balance the budget as long as we allowed these “tax breaks for the wealthy.” But this was another red herring, as eliminating the deduction, even assuming no negative impact on private usage, would yield only about $3 billion in additional revenue, which is 0.075 percent of the $4 trillion in deficit reduction that Obama was allegedly seeking—a statistically insignificant figure.⁴⁸

In typical fashion, Obama, his demagoguery in full tilt, declared, “It’s my hope that everybody is gonna leave their ultimatums at the door, that we’ll all leave our political rhetoric at the door.”⁴⁹ Columnist Charles Krauthammer pointedly highlighted Obama’s hypocrisy, writing, “And then, from the miasma of gridlock, rises our president, calling upon those unruly congressional children to quit squabbling, stop kicking the can down the road, and get serious about debt.”⁵⁰

Incongruously, White House press secretary Jay Carney took time out from the administration’s doom-mongering over the debt ceiling to brag about the wonderful state of the economy. In July 2011, he said, “Well, two things remain uncontestably true. The economy is vastly improved from what it was when Barack Obama was sworn into office as president. We were in economic free-fall. There were predictions that we were headed to the second Great Depression.”⁵¹ Illustrating the administration’s poor record of economic analysis, weeks after Carney’s comments, former White House economic adviser Jared Bernstein, who had co-authored the administration’s famous report predicting the stimulus would keep unemployment below 8 percent, admitted he was wrong and forecast that unemployment would not fall below 8 percent before the end of 2012.⁵²

Meanwhile, as noted previously, our ever-rising national debt led Standard & Poor’s to downgrade the United States’ credit rating for the first time in ninety-four years, a move Obama promptly blamed on Republican opposition to increasing the debt ceiling. America had retained its credit rating through two world wars, the Great Depression, FDR’s New Deal, LBJ’s Great Society, and the military buildup of the Cold War, yet S&P found that America’s new, unprecedented debt levels warranted a downgrade.⁵³ Obama responded that when it came to domestic spending and defense, “there’s not much further we can cut.”⁵⁴

The defense issue aside, it was a revealing look at his worldview. By merely curbing the rate of increase in domestic spending, he believed he had gone way beyond the bounds of reason.

“I MAKE NO APOLOGIES FOR BEING REASONABLE”

Even after the parties agreed to a deal to resolve the budget ceiling impasse, Obama was still champing at the bit to hike spending. As soon as the Budget Control Act of 2011 was passed, Obama announced new spending proposals—under the euphemism “key investments”—which included higher taxes, extended unemployment benefits, and a “national infrastructure bank.” As columnist Michelle Malkin observed, “The infrastructure banks would borrow more money the government doesn’t have to dole out grants that wouldn’t be paid back and don’t require interest payments.”⁵⁵ Essentially, Obama was looking to create an entirely new financial structure to facilitate his profligacy.

Indeed, the debt-ceiling agreement only seemed to make Obama more partisan and combative. On a campaign blitz through Minnesota, Iowa, and Illinois, a frustrated Obama sought to re-fight the just-finished debt battle. He lashed out at all his GOP presidential rivals, saying, “That’s just not common sense. You’ve got to be willing to compromise to move the country forward.” He added, “I make no apologies for being reasonable.”

Obama failed to mention that the GOP’s resistance to his pleas for a tax hike was a perfectly reasonable position, since higher taxes would hinder economic growth and make it even harder to balance the budget. In fact, to agree to his plan, which he had demanded because his stubborn ideology required punishing the “rich,” was not reasonable if the goal was to improve the nation’s fiscal position.⁵⁶

At any rate, after the debt-ceiling agreement, Obama demanded yet more spending, this time for his proposed $447 billion jobs bill. The administration claimed the bill would “support”—another meaningless, immeasurable metric—400,000 education jobs via grants to the states. As Hot Air’s Ed Morrissey pointed out, the administration used a similar rationale when arguing about all the jobs its original stimulus bill “saved or created.” But, he noted, many of the “saved” jobs were bureaucratic ones—not just the teachers, police officers, and fire fighters continually touted by Team Obama—and the stimulus simply enabled the states to delay painful but necessary cost-cutting measures. Morrissey also pointed out that Obama had a calculated political motive for subsidizing these particular employees—many of them belong to Obama-supporting public employee unions such as the SEIU and AFCSME.⁵⁷

In fact, the entire jobs bill was a farce. Obama knew it couldn’t pass the GOP-controlled House, but he pushed for it anyway to stoke his leftist base and to position himself to blame Republicans for obstructing his “recovery.” Sam Youngman, in The Hill, likened the American Jobs Act to Elvis: “The King made $60 million last year even though he died in 1977. The lesson: Just ’cause something is dead doesn’t mean it can’t be effective. And so it is with President Obama and his jobs bill. It’s dead as is.” Republican as well as some Democratic leaders had made that clear but, wrote Youngman, “that will not stop Obama from talking about the jobs bill and nothing else. That’s because the White House hopes the president’s steady drumbeat of ‘pass the bill’ can become a rallying cry for his supporters even if it doesn’t create a single job.”

One Democratic strategist noted cynically, “He has to keep this up so long that after people stop thinking it has a chance, they start thinking that he is some sort of crazy for creating jobs. Repetition, repetition, repetition.”⁵⁸ This charade reached the pinnacle of absurdity when Senate Democrats changed Senate rules in part to avoid a symbolic vote on the jobs bill.⁵⁹ Even after Democrats obstructed the vote on his own bill, Obama continued to hammer Republicans for obstruction.

“THE FOOD STAMP PRESIDENT”

As documented in Crimes Against Liberty, Obama repeatedly breached his promise not to raise taxes of any kind on families making $250,000 or less. He has also flirted with implementing a Value Added Tax (VAT), which would necessarily obliterate his tax pledge. In an interview with CNBC’s John Harwood in April 2010, Obama refused to rule out imposing a VAT, as had his economic adviser Austan Goolsbee. ⁶⁰ Some have speculated Obama has racked up so much debt, at least in part, to justify enacting a VAT as a desperate deficit-reducing measure—even though a VAT would utterly fail in that role, as seen throughout Europe. On the Journal Editorial Report on Fox News Channel, Wall Street Journal editorial page editor Paul Gigot mused, “I think the strategy is—has been all along—increase spending, then ultimately, you will have to raise taxes to pay for it. And in a second term, the idea is, try to get a value added tax, if possible, or a major energy tax. Because they know they can’t pay for this spending just by taxing the rich.”⁶¹

Obama’s redistributionist philosophy is reflected not only in his tax plans, but in his drastic expansion of welfare programs. Republican presidential candidate Newt Gingrich took heat for calling Barack Obama the “food stamp president,” but the evidence supports Gingrich. Judicial Watch reported that the Obama administration rewarded the state of Oregon a $5 million bonus for its efficiency in adding food-stamp recipients to already bulging rolls. This was under the government’s Supplemental Nutrition Assistance Program (SNAP) to reduce “food insecure households” by increasing access to food stamps. According to Judicial Watch, the Department of Agriculture has recently launched a multi-million dollar initiative to recruit more food-stamp participants.⁶²

Some claim these types of awards date back to the Bush administration. ⁶³ That may be partially true, but the Heritage Foundation reports that between FY2008, the last of President George W. Bush’s fiscal years, and FY2011, the average per capita benefit of SNAP almost doubled from $39.3 billion to $75.3 billion (in constant 2011 dollars).⁶⁴ The Wall Street Journal reported in November 2011 that nearly 15 percent of the U.S. population—45.8 million—received food stamp assistance in the month of August and that food stamp rolls had risen 8.1 percent over the preceding year, according to the Department of Agriculture.⁶⁵

The number of Americans who receive some form of federal government aid has skyrocketed just in the past five years to 67.3 million people, or 21.8 percent (excluding government employees). The following charts show how the percentage was about half that in the 1960s, before President Lyndon Johnson launched his War on Poverty and Great Society programs. The numbers then rose until the mid-1990s, fell slightly, and then rose slightly again during the George W. Bush administration. But during President Obama’s term the trajectory has been nearly vertical:⁶⁶

1 in 5 Americans Dependent on Government (Not Including Government Employees)

Source: Heritage Foundation calculations based on data from the U.S. Department of Education, Social Security Administration, U.S. Department of Health and Human Services, Office of Personnel Management, and the U.S. Census Bureau.

Chart 12 ● CDA 12-02 033

heritage.org

A shocking 70.5 percent of federal spending is now dedicated to dependence programs of one kind or another, and this percentage has grown sharply during Obama’s term as well, as shown in the following chart:⁶⁷

More than 70 Percent of Federal Spending Goes to Dependence Programs

Sources: Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2012, 20 11, Table 1.1, pp. 22 and 23, and Heritage Foundation calculations sourced throughout the Index of Dependence on Government.

Chart 2• CDA 12-02 035

heritage.org

In addition, under President Obama, an even greater percentage of Americans—49.5 percent—is not paying income taxes. Thus, we have more and more Americans depending on federal transfer payments, set against a dwindling number of taxpayers. This trend imperils our national destiny, for the electoral power grows ever stronger among those whose vested interest is in receiving transfer payments from others rather than contributing to society’s productivity and wealth. Again, this number has been steadily rising, with intermittent dips, since the 1960s, but it has exploded during Obama’s term, as this chart shows:⁶⁸

Nearly Half of All Americans Don’t Pay Income Taxes

Source: Heritage Foundation calculations based on data from the Internal Revenue Service,“Individual Income Tax Returns,” Publication 1304, 1962—2009, Table 1.4, and various IRS reports.

Chart I CDA 12-02 037

heritage.org

This trend reflects the administration’s redistributionist philosophy, but also its nonsensical belief that welfare payments stimulate jobs. When the Wall Street Journal’s Laura Meckler asked White House press secretary Jay Carney how exactly extending unemployment insurance creates jobs, Carney issued a reply that sounded like a Saturday Night Live parody of Keynesian theory:

Oh, uh, it is by, uh, I would expect a reporter from the Wall Street Journal would know this as part of the entrance exam. There are few other ways that can directly put money into the economy than applying unemployment insurance. It is one of the most direct ways to infuse money directly into the economy because people who are unemployed and obviously aren’t running a paycheck are going to spend the money that they get. They’re not going to save it; they’re going to spend it. And with unemployment insurance, that way, the money goes directly back into the economy, dollar for dollar virtually. Every place that, that money is spent has added business and that creates growth and income for businesses that leads them to decisions about jobs, more hiring.

Carney estimated that unemployment benefits alone could create up to one million jobs.⁶⁹ Unsurprisingly, Obama’s Agriculture secretary, Tom Vilsack, just a week later argued that food stamps are a stimulus as well. “I should point out, when you talk about the SNAP program or the food stamp program, you have to recognize that it’s also an economic stimulus,” Vilsack declared. “Every dollar of SNAP benefits generates $1.84 in the economy in terms of economic activity. If people are able to buy a little more in the grocery store, someone has to stock it, package it, shelve it, process it, ship it. All of those are jobs. It’s the most direct stimulus you can get in the economy during these tough times.”⁷⁰

OSAWATOMIE PROGRESSIVISM

If there had been any expectation that Obama would set politics aside and begin working toward a bipartisan solution to our entitlement and debt problems, he emphatically removed it in a speech in Osawatomie, Kansas, in December 2011. According to his aides, he chose the location because Teddy Roosevelt had delivered his “New Nationalism” speech there in 1910.

In the speech, Obama invoked Teddy Roosevelt’s memory in support of Obama’s belief that capitalism just can’t work without a beneficent federal government keeping it in check and restraining capitalist predators. He wholly distorted American history to imply that our free market system, which has produced the most economically successful society in history, only worked when progressives had tweaked it. But America’s economic problems, especially the ones we are currently facing, have not been caused by unregulated capitalism, but by profligate federal spending, excessive taxation, and overregulation by unaccountable officials and bureaucrats. The problem hasn’t been unfettered robber baron capitalists, but an overreaching, over-intrusive federal government that won’t let the market breathe.

But Obama needed to allege there were inherent flaws in capitalism itself, in order to support his claim that without his intervention, the system, and its capitalist (read: Republican) exploiters, would gobble up all the wealth for themselves and leave the rest of the American people—Obama’s constituents—with nothing. So he doubled down on class warfare, telling some of his fellow Americans just how unfair other Americans are. “Some billionaires have a tax rate as low as one percent,” Obama intoned. “One percent. That is the height of unfairness. It is wrong. It’s wrong that in the United States of America, a teacher or a nurse or a construction worker, maybe earns $50,000 a year, should pay a higher tax rate than somebody raking in $50 million.”

It didn’t matter to Obama that what he was saying was untrue—as Washington Post fact-checker Glenn Kessler verified when he coaxed an admission from an administration official that the White House had no data to support Obama’s claim.⁷¹ What mattered was that it was inflammatory enough to divert attention from our real financial crises. This would be critically important as Obama headed into the final year of his term to face off with Congressman Paul Ryan, once again, on the budget.

REPUBLICANS PASS RYAN BUDGET; OBAMA GOES BALLISTIC

In February 2012, before Obama submitted his FY2013 budget, Paul Ryan predicted the president would “duck the tough decisions, he’s not going to offer a solution to our fiscal problems to our coming debt crisis and he’ll probably have sprinkled throughout his budget some of the kind of themes he threw out in the fall and the State of the Union address for his campaign.” While pledging that he and the Republicans would present a plan, like they had the year before, to tackle entitlements and reform the tax code, Ryan warned that this would be Obama’s fourth budget that failed to offer a solution to the nation’s fiscal problems and coming debt crisis. Ryan’s words were prophetic.

On March 29, 2012, the House approved Ryan’s plan on a 228 – 191 vote, mostly along party lines. White House spokesman Jay Carney immediately attempted to discredit the bill, claiming it would create “a segmented replacement for Medicare that would burden seniors and end the program as we know it.” House Speaker John Boehner shot back that it would set “a course that’s sustainable not just for our generation, but for our kids and our grandkids.”⁷²

In a speech to news executives a few days later, Obama ripped into Republicans and their budget plan, saying they were so radical that even Ronald Reagan wouldn’t be able to win the GOP primary today. Decrying Republicans’ bleak, backward, “radical vision,” Obama denounced the proposal as “thinly veiled social Darwinism.” “It is antithetical to our entire history as a land of opportunity and upward mobility for everybody who’s willing to work for it,” Obama proclaimed, adding that “it’s a prescription for decline.” He cavalierly instructed the media to report that the parties were not equally to blame, for it was Republicans who were unwilling to compromise.⁷³

Meanwhile, as Ryan had predicted, Obama continued steering the economy toward fiscal oblivion, offering no plan of his own to restructure our entitlement programs, which hang like the sword of Damocles over our country.

Obama’s demagogic response to Ryan’s budget had it completely backward, as usual. He is the one thwarting equal opportunity and upward mobility; he is the one offering a bleak, radical vision that is antithetical to our history; he is the one discouraging people from contributing to our society and working, and punishing those who are successful; he is the one who has been unwilling to compromise and has ensured our national decline. He and his party are at fault for our economic and financial crises, not Republicans, who have tried in vain to correct our national course.

At a time when attentive Americans are horrified over our nation’s fiscal condition and imminent national bankruptcy, Paul Ryan has shown true leadership with a mastery of the budgetary material and a bold, innovative, and realistic plan to restore us on the road not just to fiscal solvency, but to economic growth. His plan is the primary antidote for Obama’s destructive vision and agenda. Ryan has made clear that our problems become more intractable with every day we wait to address them. Each day more people reach retirement age, and every year our unfunded liabilities grow at an alarming rate. Experts have warned that we have two or three years at most to get our fiscal house in order. After that, our bond markets will go south and we will end up like Greece and other economic basket cases.

Our choice is either to design the solution ourselves, whereby we limit and manage the pain, or continue to kick the can down the road and eventually suffer a financial collapse, when far worse pain will be forced upon us.

The Obama administration’s approach of putting its finger in the dike today and holding it there for ten years while we forever ruminate and posture about possible solutions is reckless and immoral. The president and his economic advisers must be aware of that. Yet all they do is obstruct and demonize those, like Paul Ryan, who are trying to save the nation. The only cuts they can abide are those that ensure the “wealthy” enjoy much less of their own money, and those that slash our defense budget and endanger our national security.

You may or may not support Ryan’s proposals, which the Republican Congress has largely embraced, but at least he has presented a serious, comprehensive reform plan. By contrast, Obama has offered no plan to solve or even to address our nation’s monumental debt problems.

Obama once proclaimed that he believes in American exceptionalism just as “the Greeks believe in Greek exceptionalism.” Well, if America continues on our current fiscal path, we’re going to learn first-hand what “Greek exceptionalism” really feels like.

THE ECONOMY “SHUTS DOWN IN 2027”