Obama’s Deficit Charade
President Obama posed as a fiscal conservative Monday when he hosted a "fiscal responsibility summit."
Close inspection reveals that what he is actually proposing, however, is a massive increase in government debt — thus raising the already unsustainable burden of government that is certain to fall on our children unless the welfare state is somehow curtailed.
In the first seven fiscal years overseen by the high-spending President Bush, the annual federal budget deficits were truly obscene. Yet, they never exceeded $500 billion.
In fiscal 2002 through 2008, according to the historical tables published by the Office of Management and Budget last fall, the annual deficits were $157.7 billion, $377.5 billion, $412.7 billion, $318.3 billion, $248.1 billion, $162 billion and $410 billion. (The Congressional Budget Office has since calculated that the fiscal 2008 deficit actually ended up being $454.8 billion.)
President Obama said Monday that his "administration has inherited a $1.3 trillion deficit" for fiscal 2009.
The extraordinary size of that deficit is due, of course, to what one would have hoped were passing circumstances and one-time policies: a recession, a $700 billion bailout of the banking industry and that part of the $787 billion "stimulus" President Obama signed last week that will actually be spent in this fiscal year.
"And that’s why today I’m pledging to cut the deficit we inherited in half by the end of my first term in office," President Obama said at his summit.
But what does that mean? The administration says President Obama’s promise to "cut the deficit we inherited in half" means he will reduce it from $1.3 trillion in fiscal 2009 to $533 billion in fiscal 2013.
This $533 billion deficit — that President Obama vows will be the lowest annual deficit he runs in any of the next four years — is larger than any deficit the profligate President Bush ran before this recessionary year.
In fact, President Obama’s planned $533 billion deficit for fiscal 2013 is more than twice as large as the $248.1 billion deficit Bush ran in 2006 and more than three times as large as the $162 billion deficit Bush ran in 2007.
In other words, President Obama is planning to permanently increase the scale of government borrowing — even before we are hit by the fiscal tidal wave that will come when the bulk of the baby boom generation retires and begins collecting Social Security and Medicare benefits.
The truth is this: Our federal government has been wading ever deeper into red ink for a full half-century, and President Obama is now planning to wade deeper and faster than any president who has gone before him.
According to the Bureau of the Public Debt, the overall federal debt has increased every single year for the past 50 years. The last time it declined from one year to the next was from 1956 to 1957.
Overall federal debt increased even in each year from 1998 to 2001, when the OMB was calculating annual federal surpluses. This seeming contradiction, budget experts tell me, results from the fact that when they calculate the annual surplus or deficit they do not account for the interest the government pays itself on paper for the money it has borrowed out of the Social Security, Medicare and other entitlement trust funds to pay for current expenditures in other government programs.
The interest paid on the money the government has borrowed from Social Security and Medicare taxes to fund other things does not require the government to dole out real cash today. It will require the government to dole out real cash tomorrow, however, when the number of retired people receiving Social Security and Medicare benefits balloons compared to the number of younger working people paying taxes to support those programs.
Every dollar President Obama borrows and spends, like every dollar President Bush borrowed and spent, adds to the permanent burden of government laid on the backs of our children.
Last year, then-Comptroller General David Walker reported that every American household would have to put up $455,000 to cover the $53 trillion gap that already exits between the entitlement benefits promised to living Americans and the tax revenue currently expected to pay for those entitlements.
On top of this, President Obama has just promised to add more than $2 trillion to the national debt over the next four years.
To expand on a metaphor I used in a previous column, America is heading down the blind alley of big government toward the brick wall of national bankruptcy — and President Obama is now putting his foot on the accelerator. What’s next: Liberals will use the coming crash as an argument for even more big government, quite possibly in the form of socialized medicine that seeks to control government spending by rationing the health care of all Americans.