The Magazine

Spender in Chief

The president doesn’t want a deal; he wants higher taxes, on his terms.

Dec 17, 2012, Vol. 18, No. 14 • By FRED BARNES
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Among President Obama’s rhetorical skills is an impressive mastery of lip service. He displayed it last week when he spoke to the Business Roundtable, the lobby for big business. And he did so without betraying even a hint that his words were bunk.

Boehner looking at Obama

House Speaker John Boehner, President Barack Obama

Newscom

In this case, he was paying lip service to the notion that​—​contrary to what he called “my reputation”​—​he’s for spending cuts to reduce the deficit and to secure a bipartisan deal to avert the fiscal cliff on January 1. “We’re prepared to make some tough decisions when it comes to cutting spending,” he insisted.

The business moguls didn’t break into laughter, but they should have. Senate minority leader Mitch McConnell did when he heard the president’s plan for a fiscal cliff agreement. Serious spending cuts, meaningful reforms, even modest restraint​—​those are missing from the Obama plan. And not surprisingly.

When Democrats controlled Congress with large majorities in his first two years as president, Obama spent lavishly. The deficit soared past $1 trillion a year and has stayed there. Federal spending reached 25 percent of GDP, the highest level since World War II. Obama had an excuse. He was battling a deep recession. But when the downturn ended five months after he took office, he continued to spend.

His second two years were different. Republicans captured the House in 2010 and claimed a mandate to shrink spending. Obama resisted at every juncture. He opposed cuts​—​any cuts at all​—​in three continuing resolutions that kept the government operating in 2011. And he asked for a “clean” increase in the debt limit​—​that is, with no spending cuts attached. He acceded to cuts only under extreme duress.

Obama’s plan for a fiscal cliff compromise reflects his hostility to spending cuts. Instead, he wants to raise taxes by $1.6 trillion. That’s a nonstarter. He wants another stimulus of $50 billion. It’s already DOA on Capitol Hill. Worse, he’s back with the most fraudulent spending cut of all, $800 billion in reduced funding for wars in Iraq and Afghanistan a few years from now when they’re no longer being fought. This counts as a cut of money that’s never going to be spent.

But at least Obama is willing to tackle skyrocketing entitlement spending, right? Wrong. He’s offering $400 billion in reductions sometime down the road, chiefly in what’s paid to providers. Yes, this would produce a reduction​—​in the number of providers, particularly doctors, who will quit seeing Medicare patients.

What Republicans want with entitlements is not cuts but reforms. They’ve recommended raising the eligibility age for Medicare and slightly means testing the formula for benefits. This isn’t radical stuff. The Medicare prescription drug program is already means tested to favor the less affluent.

Why not agree to these changes? The liberal base of the Democratic party​—​Obama’s base​—​opposes them, that’s why. House minority leader Nancy Pelosi says they would harm the middle class (not true). She’s against shaving any funding from Medicare, with one exception. In 2010, she supported a cut of $716 billion, with the money shifted to Obamacare to make it appear fiscally sound and thus able to win congressional approval.

If Obama doesn’t know better than to follow Pelosi’s lead, the co-head of his deficit reduction commission, Erskine Bowles, does. He’s an ardent entitlement reformer and was the instigator of the 1997 agreement between Newt Gingrich and President Bill Clinton on reforming Social Security. Their secret pact died when the Monica Lewinsky scandal broke.

Bowles, by the way, was the Democratic leader of the commission. He talks to Obama and surely must have described the value of reforming entitlements. But Obama may be so puffed up by winning reelection that he won’t consider a major concession to Republicans or he may be just too much of a reactionary to allow tinkering with a sainted liberal program.

By dismissing GOP offers, he’s pursuing a risky strategy. The press trumpets the White House line that the only impediment to a fiscal cliff deal is Republicans’ refusal to accept income tax rate hikes for the wealthy (and not so wealthy). But there’s another barrier that’s equal to the tax hike, perhaps greater.

House speaker John Boehner can’t agree to a deal without real spending cuts or reforms. If he did, House Republicans would abandon him. The Washington Post says “a growing chorus of Republicans” are ready to accept a deal that boosts tax rates. Maybe so, but the chorus would be no larger than a quartet or a trio if spending cuts aren’t included.

Treasury Secretary Tim Geithner claims the president is willing to go over the fiscal cliff absent higher tax rates for the top 2 percent of earners. That would mean everyone’s taxes would go up and deep cuts in defense and domestic spending would be imposed.

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