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All Da King's Men

A Balanced Approach To Nowhere

By Da King Published: April 14, 2011

Yesterday, I was expecting to hear President Obama lay out his plan for eliminating our $1.6 trillion deficit and start dealing with our $14.3 trillion debt. What I heard instead was an Obama 2012 re-election campaign speech. If Obama was looking to fan the flames of partisan division, he certainly accomplished that. His speech was highly partisan. If Obama was looking to actually solve our dire fiscal situation, as you would expect from the leader of the country, then he failed miserably. You lose, America.

Even if you are naive enough to believe every word Obama said in his speech (which would require a huge dose of naivete), his "plan" doesn't come anywhere near to solving our problems. He proposed $4 trillion in deficit reduction over ten years, with half of that coming from shadowy promises of unnamed spending cuts, and the other half coming from tax increases, with many of those also falling into the shadowy category. About the only solid proposal he made was reversing the Bush tax cuts for the top 2%. That's hardly a new idea, and certainly didn't warrant a new speech from the President.

Even if Obama's shadowy, vague, half measures plan magically materialized into reality, it still doesn't come close to dealing with our fiscal problems. I'm starting to wish the Republicans would go along with reversing the Bush tax cuts for the top 2% just so we can eliminate that canard from the conversation. As I pointed out in my last post, taxation is not the problem. SPENDING is the problem. Reversing the Bush tax cuts is not the cure-all the Democrats make it out to be, but it seemed to be the central "solution" proposed by Obama. At best, Obama's so-called "balanced approach" brings a $4 trillion scalpel to a problem that requires an $11 trillion sledgehammer. At worst, as I'm much more inclined to believe after a lifetime of listening to politicians making vague promises, it will do nothing but raise taxes again and again as spending continues to increase. It's the same tax and spend crap I've been hearing from Democrats for decades. The key point is, Obama's "plan" will still increase spending and increase the debt. It solves nothing. In fact, in a speech that was supposed to be about deficit reduction, our President spent half of it talking about all the spending he wants to do, which should give us all a strong hint as to his true intentions. He says he wants to cut spending at the same time he defends it and calls for more.

In light of this, I don't have much in the way of specifics to report on Obama's deficit reduction efforts, because he didn't offer many specifics. Obama use his bully pulpit to punt the ball on responsibility yet again, which has become his pattern.

The one area the President did do a decent job was in describing our fiscal problem, so I'll focus a bit on that:

Even after our economy recovers, our government will still be on track to spend more money than it takes in throughout this decade and beyond. That means we’ll have to keep borrowing more from countries like China. And that means more of your tax dollars will go toward paying off the interest on all the loans we keep taking out. By the end of this decade, the interest we owe on our debt could rise to nearly $1 trillion. That’s the interest. Just the interest payments.

Then, as the Baby Boomers start to retire and health care costs continue to rise, the situation will get even worse. By 2025, the amount of taxes we currently pay will only be enough to finance our health care programs, Social Security, and the interest we owe on our debt. That’s it. Every other national priority – education, transportation, even our national security – will have to be paid for with borrowed money.

Ultimately, all this rising debt will cost us jobs and damage our economy. It will prevent us from making the investments we need to win the future. We won’t be able to afford good schools, new research, or the repair of roads and bridges – all the things that will create new jobs and businesses here in America. Businesses will be less likely to invest and open up shop in a country that seems unwilling or unable to balance its books. And if our creditors start worrying that we may be unable to pay back our debts, it could drive up interest rates for everyone who borrows money – making it harder for businesses to expand and hire, or families to take out a mortgage.

The President is exactly right about that part. The seriousness of the need for us to reduce our debt/deficit situation cannot be overstated. Our very future as a country hangs in the balance. Unfortunately, his "plan" leaves this sorry vision of the future in place. It doesn't change any of it. Instead of putting forth a real plan to eliminate the deficit/debt, our illustrious President chose instead to engage in divisive partisan gamesmanship in yet another failure of leadership. His speech wasn't really about addressing the fiscal problems he described above. It was about scoring political points against Republicans.

Two days ago, the International Monetary Fund (IMF) pointed out that the United States doesn't have any "credible strategy" to reduce it's deficit/debt load. After Obama's speech, we still don't. The IMF pointed out a few other things worth noting as well:

The US lacks a “credible strategy” to stabilise its mounting public debt, posing a small but significant risk of a new global economic crisis, says the International Monetary Fund.

In an unusually stern rebuke to its largest shareholder, the IMF said the US was the only advanced economy to be increasing its underlying budget deficit in 2011, at a time when its economy was growing fast enough to reduce borrowing.

To meet the 2010 pledge by the Group of 20 countries for all advanced economies – except Japan – to halve their deficits by 2013, the US would need to implement tougher austerity measures than in any two-year period since records began in 1960, the IMF said.
In its twice-yearly Fiscal Monitor, the IMF added that on its current plans the US would join Japan as the only country with rising public debt in 2016, creating a risk for the global economy.

Carlo Cottarelli, head of fiscal affairs at the Fund, said: “It is a risk that if it materialises would have very important consequences... for the rest of the world. So it is important that the US undertakes fiscal adjustment in a way sooner rather than later.”

Somebody want to explain to me again how Obama has restored America's standing in the world ? It seems the world hasn't received the memo.

We need serious leadership right now, more than we have since the 1930-40's. Instead, we have the unbearable lightness of Obama. That's a loss for all of us.

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