“I’ll gladly pay you Tuesday for a hamburger today.”
—J. Wellington Wimpy
President Obama is not yet providing any details—one suspects because two and a half years into his presidency he still doesn’t have any—but he is sketching some general outlines of job and debt proposals he expects to unload on us in September. In an interview yesterday Obama said:
“I think that we’ve got to take a longer term view — how do we deal with our deficit and debt in a long-term way? If we get that under control, we can actually pay for some additional job programs in the here and now.”
Well, Mr. President, you had me, then you lost me. Best I can tell, what he wants to propose is that we cut the budget deficit and debt—notice, he didn’t say “cut spending”—in the future, and spend more on jobs programs now.
Do these people listen to themselves?
I will deal with “job creation” in tomorrow’s post, but let’s just consider the broad concept the President is expected to push. This is an administration that already jammed through a health care bill the CBO is estimating will cost over $1 trillion, and fought for passage of a “stimulus” package costing an additional nearly $800 billion. Now he’s going to press for additional as-yet undefined spending now, all while somehow getting the deficit and debt “under control” tomorrow. How, exactly, is that going to work?
Let’s assume for a second you can actually do both. Obama is missing the fundamental point those urging a reduction in the debt and deficit are making. The idea isn’t a kind of zero-sum proposal where you cut back here so you can spend there and the total remains about the same. The idea, of course, is to reduce the total amount of spending.
The larger problem is you can’t both add spending today and curtail debt and budget deficits tomorrow. Obama’s failure to come to grips with this fundamental truth highlights the fact that he has no managerial or budgeting skills or experience. I suppose that’s no surprise from a President who has never had a job or run a business or otherwise ever in his life had to handle money or be responsible for a budget.
Let me try to lay this out for you, Mr. President.
You are already spending a trillion dollars a year more than you take in. You already owe $14.5 trillion in debt—every child born in the U.S. today starts his life $47,000 in the hole. What this means, Mr. President, is you already don’t have any savings to pay down debt. Every additional dollar you spend is a dollar you don’t have, meaning it’s inherently deficit spending, and it is inherently adding to the already unmanageable debt. That’s what the CBO, your own Treasury Secretary, the Federal Reserve, and most economists mean when they refer to the current fiscal situation as being “unsustainable.” You are already in a situation that cannot carry on forever. Under these circumstances, you can’t both spend on jobs today and reduce the debt and deficit tomorrow. It’s mathematically impossible. Let me reduce it to numbers you can handle, Mr. President. Assume you owe the bank $145. You have a salary of $26, but your annual budget has you spending $37. Every year you spend $11 more than you make, which means every year you are adding to that $145 you already owe the bank. If you increase that $37 even just a little bit to, say, $38, you have increased the amount by which your spending exceeds your income. That’s your “deficit.” That increase also means you have less money to pay off what you owe–in fact, you now owe more than you did when you started. Neither the deficit nor the debt are cured tomorrow when you increase spending today; they both get worse. That’s how math works on this planet.
Even my six year old follows this.
That the President can’t get his mind around this concept tells us he’s either willfully ignorant or worse. You can’t correct a debt problem by continuing to spend. The only way to correct a debt problem is to stop spending and start using the resulting savings to pay down what you owe. Yet even as we’ve maxed out the credit cards, Obama wants to continue the spending spree while making only minimum payments, and somehow he thinks that while doing that the debt and deficit will get under control.
I find myself returning again and again to Daniel Hannan’s tongue-lashing of Gordon Brown: “The truth, [Mr. President], is that you have run out of our money.” And don’t give me this “I inherited it from Bush” crap. I don’t really care who started it or whose fault it is, this is the fact of our situation today. One of the great lessons golf teaches—I’d expect you to know this one, Mr. President, assuming you play by the rules . . . oh, who am I kidding?—is you have to play the ball where it lies, regardless of how it got there. We have to deal with our situation as we find it.
Somehow, I don’t expect that Obama is going to learn this lesson any time soon.