In an appearance on the Late Show with David Letterman, President Barack Obama suggested that most of the country’s debt was accumulated under George W. Bush, pretended that he has offered a solution to these problems, said that he does not know the total U.S. national debt, and claimed that the debt is not a short-term concern for the country.
It was one of the most dishonest performances from this president in recent memory, and yet it has generated virtually no attention from a mainstream media.
The conversation started when Letterman told the president that he’d watched the Republican National Convention and was taken by the debt clock spinning the convention hall.
Letterman: Here’s what I found troubling and I want you to help me through this. They had the clock – the debt countdown clock. And I mean this thing is going like crazy. And it’s several trillion dollars. Now, what is that?
Obama: Well, here’s what happened. We had a surplus when Bill Clinton was president.
Letterman: That means extra money.
Obama: Extra money. That was projected to continue to be a surplus. We decided to launch two wars on a credit card. We cut taxes twice without finding offsetting costs for it – or ways to pay for it. A prescription drug plan – and then we had a massive recession. And so when I walked into office we had a trillion dollar deficit, debt had mounted, and then we had to take a bunch of emergency measures – that cost money. Saving the auto industry, making sure that the financial system got back on track.
This is highly misleading. Letterman asked about the debt clock and Obama responded by talking about annual deficits. The effect, of course, is to allow viewers to conclude that all of the debt on the debt clock was accrued after Clinton – and because of the policies of George W. Bush. Clinton certainly deserves some credit for the surpluses, but the debt when Clinton left office was $5.7 trillion. It’s worth noting that Obama supported one of those two wars, has extended many of those tax cuts, and has proposed to provide health care well beyond the costly prescription drug plan – all without finding ways to pay for it.
So now, what we’ve got to do is we’ve got to pare down that deficit, get that debt under control. The only way we’ve ever been able to do that is when you do it in a balanced way. So you cut out spending you don’t need – there are programs that don’t work. And you know I tell my Democratic friends all the time, if you’re going to be in favor of helping the American people, you can’t just assume that every government program is working the way it should. It can work better. But what is also true, is that we’re going to need to ask folks like you and me to do a little bit more. And if you and I are paying the same tax rates under Bill Clinton then that helps to close the deficit. And if we do those two things then we can manage very effectively and get our books in order.
There are several problems with this passage. Which programs “don’t work”? And given that he’s been president for nearly four years, why haven’t they been eliminated? The budget presented by the president in 2012 never balances – it never comes close. After his budget proposal was roundly criticized as unserious last winter, Obama took another shot with a big economic speech in June. It didn’t work.
Dana Milbank, the acerbic liberal columnist for the Washington Post, wrote on June 14, 2012, under the headline: “Skip the falsehoods, Mr. President, and give us a plan.” Milbank called Obama’s do-over speech “a falsehood wrapped in a fallacy. The falsehood is that he has been serious about cutting government spending. The fallacy is that this election will be some sort of referendum that will break the logjam in Washington.” Obama, Milbank continued, “has made no serious proposal to fix the runaway entitlement programs that threaten to swamp the government’s finances.” Milbank criticized the plans offered by Republicans but acknowledged that they have at least presented one. “Nothing in Obama’s speech came close to a proposal to fix the debt problem.”
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: 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.”
According to the U.S. Treasury, the federal government is adding more than $4 billion in debt each day. The Congressional Budget Office and the Treasury Department estimate that the government is paying nearly $650,000,000 in interest payments every day under President Obama. That’s a lot of short-term damage.
And while the president argues that low interest rates mean debt is not a problem in the short-term, at least one credit agency, Egan-Jones, disagrees. The ratings firm downgraded the US government from “AA” to “AA-“ citing the decision of the Federal Reserve’s open-ended commitment to keep printing money.
There is one other interesting comment from the president in this exchange. A look at his first-term record gives us reason to be skeptical that Obama would address debt and deficits in any serious manner in a second term. So does the list provided by David Axelrod. But if he were to change course, his comments to Letterman raise real questions about how he might do so.
The president told Letterman that as he seeks to deal with debt and deficits in a “balanced way,” he doesn’t “want to balance it solely on the backs of middle class families.” Dealing with the debt, he added, “is going to require a little give on everybody’s part.” (Emphasis added).
What is the "give" from the middle class? Obama's assertion that he doesn't want to seek balance "solely on the backs of the middle class," suggests that he does want to ask something of the middle class. What is it?
The president has long claimed that he would not raise taxes on middle class Americans.
But when the president speaks of “balance” it’s usually a euphemism for higher taxes. So what does he mean when he says that in seeking “balance” he doesn’t want to deal with deficits “solely on the backs of middle class families?” We know that he’s proposing higher taxes on the rich. What is he going to ask middle class families to do?
We know that Obama’s former budget director has called for the expiration of all Bush tax cuts – meaning a de facto tax hike not only the those in higher brackets but on everyone, including the “middle class.”
The New Yorker’s Ryan Lizza reported back in June that this was a real possibility.
“Several White House officials I talked to made it clear that if a deal, or at least the framework for a deal, is not reached before December 31st Obama would allow all the Bush tax cuts to expire – a tactic that would achieve huge deficit reduction, but in a particularly painful and ill-conceived fashion.”
There are dozens of interesting questions of Obama and his campaign for reporters curious enough to ask them.