Thursday, May 13, 2010
Rising Deficits, Plunging Truth
The White House has many tools to change the narrative to its advantage. But it's unlikely swing voters will abandon their concerns about ObamaCare, spending and deficits. The public, especially independents, increasingly believes Mr. Obama's policies threaten America's economic future.
This country is divided into three parts concerning national politics. About a third think President Obama is moving in the right direction, with many of them impatient for the president to be bolder with his leftist agenda. Somewhere in the vicinity of 40 percent to 50 percent of Americans are shocked and appalled at the nation's rush toward bankruptcy, socialism, fundamental transformation of our way of life and the permanent weakening and impoverishing of America.
The world is too dangerous for anything but truth and too small for anything but love.
William Sloane Coffin
Conservatives Tony Blankley and Karl Rove published columns today that analyzed the present political landscape in hopes of major GOP congressional gains in November. This, of course, will happen, but the reasons they give for this coming apocalypse are disheartening. For those on the right, it's payback time for the Democratic Party's wasteful spending, deficit-exploding party! Blankley refers to the health care legislation that will inevitably raise the debt and stokes fear by predicting that Obama will raise taxes and that the US will turn into Greece, the ultimate debt-avalanche. Rove just says it plain and simple: "The public, especially independents, increasingly believes Mr. Obama's policies threaten America's economic future."
Will the health care plan actually raise the debt? The Congressional Budget Office (the standard for both sides of the aisle) says no. It will actually reduce the deficit by slicing Medicare waste and raising the taxes of the wealthy (and tanning bed users).
Will Obama raise taxes? He'll have to raise taxes somewhere if he (or anyone) ever hopes to reduce the deficit in this decade (and beyond). As Fed Chairman Ben Bernanke testified recently, "The reality is that the Congress, the Administration and the American people will have to choose among making modifications to entitlement programs such as Medicare and Social Security, restraining federal spending on everything else, accepting higher taxes, or some combination thereof.” We can talk all we want about cutting wasteful government spending, but take a look at the federal budget and tell me where leaders can realistically make up trillions in order to balance it out. Obama's 18-member bipartisan Commission on Fiscal Responsibility and Reform will report on their findings on December 1st after they comb through the federal budget and offer pragmatic solutions.
Will the US follow Greece's pathway to debt-filled destruction? Economist Niall Ferguson says not anytime soon:
For the world’s biggest economy, the US, the day of reckoning still seems reassuringly remote. The worse things get in the eurozone, the more the US dollar rallies as nervous investors park their cash in the “safe haven” of American government debt. This effect may persist for some months, just as the dollar and Treasuries rallied in the depths of the banking panic in late 2008.
And who's fault is it that we have this exploding deficit problem in the first place? The Center on Budget and Policy Priorities pins our current mess mostly on Bush economic policies (the thin light blue line refers to Obama's stimulus plan):
Economist Dean Baker, who spends a lot of time critiquing economic coverage in the press, pits the blame on "experts" like Greenspan and Bernanke whose policies led to the housing bubble that burst and led to the devastating recession that led to the upcoming decade of deficits. He adds that any talk of curing deficits by slashing spending must be coupled with admitting that this will lead to more job losses:
Is our huge deficit a problem today? Not if you think people should have jobs. Private sector demand has plunged because of the collapse of the bubble. If the public sector does not fill the demand gap with deficit spending, then we have less demand and fewer jobs. That’s worth saying a few hundred thousand times since the deficit hawks have filled the airwaves and cyberspace with so much nonsense.
If, in fact, Federal Reserve oversight, the Bush tax cuts, wars in Iraq and Afghanistan and economic downturn together account for virtually the entire deficit over the coming decade is it honest at all to criticize the Democratic health care plan (negatively labeled ObamaCare by those on the right), Democratic stimulus plan and Obama's plan to slightly raise taxes on those making $250,000 or more (which, I would argue, actually leads towards surpluses)? Political and economic truth seekers should watch and read carefully in the months ahead as the GOP (and their conservative media) whole-heartedly embrace a fear-drenched narrative of taxes and deficits in order to win congressional seats in November. I'm convinced that conservative leaders have important ideas to add to our national debt dialogue. They should stick to explaining and expounding upon them (to make our country better) instead of taking the easy way to victory.