Obama Budget

THE WEEKLY STANDARD podcast with Fred Barnes on President Obama's bloated budget.

Let's say you're a Democratic congressman from a swing district. Your constituency actually went for McCain in 2008 while sending you back to Washington on a split ticket. You had some rowdy town hall meetings during the 2009 August recess and decided to vote No on the House health care bill last November. Now the White House is saying that if you don't vote for the Senate bill in the coming weeks, the president won't appear in your district this fall or raise money for you on the road. And the DNC chairman is saying a Yes vote will be rewarded with support from Obama, Organizing for America, and the national party.

Here's the thing: What good would any of this do? To preserve your seat in an anti-incumbent, anti-Washington, anti-big government year, you have to distance yourself from Obama and the national Democrats anyway -- which is why you want to vote No in the first place!

Carrots and sticks don't matter. What matters is how your district will react to a Yes vote. And fear of reprisal -- not from Obama, not from Tim Kaine, but from the people -- is why Pelosi is still coming up short.

President Obama has delayed his upcoming trip to the Pacific in order to pressure wavering House Democrats to back his health care reform. Obama was originally supposed to depart next Thursday, March 18. Now he'll leave Sunday the 21st. But that is still five days earlier than the Democrats' self-imposed deadline of March 26, when Congress is scheduled to begin its Easter Recess. At this point I wouldn't be surprised if Obama postpones the Asia trip until April. He and the leadership are engaged in a full-court press to win every vote.

Michael Kinsley on inflation in the new Atlantic:

My specific concern is nothing original: it’s just the national debt. Yawn and turn the page here if you’d like. We talk now of trillions, not yesterday’s hundreds of billions. It’s not Obama’s fault. He did what he had to do. However, Obama is president, and Democrats do control Congress. So it’s their responsibility, even if it’s not their fault. And no one in a position to act has proposed a realistic way out of this debt, not even in theory. The Republicans haven’t. The Obama administration hasn’t. Come to think of it, even Paul Krugman hasn’t. Presidential adviser David Axelrod, writing in The Washington Post, says that Obama has instructed his agency heads to go through the budget “page by page, line by line, to eliminate what we don’t need to help pay for what we do.” So they’ve had more than a year and haven’t yet discovered the line in the budget reading “Stuff We Don’t Need, $3.2 trillion.”

Fans of Republican Congressman Paul Ryan of Wisconsin, author of the Roadmap for America's Future, have some reading to do. First up: Ryan has a column in Newsweek describing his plan in an easy-to-read format.

From an Economics 21 staff editorial:

The Ryan and Orszag proposals represent competing visions of how the United States deals with our fiscal dilemma. Under Congressman Ryan’s vision, we try to live within our projected revenues, leave our children with tax burdens comparable to our own, and constrain our spending appetites accordingly. On the Social Security side, this means slowing the growth of benefits -- which would still grow faster than inflation.

Under the alternative vision espoused by Orszag, we would impose on younger generations higher payroll tax rates, tax a higher fraction of national wages, and levy an additional 3% benefit-less surcharge, thereby reducing economic growth and individual saving.

The contest between the Ryan and Orszag visions for Social Security is the fundamental contest between constraining our spending appetites and raising taxes to fuel persistently higher costs. It mirrors the gap between the Obama Administration’s larger fiscal policies, and the views of American voters on the political center and on the right.

This editorial is a useful reminder that the Roadmap for America's Future not only tackles Medicare and Medicaid spending; it drastically overhauls Social Security and tax policy, as well. You can say Ryan's plan is ambitious -- perhaps too ambitious! But you can't say it isn't a serious attempt to save a sinking ship.

Today marks one year since President Obama signed the American Reinvestment and Recovery Act, otherwise known as the stimulus, into law in Denver, Colorado. In January 2009, Obama administration economists predicted the stimulus would hold unemployment to 8 percent, and that without a stimulus unemployment would rise to 9 percent. Instead, unemployment rose to a high of 10.1 percent before falling to 9.7 percent in January 2010. Majorities now oppose the stimulus. Only six percent of respondents in the recent New York Times / CBS News poll believe the stimulus has already created jobs.

The stimulus had three parts: transfers to state governments, a tax rebate, and infrastructure spending. The best you can say for the stimulus is that it prevented state, local, and municipal governments from firing heavily unionized public sector employees during a recession. In an email to supporters last night, former Obama campaign manager David Plouffe credited the stimulus with slowing the rate of job loss over the last year. Memo to Obama reelection team: "Slowing the rate of job loss" does not equal "recovery."

Niall Ferguson:

What we in the western world are about to learn is that there is no such thing as a Keynesian free lunch. Deficits did not “save” us half so much as monetary policy – zero interest rates plus quantitative easing – did. First, the impact of government spending (the hallowed “multiplier”) has been much less than the proponents of stimulus hoped. Second, there is a good deal of “leakage” from open economies in a globalised world. Last, crucially, explosions of public debt incur bills that fall due much sooner than we expect

For the world’s biggest economy, the US, the day of reckoning still seems reassuringly remote. The worse things get in the eurozone, the more the US dollar rallies as nervous investors park their cash in the “safe haven” of American government debt. This effect may persist for some months, just as the dollar and Treasuries rallied in the depths of the banking panic in late 2008.

Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase “safe haven”. US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.

The Economist's Buttonwood columnist has more: "Greek yields have come off their peak and every reduction eases the "debt trap" (interest rate higher than the growth rate) in which the country is stuck. The next Greek financing is not till April. But one suspects the markets will want to test the EU's resolve."Yogurt and rich shipping magnates are no longer Greece's most famous exports. That title now belongs to sovereign debt crises.

Wisconsin Rep. Paul Ryan's Roadmap for America's Future has sparked intense debate ever since President Obama singled Ryan out during the January 29 House GOP retreat in Baltimore, Maryland. Predictably, support for Ryan's good-faith proposal to solve America's long-term fiscal crisis by transforming the welfare state for Americans under 55 years old has been divided along ideological lines. Michael Gerson, George F. Will, David Brooks, Ross Douthat, and The Economist all have kind things to say about the proposal. Liberal commentators and Democratic politicians, from administrational officials to the chairman of the Democratic Congressional Campaign Committee, do not.

Liberals have seized on the Roadmap in order to say that Republicans want to leave seniors in the cold. Today, the Wisconsin Democratic party organized a conference call, featuring Democratic Rep. Xavier Becerra of California and left-wing economist Dean Baker, devoted entirely to attacking Ryan and his plan. (Ryan participated in a conference call of his own to respond.) Meanwhile, the liberal Talking Points Memo website reports that House Democrats are planning to hold a vote on a resolution condemning the Roadmap and other attempts to introduce personal accounts into Social Security. This week's blizzard interfered with the Democrats' plans, however. Now the vote is up in the air.

Some good news on the jobs front recently. January unemployment decreased to 9.7 percent. New jobless claims fell last week. The number of Americans filing for unemployment benefits is also down.

In an interview with Bloomberg News, President Obama said he does not "begrudge" the bonuses handed out to mega-bankers Jamie Dimon and Lloyd Blankfein. This is a stunning reversal for someone who has spent the past three years as a candidate and a president campaigning against the banks. As you can imagine, the left is upset, and with good reason. Paul Krugman is apoplectic. Simon Johnson, whose post on the Euro Zone is something you should read, says Obama "still doesn't get it."

After they slept through Scott Brown's victory in Massachusetts, the new Washington Post / ABC News poll ought to be a wake-up call for congressional Democrats and the Obama administration. Obama's approval rating is at 51 percent, but the only issue area where he has higher than 50 percent approval is terrorism.

Only 43 percent of the public, for example, approves of the way Obama is handling health care -- and yet the White House continues to bring up the issue despite public opposition and the inability of congressional Democrats to pass a final bill.