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The Obama Bankruptcy

ADVANCE EDITORIAL from the August 17, 2012 issue.

12:00 AM, Aug 17, 2012 • By IRWIN M. STELZER
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The end of Medicare and Medicaid as we know them—through reform, the Ryan way, or -bankruptcy, the Obama way. The direction of the country—via the Romney-Ryan right track, or the Obama-Biden wrong track. Those are the choices, made stark by the addition of Paul Ryan to the Republican ticket.

Barack Obama

Anyone who thought that the selection of Paul Ryan would force the president and his team to abandon purely negative campaigning had better think again. The presence of Ryan on the ticket has merely changed the target of Obama’s negative campaign from Mitt Romney’s performance at Bain Capital to Paul Ryan’s plans to make sense of our fiscal condition and preserve Medicare, unchanged for those 55 years old and over, reformed for other Americans. The Obama campaign remains stuck on negative, claiming that Ryan would destroy Medicare and Medicaid “as we know them.” How Obama would preserve these programs “as we know them” remains a deeper secret than his well-publicized cyberattacks on Iran. The simple fact is that existing entitlements, gobbling ever-larger portions of our GDP, cannot survive “as we know them.”

I am reminded of a wonderful scene in an Elaine May movie (A New Leaf) in which Walter Matthau’s attorney is trying to explain to him that he has squandered his entire huge inheritance. To which an uncomprehending Matthau, waving a check that has bounced, replies that his check must be honored, a position he maintains despite his lawyer’s repeated explanation that, having spent more than the income from his inheritance for many years, he has no more capital: “You don’t have any money.”

President Obama certainly cuts a more elegant figure than the late, rumpled Walter Matthau, but he, too, has no money to back his spending plans. Which is why the Democrats are sticking to their negative campaign rather than saying just how they propose to save these entitlements as we know them. Matthau solved his problem by marrying an extraordinarily wealthy heiress; Obama has solved his problem—our problem—by borrowing almost 40 cents to cover every dollar he spends. That can’t go on, and won’t be solved by soaking the rich: Squeeze them dry and he won’t affect the rounding error in his deficits.

We have already lost our triple-A rating and are on notice that the world’s investors will charge a lot more for their money if we don’t get off this wrong track. The burden of the debt Obama has already incurred in record-breaking amounts, the burden hanging over the next generation, will increase when mounting debt drives interest rates up. Entitlements will not be the only things surrendered: Doubt that and ask overly indebted cities around the country how they are faring with reduced budgets for education, police, firemen, and the parks and other amenities that their citizens assumed were theirs by right.

So the choices on offer are continuing full speed ahead towards the fiscal cliff—the Obama plan—or adopting some version of the Ryan reforms. It is not between some viable Obama plan, nowhere in sight, and the Ryan plan; it is between denial and a willingness to face hard facts. That is not to say that all of those reforms are perfect, or that Mitt Romney has not been vague about just which loopholes he plans to close in order to finance his proposed tax cuts and Ryan’s proposed reforms. That is less important than the differences between Obama and Romney-Ryan on the direction in which they wish to take the country. Voters generally agree that Obama has us on the wrong track—even those who like some of what the president has done by and large concede that an economy with prolonged high unemployment and eye-watering deficits approaching a financial cliff, is headed in the wrong direction. The Romney-Ryan details matter less than that they have committed themselves to changing that direction by, among other things, preserving entitlements as we will come to know them, entitlements we can afford.

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