Thursday, January 27, 2011

The Un-Serious President

By Donald Sensing

Because I am on the White House's email list, they sent me the "as-delivered" text of President Obama's SOTU address. There are two sequential paragraphs I address here:

... I am proposing that starting this year, we freeze annual domestic spending for the next five years. (Applause.) Now, this would reduce the deficit by more than $400 billion over the next decade, and will bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was President.

This freeze will require painful cuts. Already, we've frozen the salaries of hardworking federal employees for the next two years. I've proposed cuts to things I care deeply about, like community action programs. The Secretary of Defense has also agreed to cut tens of billions of dollars in spending that he and his generals believe our military can do without.
This is a stunningly unserious proposal. Since a picture is worth a thousand words, here is why:


Okay, maybe a picture is worth a trillion reasons, or 25 trillion, or whatever. Some explanation of the columns is in order.

The leftmost column is the Congressional Budget Office's estimate of the cumulative deficit from 2011-2021, just under $7 trillion. (Note: the CBO estimates that the deficit for just this year will be $1.5 trillion.) This estimate is based (as the law requires) on static analysis - meaning that it assumes present laws affecting taxes and spending will not change over the 10 years.

But having made the estimate that the law requires, the CBO makes another one with certain presumptions. While these presumptions are open to debate, they are not unreasonable. So the column second from left is the CBO-adjusted ten-year estimate of approximately $12 trillion.

But deficits, while important, are not actually the major problem. That problem is debt. And we are rapidly approaching the crush depth of debt. Deficits add to the debt, of course, but a deficit now and then is not going to sink the ship of state.

The problem is when deficits are either massive or repetitive. Under the Obama administration they have been both. I do not defend the deficits run up by G.W. Bush, but consider what Obama has done with them:


Today, Americans owe more than $14 trillion in federal debt (center column), approaching the amount of the gross national product. If you include the unfunded mandates for the next few decades, the number approaches $60 trillion, more than the economic output of the entire globe.

By 2021, the federal debt will be more than $25 trillion (second from right column). Interest payments alone will consume more than half the federal budget before that.

And what is President Obama's bold pronouncement to this crisis? That's the right column - "cut" $400 billion over 10 years.

But don't worry. He's cutting things he care deeply about, "like community action programs." That was his only example of cuts to things he cares about, and what a budget buster they have been, eh? The rest of his "cuts" comes from three sources:

** The defense budget, which no budget analyst says is the bank breaker, and which will save, Obama said, "tens of billions," not exactly a budgetary life saver, anyway, and

** a freeze on domestic spending, but that spending is the source of his runaway deficits; a freeze simply locks the deficits in ut infinitio, and

** A freeze on federal salaries, which does nothing to push back the runaway size of the government that began long before Obama's term, but which he has not arrested and obviously will not. Note that Obama did not promise a freeze on hiring, just a freeze on salaries. So expect federal salaries to keep adding to the deficit as more people are hired, even though salaries of the pay scales won't increase.


More than anything else in the SOTU speech - including "winning the future with trains and windmills" - the president's wave-of-the-hand dismissal of the true crisis of the country's solvency demonstrates that no one who ever actually thought he was a serious- or sober-minded man can cogently think so now.

As my first reaction said, "This is a man whose heart is no longer in the job. He is just marking time now."

Additional reading:

http://www.usdebtclock.org/

http://www.gop.gov/policy-news/11/01/26/an-overview-of-cbos-january

http://www.nationalreview.com/corner/258115/cbo-baseline-shows-staggering-debt-brian-riedl

http://cboblog.cbo.gov/?p=1726

http://cbo.gov/doc.cfm?index=12039

http://cbo.gov/ftpdocs/120xx/doc12039/SummaryforWeb.pdf

http://cboblog.cbo.gov/?p=1812

http://www.heritage.org/Research/Reports/2011/01/New-CBO-Budget-Baseline-Reveals-Permanent-Trillion-Dollar-Deficits

http://www.cato-at-liberty.org/new-cbo-numbers-re-confirm-that-balancing-the-budget-is-simple-with-modest-fiscal-restraint/

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