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Works and Days

Our Ten-Trillion-Dollar Man

July 24th, 2011 - 4:58 pm

Borrowing Is No Longer Stimulus?

The Congressional Budget Office not long ago forecast that Barack Obama’s $1 trillion-plus annual deficits — scheduled over the next decade — would result in almost another $10 trillion in aggregate debt. Going back to the pre-Bush tax rates this time won’t balance the budget. Slashing discretionary spending will not. So large has the splurge become, and so hooked are the constituencies of federal money, that massive cuts to entitlements necessary to stave off financial implosion may well prompt Greek-like protests.

That staggering sum was apparently conventional wisdom until the November 2010 election. But now there is fear that at some point in the future, Obama will not be known as the first African-American president. Nor will he be cited even as the hope-and-change phenomenon of 2008. Instead, posterity shall know him as the single greatest borrower in American presidential history, a novice who nearly wrecked the U.S. economy by borrowing over $4 billion a day without any feasible proposal how to pay back such a vast sum — taking a post-recession recovery and turning it into a stagflationary mess. In the third year of his tenure, Obama is still left only with “Bush did it” as an explanation of what went wrong.

Obama has managed the nearly impossible: the greatest peacetime deficits in U.S. history — about $1.5 trillion per year — in his first three years achieved almost no economic expansion. Instead, unemployment is chronic and stays over 9.2%; growth is stagnant; gas is sky-high — and the president seems stunned that none of what he had promised came to pass. All his liberal nostrums have been tried and been found wanting. There is no successful EU model, no winning blue-state statist paradigm for guidance.

Remember that his key advisors — Goolsbee, Orszag, Romer, Summers — have now quit and did not last even three years, their policies orphaned by the very parents who spawned them. Even the president joked that “shovel-ready” was a joke. When he evokes “stimulus” and “investment,” in response, we do not even think “borrowing” and “taxes,” but rather “he’s clueless again.” The old argument that we simply did not borrow enough (say, $5, $6, $7 billion a day?) is laughable beyond the point of caricature, given that the administration followed the Bush record of record peacetime debt. The only mystery is whether the massive Obama borrowing was a product of incompetence, a poorly thought out gorge the beast way of increasing taxes and redistributing income, or a more cynical effort at creating a permanent constituency of millions of new food stamp recipients and federal workers. Or more than that still.

Your Debt And None Of Our Own

Obama himself recently proposed a massive deficit budget that not a single Democrat in the Senate could vote for; then suddenly he flipped, and said that red ink of the sort that he ran up was now unsustainable. When did the president of the United States metamorphosize from the greatest Keynesian in presidential history to a fiscal hawk — January? March? April 1?

As he calls for higher taxes, he still has not offered any plan whatsoever that details where the president himself would cut. Remember that he conceded in December that higher taxes were bad; but by July they were then good again. He courts Wall Street one day for campaign money, yet on another calls them “fat cat” bankers and deplores their jets. Food stamps recipients now number 50 million — and we dare not imagine that even one has taken a dime without good cause.

The would-be employer is told to hire, but on what confident supposition, what rationale? That he knows well the tax rate to come, the health care costs to come, the regulations to come, the pro-business, veteran CEO appointee to come, the next presidential slur to come? Apparently Obama believed that capitalists were so greedy, so wealthy, so money-hungry that they would not mind much the redistributive obstacles he erected.

He talks grandly of getting America back to work, as his subordinates try to close down a Boeing aircraft plant, layer more regulations and burdens on energy production, reverse the order of creditors in the Chrysler mess, and take over GM — even as he continues the old “spread the wealth” and “redistributive change” adolescent rants with newer, sillier faculty lounge concoctions, claiming that at some point we have made enough money and that he himself has hundreds of thousands of dollars in income that he does not need and thus should have higher taxes on. (If so, please, help the Treasury out by offering to pay the gas for the Costa del Sol, Vail, and Martha’s Vineyard first-family freebies). One expects such banalities from the college dorm lounge, but not the middle-aged president of the United States.

Carter 2.0

Abroad the misdirection, confusion, and petulance mirror-image the debt mess. In Libya we have no mission aim, no methodology, and no desired outcome — our consolation only that Libya is a tiny country compared to a nearly 30-million person Afghanistan or Iraq. Obama went to the Arab League and the UN, but not the U.S. Congress for authorization — but to do what? Help the rebels? Enforce a no-fly-zone? Kill Gaddafi? Overthrow the government? All, some, or none?

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