On Tuesday, President Obama urged Congress to restore a pay-as-you-go rule to new federal spending and tax cuts. According to the President, the policy would require that new spending or tax cuts be paid for with spending cuts elsewhere or new revenue. In his remarks, the President observed: "Paying for what you spend is basic common sense. Perhaps that's why, here in Washington, it has been so elusive."
Of course, nowhere is that common sense more elusive these days than among the enterprising government managers of the American economy, the Obama administration's economic policy team. A heady boldness is not only the chief characteristic of the President's policy proposals, but it characterizes the way he communicates them as well. In his daily repetition of "don't blame me, I'm stuck with cleaning up the last guy's mess," consistency matters much less than audacity.
Why, of course, we'll pour hundreds of billions into the banking business, the insurance business, and the automobile business. And take another $1.5 to $2 trillion to enact his promise to change fundamentally the way health care is provided in this country. And send Congress a $3.5 trillion budget, more than a third of it paid for with borrowed money. And spend $800 billion to stimulate the economy, much of it after the economy has recovered and on projects of suspect merit. And sign a bloated omnibus appropriations bill with a price tag of more than $400 billion. And assail recalcitrant hedge fund managers who selfishly balk, on behalf of their investors, many of which happen to be the pension plans of middle class Americans, at the loss of their legal status as secured creditors to Chrysler, making it more difficult for other challenged industries to find creditors in the future other than the American taxpayer. And reduce the tax burden for 95% of Americans and squeeze the other 5%, the greedy rich who only paid fifty percent of all income tax revenue before he took office. But, by God, Congress better start exercising a little fiscal discipline around here or this country is going to be in a hell of fix.
To be sure, the Bush administration is responsible for the damage caused by its fiscal policies - tax cuts without spending restraints, a massive new prescription drug entitlement, dishonest budgeting for two wars. But rather than be the antidote to the fecklessness of his predecessor, President Obama has taken as his mandate for change massive new spending and a re-structuring of the American economy that won't be bankrolled by the 5% of upper income taxpayers the President likes to excoriate as unpatriotic, but by oceans of debt owed to, among others, Chinese bankers. That assumes, of course, Chinese bankers and other financers of our profligate spending will continue to buy our Treasury bills as hyper inflation, a very possible consequence of this new "era or responsibility," destroys their value. In the process he will run up deficits larger as a share of GDP than any other deficits since World War II, and a debt that will grow to over 80% of GDP.
But, hey, this breathtakingly ambitious young President is just so darn, well, ambitious . . . and so well spoken! Why worry over a few extravagances? Gosh, it's good to see him so engaged in the country's troubles even though they're all George Bush's fault.
Those who worry over the consequences of the President's plans - anemic economic growth as private sector spending is crowded out by the government's, runaway inflation, skyrocketing interest rates, a severely weakened dollar - be not afraid! The President has instructed his Cabinet to find an entire hundred million in savings and exhorted Congress to re-institute PAYGO. Pshew! He had me worried for a moment.
Let's not trouble ourselves over how Congress will eventually achieve these economies. Nor should we make an issue of the fact that the PAYGO the President proposes doesn't include discretionary spending, a mere 40% of the budget. Let no worry furrow our brows because Congress will have ten years -- long after the President has returned to Chicago and many members of Congress have retired -- to make the increasingly difficult decisions of where to find the revenue or spending cuts to cover the cost of the new health care entitlement, college tuition credits, the government's management of a newly nationalized automobile industry or any other adventure in government activism the President feels inclined to embark on.
Somehow, somewhere, someday we're going to pay for them . . . and how. Why, that's just common sense in the bold, bright age of Obama.
