THE WHITE HOUSE ARGUMENT
DAVID BROOKS | NYT NEWS SERVICE
I’VE been critical of President Obama’s budgets. I’ve argued that while I like the way Obama preserves spending on things like scientific research and programs for the vulnerable, he doesn’t do enough to avoid a debt crisis.
I’ve based that argument on certain facts. President Obama’s 2013 budget will add roughly $6 trillion to the nation’s debt over the next 10 years. By 2022, Americans will be spending $915 billion on interest payments on the debt alone, a number far larger than that year’s entire defence budget.
If you look further out, the situation is worse. According to the Committee for a Responsible Federal Budget, by 2050, Representative Paul Ryan’s budget would cut total public debt to 10 percent of GDP Current law would put debt at 42 percent of GDP Under the Obama budget, debt would skyrocket to 124 percent of GDP.
Extremely senior members of the administration believe these sorts of criticisms are completely unfair and vastly underestimate their fiscal hawkishness. In this column, I thought it only fair that I provide you with a summary of their arguments.
First, their goals. They argue that it’s foolish to try to solve the debt problem with some drastic magic bullet all at once. It’s smarter to stabilise the debt while also looking after other needs, like protecting the vulnerable and investing in things that boost growth and mobility.
They argue that the president’s 2013 budget is a step toward fiscal stability that will also pave the way for bigger steps in the years ahead.
They estimate that their budget would produce $5 trillion in budget savings over a decade. It would raise $1.5 trillion in new revenue by raising taxes on those making more than $250,000 a year.
There would also be a broad range of spending cuts. These include the $1.7 trillion in cuts the administration agreed to in the budget deals with Republicans over the summer, and several others (including the somewhat gimmicky $617 billion ‘cut’ by not fighting the wars in Iraq and Afghanistan for another decade).
Further, the president is parsimonious when it comes to domestic spending. The White House has prepared a series of charts to illustrate the administration’s fiscal discipline.
The most interesting concerns domestic discretionary spending, which is spending on things like education, welfare and social support.
Going back to 1962, domestic spending has hovered around 3.3 percent of GDP In big-spending years (the Jimmy Carter years), it rose to about 4.4 percent. In lowspending years (Ronald Reagan’s and Bill Clinton’s second terms), it fell to about 2.9 percent of GDP.
During Obama’s presidency, domestic spending topped out at 4 percent of GDP. But, in the Obama budget, over the next 10 years, that spending would fall to 2.2 percent, much lower than anything Reagan achieved. Under Paul Ryan’s budget, by the way, that spending would fall to 1.8 percent, which the Obama administration regards as savagely low.
These officials say the administration has also made modest but important progress in controlling Medicare spending, the biggest debt driver. The budget raises some Medicare premiums on highincome retirees and increases some deductibles. White House officials say they have taken enormous heat from the left for putting some structural Medicare reforms on the table cutting benefits, raising eligibility ages and changing cost-of-living adjustments. Republican leaders, they point out, have not done anything that brave.
Over all, they continue, the president’s budget stabilises the debt in a way that is relatively gimmick-free.
Annual federal deficits, which are at about 8 percent now, would come down to around 3 percent between 2015 and 2022.
The total federal debt is now at about 74 percent of GDP Under Obama’s plan, it would rise to 78.4 percent of GDP in 2014 and then stabilise at about 76.5 percent from 2018 to 2022.
Basically, what we’re looking at is a period of stability, administration officials say, which would soothe credit markets and give us time to make further adjustments. This, they conclude, is responsible prudence.
I’m not going to pass my own comprehensive judgment on this here. I’ll just say that my conversations reaffirm my conviction that Obama is a pragmatic liberal who cares about fiscal sustainability, who has been willing to compromise for its sake, but who has not offered anything close to a sufficient program to avoid a debt crisis.
But we have a campaign in front of us. If the president is truly committed to a strategy for progressive fiscal stability, as Bill Clinton was, he’ll make that the centre of his campaign. He’ll earn a mandate.
He’ll win over independents who want fiscal discipline but worry about the way Republicans get there.
If he doesn’t have a passion for fiscal stability, he’ll campaign on side issues and try to win by scaring everybody about the other side.