On Spending, Obama and Co. Just Don't Get It

On Spending, Obama and Co. Just Don't Get It

By Tom Bevan - January 10, 2013

Houston, we have a problem. Despite the dire fiscal challenges facing America, our elected leaders in Washington, D.C., particularly President Obama and the most influential congressional Democrats, apparently don’t believe there’s a problem. When it comes to the country’s deficit and debt, they appear to be living on another planet.

How else to explain the statement recently attributed to Obama by House Speaker John Boehner, uttered during the most recent round of negotiations on the “fiscal cliff”?

“At one point several weeks ago, the president said to me, 'We don't have a spending problem.' " Boehner told the Wall Street Journal.

As if to prove the point, Reuters reported this week that President Obama insisted that $64 billion worth of corporate tax breaks be added to the fiscal cliff deal, including a $222 million credit for the rum industry, a $78 million write-off for owners of NASCAR race tracks, and a $248 million break for Hollywood that will allow studios to write off their production costs more quickly.

The Associated Press, tallying up the 50 tax breaks in the bill, came up with an even higher cost: $76 billion over the next 10 years. "It's hard to think of anything that could feed the cynicism of the American people more than larding up must-pass emergency legislation with giveaways to special interests and campaign contributors," Sen. John McCain told the AP.

Yet, not including this bundle of corporate pork into the package was, according to those involved with the negotiations, a “deal breaker” for the White House.

This isn’t an isolated episode.

Two months ago Illinois’ Democratic Sen. Dick Durbin made the utterly misleading assertion that “Social Security does not add one penny to our debt -- not a penny.” In fact, Social Security, which is a pay-as-you-go program financed primarily by payroll taxes, began taking in less money than it was spending for the first time in 2010. Its cash flow deficit has been growing ever since, and it accelerated since the enactment of the payroll tax holiday two years ago.

Only by counting the yearly interest on the $2.7 trillion worth of U.S. Treasury IOU’s that already sit in the program’s trust fund (paid for, ironically enough, with more IOU’s) -- a fund that has been raided over the years to pay for other government spending, can one possibly claim that Social Security “is not in crisis.

The following day, the president’s aides echoed Durbin’s fiction about Social Security. “We should address the drivers of the deficit,” White House spokesman Jay Carney said during his daily press briefing, “and Social Security currently is not a driver of the deficit.”

Throughout the budget battles, Republicans have been portrayed as intransigent “hostage takers” bent on protecting tax breaks for millionaires. There is some truth to that. But it is also true that Democrats have been equally obstinate when it comes to tackling the other side of the equation -- spending.

And though most Republicans in the Senate and about a third of Republicans in the House finally capitulated last week and agreed to Obama’s demand that tax rates be increased on Americans in the upper-income brackets, Democrats still show no signs of facing reality on the spending side.

Instead, some Democrats in Congress and prominent liberals like New York Times columnist Paul Krugman have begun bandying about desperate schemes such as minting a trillion-dollar platinum coin to magically solve the budget crisis, and urging the president to precipitate a constitutional crisis by using the 14th Amendment (which contains a section stating that “the validity of the public debt . . . shall not be questioned”) as an option to defy Congress on the debt ceiling.

Is it any wonder we have a bitterly divided government headed toward another high-stakes showdown? We have two political parties living in alternate universes when it comes to solving the country’s budget crisis. And while the GOP buckled under the pressure to raise taxes during the fiscal cliff, the next time around it may be the Democrats who come crashing back to Earth over the spending problem they don’t believe exists. 

Tom Bevan is the co-founder and Executive Editor of RealClearPolitics and the co-author of Election 2012: A Time for Choosing. Email:, Twitter: @TomBevanRCP

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