22 Mar 2011

Obama’s Deficit Is Different

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I get dragged, these days, into aimless arguments with liberals on Facebook. Jim Scheltens taunted overnight: “[T]he federal deficit didn’t matter until we had a black democrat president.”

I think the Bush deficit mattered, but deficits are normal in times of war, and the 9/11 attacks inevitably resulted in military operations. Obama’s deficits are, by contrast, deficits of choice and are of a completely different order of magnitude.

Victor Davis Hanson observes:

Obama has scheduled $5 trillion in new debt since he took office, in part as Keynesian stimulus to snap us out of a slowdown that seemed instead to get worse. The massive debt was incurred in service to new redistributive entitlements that, we are told, will level the playing field. And to implement a new government absorption of health care, the administration has so far granted over 1,000 exemptions from its own landmark legislation. Many of the labor unions that were the most vocal supporters of the president’s agenda are the most eager to be freed from the consequences of his health care mandates. …

Debt is now the father of us all. In some sense, every cruise missile fired, every Social Security check cashed, ever NPR show aired is done so in part with borrowed money. In response, the president saw the impending doom of insolvency, appointed a bipartisan commission to draft a solution, and then ignored his own appointees’ recommendations. So far the excuse is largely that George Bush ran up debt as well, although last month Obama’s red-ink exceeded the entire 2007 budget deficit under Bush — 30 days of Obama trumping 365 of Bush.

The Obama deficit is different in character. Unlike other past presidents’ deficits, the debt resulting from currently projected federal spending has no possibility of being repaid at practicable or conceivable tax levels, the federal government as it exists is unsustainable, and that unhappy situation directly and immediately threatens America’s economic future, military capabilities, and role and position in the world.

When previous presidents overspent, we knew we could write the check today and cover it tomorrow. This time there is a real likelihood that the check will bounce, i.e. that the entitlement obligations the government has assumed are unaffordable and can in no circumstances be met. The police will not arrive to take all of us to jail, but before long, the existing systems of federal spending and entitlements will not undergo some process of orderly reform, but will collapse in a rout. The US dollar may no longer be the world reserve currency, the US may very well not be the world’s principal financial center or leading military power, and American presidents may be obliged to run US foreign policy past the foreign ministries of our leading creditors.

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SDD

Banks will tell you that when debtors realize they cannot possibly repay, the next thing they do is max out their credit cards in a spending binge.



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