Obama’s Late Night Budget Bluster

Erskine Bowles, a Democrat Obama chose to co-chair his debt commission, had this to say about Obama's proposal: "The President came out with his own plan and the President came out, as you will remember, with a budget and I don’t think anyone took that budget very seriously. Um, the Senate voted against it 97 to nothing."

Not only has the president failed to do anything serious on debt and deficits, comments from his top adviser suggest that it wouldn’t be a priority in his second term. In an interview with National Journal, David Axelrod responded to a claim that Obama has been “vague” about his second term goals. He listed six specific issues. The list did not include anything on the debt or deficits.

The president believes you build a strong, sustainable economy by building a strong, viable growing middle class. You have to continue to upgrade our educational system and improve access to higher education and technical training. We have to invest in research and development and the kinds of things that will create high-end, advanced manufacturing jobs. We have to continue to open up markets all over the world for American products. We need to continue with an all-of-the-above energy policy and really push for the development of all sources of energy. Immigration reform is an unfinished piece of business. But the principal thing we need to be pursuing is a very aggressive strategy of putting people back to work.

If cutting the deficit or reducing the debt were an Obama priority, it’s unlikely that the president’s top adviser would fail to mention it.

Moreover, Obama claims in the Letterman interview, as he has before, that together with his phantom spending cuts, raising taxes on the rich will help us “manage very effectively” and “help get our books in order.”

It will not.

Let’s use the White House’s own numbers. The Office of Management and Budget estimates that allowing Bush tax cuts to expire for those with incomes above $250,000 would generate $835 billion over the next ten years – or $83 billion per year. Adding in hikes in the estate, gift, and GST taxes would bring in another $116 billion. In total, the White House estimates that its tax hikes would bring in an additional $952 billion.

And how much in deficit spending? $6.4 trillion over the same ten years.

Letterman continues:

Letterman: Now do you remember what that number was? Was it $10 trillion?

Obama: No, I don’t remember what that number was precisely.

Letterman’s question wasn’t precise. Was he talking about the debt as it registered on the debt clock at the Republican convention? Or, picking up on Obama’s answer, when Clinton left office? When Obama came to office? The question was ambiguous, but Obama, rather than clarify, simply chose not to answer it.

Letterman then asks a rather basic question:

Letterman: But see now if this is me, and I got the credit card guy calling me every day, I start to get scared. As Americans, should we be scared that we owe that kind of money? Who do we owe that money to?

Obama: Well, a lot of it we owe to ourselves, because if you invest in a Treasury bill or something like that then essentially you’re loaning the government money. In fact, the majority of it is held by folks who live here. But we don’t have to worry about it short-term. Right now, interest rates are low because people still consider the United States the safest and greatest country on earth – and rightfully so. But it is a problem long-term and even medium-term. So we’re gonna have to take care of this debt – this deficit. But we’ve got to do it in a balanced way and part of what the argument is going to be about during this campaign is I don’t want to balance it solely on the backs of middle class families, I don’t want to gut our investments in education, or turn the Medicare program into a voucher just to pay for tax cuts for you and me. I think it’s important for everybody to do their fair share to start bringing it down. And in fact we can do it in a pretty responsible way. But it’s going to require a little give on everybody’s part.

The most stunning part of Obama’s answer is his claim that “we don’t have to worry about [debt] in the short term.”