The Magazine

A Budget Deficit

Obama's big-government plan and the GOP's uninspiring alternative.

Apr 13, 2009, Vol. 14, No. 29 • By MATTHEW CONTINETTI
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You can learn a lot from a budget. President Obama's $3.6 trillion behemoth isn't just a bunch of numbers and tables. It's a vision of where America ought to be in the future. Obama would ramp up government spending in health care, energy, and education. Taxpayers would foot the bill for a larger, more intrusive government that would claim to improve the quality of life and reduce inequality.

Annual deficits and a growing public debt burden would be secondary to improving society. Obama is betting that, by throwing money at schools and hospitals and environmentally friendly industries, he'll lay the foundation for the next economic boom. The president says he's neither a socialist nor a big-government liberal. He sees himself as the venture-capitalist-in-chief.

The problem with all this is that Obama has an oversized confidence in what government can achieve. The economy and society aren't toys that the president and his whiz-kid policymakers can manipulate to achieve their desired ends. The economy and society are complex organisms that constantly mutate. They repel, adapt to, or coopt outside pressures. They frustrate attempts at rational control.

Why? Because the economy and society are composed of weak, flawed, and irrational creatures with a will of their own. In Obama's view, government can pick up the slack when individuals or markets fail. That's true up to a point. But who will clean up the mess when government fails?

When Obama says his budget heralds "a new era of responsibility," he's not talking about individual responsibility, or the responsibility of families to raise the next generation. Nor does he mean government's responsibility to provide for a decent measure of social and national security, and a legal and regulatory framework that allows civil society and the free market to flourish. No, Obama is talking about the responsibilities government is going to impose on us in the form of higher taxes. The upshot is more government, and still more debt. Not to mention a dependent citizenry.

We wish we could say that Republicans had stepped up to the plate with a compelling, competing vision of America's future. Unfortunately, that hasn't happened yet. As visions go, the alternative budget that the House GOP offered last week is pretty dim. It's the same platform Republicans rode to defeat in 2008: a five-year spending freeze, extending the Bush tax cuts, and reducing the corporate tax rate to 25 percent from 35 percent. It would tie Medicare benefits to income so that high-earners receive less. It would prevent future bailouts and repeal much of the stimulus. And it would increase domestic oil and natural gas production.

There are plenty of good ideas in the House GOP budget. We're particularly fond of the energy program, for example, and think voters would be, too. Nonetheless, the good ideas don't yet add up to an attractive picture of a prosperous and responsible America. The party of Lincoln has a real opportunity to rechristen its relationship with the American middle class, and to chart a way forward for democratic capitalism. That work has just begun, so perhaps it's not fair to expect it to be reflected in this year's Republican budget alternative. But, even judged by limited expectations, this budget's pretty uninspiring.

It almost seems as if the GOP worked backward. Typically, the job of politics is to figure out what kind of society we would like to have, and then figure out a way to pay for it. But the House Republicans started by figuring out how much they were willing to pay--"the post-war average tax level of roughly 18.3 percent of gross domestic product"--and then determined what the government would have to look like to get there. Instead of deficits that bring you more health, energy, and education funding, the House GOP's deficits bring you tax cuts for childless high-earners and corporations.

Conservatives envision a society where prosperous and thrifty two-parent families pay for their health insurance, like their car insurance, directly; where a middle-class family's tax burden is low; where there is money left over to save for education and retirement. If only Republican politicians took up this cause, too. Why not hold off on the corporate tax reform and instead cut taxes for the middle class while drastically expanding the child tax credit? Why not sit on plans for Medicare in order to give able-bodied adults tax incentives to purchase their own insurance on the open market? Why not suggest a gradual increase in the retirement age to secure the long-term future of entitlements? Why not end farm subsidies outright, cap the mortgage-interest deduction, and call for a shift in the tax burden from earned income and labor to consumption?