The fiscal crisis, President Obama declared at a White House press conference today, consists of two problems: the deficit and debt. Spending? That’s something he’d like to see more of, only House Republicans won’t let him.
And there lies the core of the disagreement between the president and Republicans in the talks on raising the debt limit by the August 2 deadline the Obama administration imposed. Republicans want to deal with the cause, the surge in spending, and Obama prefers to focus on the effects, soaring deficits and a national debt that has increased by $4 trillion in the two-and-one-half years of the Obama presidency.
So that’s what he did in the session with reporters. It was all deficit and debt and the need to bring them under control, particularly by raising taxes. Controlling spending? That was not worth mentioning – and Obama didn’t.
He argued that boosting taxes would not discourage hiring and hurt the economy because the hikes wouldn’t come until 2013. Might higher taxes looming in the near future be a disincentive for private investment, growth, and job creation? Obama didn’t say and reporters failed to ask.
Nothing the president said today altered his position in any way: he desperately wants a large tax boost to go along with unspecified spending cuts. That would be the “fair and balanced approach.” Republicans have complained his spending reductions are illusory.
“I have bent over backwards to work with Republicans,” Obama said. But he insisted on an increase in taxes, which he calls “revenues,” which must be “commensurate with the sacrifices we’re asking other people to make.” He didn’t identify those sacrifices, nor did reporters ask.
In the fiscal struggle with Obama, Republicans have the 2010 election (spending cuts were a dominant issue) and public polls on their side. At the press conference, Chip Reid of CBS News told Obama that two-thirds of Americans oppose hiking the debt limit at all. Obama appeared unfazed upon hearing this.
A higher debt limit would allow the government to borrow and spend more. Republicans want spending cuts to match the $2.4 trillion increase the president is seeking in the debt limit.
In the standoff with Republicans, Obama’s allies include most Democrats in Congress, the liberal wing of this party, and much of the mainstream media. Rather than deep spending cuts, particularly on entitlements, they want to boost taxes as much as politically possible to cope with the deficit.
Obama said he’d rather be talking about “new programs” – that is, more spending – than about fixing the deficit and debt problems. He said he’d like, for instance, to create an infrastructure bank that would put jobless construction workers back to work. But that’s possible only after the deficit and debt are stabilized and the economy improves, he lamented.
Despite the sour report last week on joblessness, the president indicated he’s given no thought to abandoning his economic policies and embracing new ones. He blamed the wave of layoffs of state and local government workers on the phasing of his stimulus program.
Obama gave two examples of how he’d like to continue his Keynesian-style stimulation of the economy. He wants to continue the reduction in payroll taxes for employees and to extend unemployment benefits. These programs put money in people’s pockets, which they then spend, increasing demand. This, in turn, encourages businesses to hire more people.
He didn’t explain why this approach has led to such a weak recovery and reporters didn’t inquire. Economic growth and job creation have been far less robust since the recession officially ended in June 2009 than in previous recoveries.