By: Vasko Kohlmayer
Wednesday, June 10, 2009


As Obama chides the health care and automotive industries to cut costs, his budget-busting deficits reach record levels.
Yesterday, the president called on Congress to implement Pay-As-You-Go budgeting, as he did during the 2008 campaign and Democratic Congressmen promised to do during the 2006 campaign. “The pay-as-you-go rule is very simple,” Obama said. “Congress can only spend a dollar if it saves a dollar elsewhere.” However to date, the only people tightening their belts are the industries he is strong-arming.

In his latest weekly radio address, which focused on health  care, President Obama said, “A few weeks ago, some of these improbable allies committed to cut national health care spending by two trillion dollars over the next decade.” That $2 trillion “commitment” was obtained in a meeting that took place at the White House last month. Convened by the president, it featured top players in the healthcare industry who were invited to account for their spending practices and then asked to come up with ways to cut costs. At the summit’s conclusion, the president proudly announced that those present made a “voluntary” commitment to $2 trillion in spending reductions by 2019. 

Later on, however, it emerged that the commitment was not entirely voluntary, as the participants were arm-twisted by administration officials into making their pledge. In any event, most of them do not think that they will be able to honor it in the end. Senator Chuck Grassley of Iowa described the vow as “fairy dust.” 

The futility of this particular exercise notwithstanding, the president’s effort deserves close attention, because it is part of a recurring pattern. That pattern unfolds in the following manner. Obama summons top representatives of a major industry and tells them that their spending and expenses are unsustainably high. He declares this unacceptable and then orders that significant cuts be made. In the process, the president goes as far as to point out specific items which he personally deems unnecessary and wasteful. Some of the things that have drawn his criticism so far include the use of private jets, office refurbishments, and client hospitality functions. This attention to detail is meant to be the practical outworking of Obama’s often-repeated conviction that in this time of economic hardship we all need to tighten our belts. 

But the president’s words and actions beg the question: Why doesn’t he do the same? While Obama berates everyone else for their “excessive,” “unsustainable,” and “wasteful” costs, the federal government has under his direction embarked on an unprecedented spending extravaganza.

Consider these numbers. In less than a hundred days, he managed to open the largest budget deficit in American history. The $787 billion stimulus package he signed into law in February of this year is by far the largest spending bill ever. Described as “mammoth” by the media, this amount far exceeds any single bill of FDR even with inflation factored in. Christina Romer, Obama’s close associate and chairman of the Council of Economic Advisers, boasted that the bill is “is a completely different animal in terms of size” from anything that has ever been tried before. 

Worse yet, the stimulus package was ridden with pork. The final version of the bill, for example, included $225 million for “grants for violence against women prevention and prosecution programs.” One can only wonder how a quarter of a billion dollars spent on this kind of program will help the economy. The vast array of questionable items included $2.5 billion for “research and development of renewable and efficient energy technology,” $4 billion for “loan guarantees for standard renewables” and $85 million for “Indian Health Services IT development and deployment.” Very little in the stimulus package was directed to stimulate the country’s engine of jobs and prosperity – private enterprise. Most of it will go instead toward expanding government and paying off the president’s leftwing constituencies and liberal interests groups. According to a recent analysis by Matthew Vadum, senior editor at Capital Research Center, ACORN – the radical community organizing group that has been indicted or convicted of voter fraud in seventeen states – could be eligible for $8.5 billion of stimulus money. 

According to its latest estimate issued in March, the Congressional Budget Office (CBO) projects that this year’s deficit will reach some $1.85 trillion. This is the biggest deficit ever, exceeding the previous record set in 2008 by a factor of four. Even though George W. Bush was something of a careless spender himself, Barack Obama makes him look like a model of fiscal sobriety. In a sign of how far things have gone, six months ago deficits of $1 trillion seemed unthinkable. Barely half a year into the Obama administration, they are already accepted as par for the course. To make the outlook even bleaker, the CBO’s March projections were based on optimistic assumptions. With the economy slower, unemployment higher and tax receipts lower than what the CBO had forecast, it now seems inevitable that the deficit will exceed $2 trillion by the end of this fiscal year. We can expect this to be confirmed when the regular monthly update is issued early in July. 

Revising the deficit upward has recently been something of a habit with the CBO. Earlier this year it put it at $1.2 trillion, then at $1.6 trillion, and finally at the current $1.85 trillion. Some experts predict that the budget shortfall will reach $2.5 trillion this year. Given the unparalleled spending propensities of this administration, they may well be right. It is hard to believe that in the course of a mere twelve months, the deficit will have shot past two previously-undreamed of landmarks – one and two trillion dollars. This is truly a historic achievement, but not the kind that is conducive to the economic and fiscal well-being of this country. 

By current CBO’s estimates Obama’s deficits will add some $10 trillion to our national debt in the next decade, nearly doubling it. This number, however, will also be revised upwards once the new deficit figures are factored in. Dreary as these figures are, things are likely to be worse. This is because the CBO calculations do not take into account the costs of some of the president’s most ambitious programs such as health care reform. Providing universal health insurance would effectively create the most far-reaching entitlement program in American history. The administration puts its cost at some $1.2 trillion over the next decade. Most experts, however, dismiss this figure as grossly understated. It is only enough to look at the exploding costs of Social Security and other entitlements to see how profoundly unrealistic the administration’s numbers are. But even if we take Obama’s estimate at face value, the resulting national debt would by 2019 stand at more than twice the level he inherited when he took the oath of office. 

By far the most profligate president in this nation’s history, Obama’s spending extravaganza is made especially indefensible by the fact that he is using the money we do not have. Under his direction, the federal government has been borrowing almost fifty cents out of every dollar it spends. The president has repeatedly told us that he wants to lead by example. Cutting federal spending by the same amount he required of the healthcare industry – $2 trillion – would be a good start. The savings could surely be found, since Obama has himself publicly complained of government waste. So far the president has been asking everyone else to make sacrifices. Perhaps the time has come for him to do the same.


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