The further to the left or the right you move, the more your lens on life distorts.

Monday, July 06, 2009

Children's Rules

There is an interesting phenomenon that has occurred repeatedly in at least a few Northeastern blue states. The electorate sends a liberal legislature to do their business, but in what might seem to be a counter-intuitive twist, elects a more fiscally conservative Governor (often a Republican) to reign them in. It’s as if the electorate’s inner child wants lots of juicy government programs, but at the same time it wants an adult to control the children in the legislature so that they don’t get too rowdy.

When I look at the massive new Federal programs being proposed by the Obama administration, particularly in the context of the current recession and the already massive debt that will weigh down any recovery, I worry that the national electorate has also indulged its inner child by electing an overwhelming Democratic majority in the Congress. But it somehow forgot to put an adult in the White House to reign them in. Hence, we see irresponsible spending proposals totaling trillions of dollars, with no suggestion as to how to pay for them.

Fred Hiatt, the Editor of The Washington Post’s opinion page, and certainly no enemy of Barack Obama, comments of this situation:
"The systematic widening of budget shortfalls projected under CBO's [the non-partisan Congressional Budget Office] long-term scenarios has never been observed in U.S. history," the CBO pointed out in its usual dry style. And: "All in all, the U.S. economy could contract sharply for a long period."

Obama's response has been to acknowledge the seriousness of the problem -- and make it worse. I'm not talking about his record-breaking stimulus plan, which was essential (if not ideally shaped) given the recession he also inherited. Rather, it is Obama's long-term budget that would more than double the projected deficit over the next 10 years, to $9 trillion, by extending most of the Bush tax cuts and limiting the alternative minimum tax while creating new programs and entitlements (to college tuition scholarships, for example) and refusing to cut back on existing ones.

And that's not to mention his top priority, universal access to health care. Obama has said that reform must be paid for, and he hopes it will lead to a slowing in the growth of health-care costs. That would hugely improve the long-term budget outlook.

But the prospects of cost control are tenuous, experimental, distant and politically fraught; by comparison, creating an expensive new entitlement is easy. [emphasis mine] Obama has proposed to pay for part of universal access by collecting more income tax from the wealthy, which would make the existing deficit that much harder to close. The cost of the entitlement could rise more quickly than the revenue paying for it. There is a good chance, in other words, that whatever emerges from Congress this summer will worsen the budget prognosis.

I’d be less than honest if I didn’t admit that I’m worried about the future, and it has nothing to due with vacuous claims that Cap and Trade will somehow “save the planet” or that universal health care will magically reduce the federal deficit while at the same time improving the economy and business climate – all without raising taxes on any but “the rich.”

I’m worried because with each passing month, it appears that children—full of good intentions and idealism—are running the government. The problem is that those good intentions and idealism have to be tempered by adult common sense. You know, by real grown-ups who recognize that nothing is free, and sometimes the best approach is to do a little less than you’d like because you really can’t foresee the unintended consequences of doing it all.

No worries though. My friends keep telling me that Barack Obama is a really smart guy, and he has it all figured out. Hope so.