David Brooks got it right the first time.
His New York Times column last Tuesday was a blistering critique of the Obama budget plan. He had been deceived, Brooks said. Candidate Obama spoke like a centrist, but his governing agenda, as reflected in his first budget submission to Congress, betrayed an aggressive liberalism that had to be confronted, even by moderates.
But by Friday, after some apparently very smooth talking from Team Obama, Brooks had changed his tone. The budget is trying to do too much, he maintained in Friday’s column, but the Obama administration isn’t necessarily on an ideological crusade. Moderates can work with them, he concluded.
Brooks cites four arguments used by Obama surrogates to convince him his Tuesday piece was an over-reaction.
#1: They are not on an ideological crusade, Team Obama says. They are just re-balancing policy after the excesses of the Bush years.
That may be how they view themselves, but that doesn’t make it so.
The Obama budget’s large policy shifts are focused on income redistribution, not economic growth. There is a $1 trillion tax increase on upper income households, which is used for new programs and refundable tax credits, not deficit reduction.
As Michael Boskin noted in this piece Friday, the Obama budget would increase the number of households with no income tax liability from 38% to 50%, with the tax burden falling ever more heavily on a small sliver of the population with higher incomes. To paraphrase Margaret Thatcher, you can’t increase the tax on entrepreneurship and work and expect them to increase.
#2: Their budget is not a “big government” plan.
To bolster their case, they argue that discretionary spending on domestic programs will fall from an historical average of 3.7% of GDP to 3.1% of GDP. But that number can be manipulated in any number of ways. For instance, the budget moves Pell Grants from discretionary to mandatory funding, which makes the Obama discretionary number look smaller than it really is. And some of the biggest spending in the Obama budget is not even accounted for in the discretionary category, such as the health-care plan.
It’s more accurate to look at overall spending. Over ten years, they plan to increase federal outlays by more than $3 trillion compared to a reasonable projection of current law. In 2008, before the full force of the financial crisis had hit, total federal spending was about $3 trillion. In 2013, the Obama budget would increase it to $4 trillion, a $1 trillion increase in the size of government in just five years.
#3: Republicans should like his entitlement cuts and health-care ideas.
What entitlement cuts? What health-care ideas? The budget includes only the most modest of changes. In 2008, spending on Medicare and Medicaid was $587 billion. In 2019, it will be $1.34 trillion.
The Obama team has talked incessantly about how they understand the problem of rising health-care costs. Where is their plan to do something about it? No one believes the president’s current suggestions — more information technology, better prevention, and even comparative effectiveness research — will come anywhere close to solving the problem.
Meanwhile, expectations are growing that the administration and Congress will pass a plan this year with a new subsidy program for millions of households to buy health insurance. There is ample historical evidence to suggest that the cost of this latest health-care entitlement will grow equally as rapidly as the unaffordable ones already on the books.
In the budget plan, President Obama essentially said he will work with Congress to come up with a plan to address escalating costs. Does that give anyone confidence? If anything, this Congress will turn to Medicare-style price controls, not market mechanisms, to control costs.
#4: The budget will not produce a sea of red ink.
Between 2010 and 2019, the Obama budget would add $7 trillion to the nation’s public debt, and that’s before the entire baby boom generation has signed up for Social Security and Medicare. At the end of 2008, the debt that had been accumulated over two centuries stood at $5.8 trillion.
Last November, millions of Americans who had mainly pulled the lever for Republican candidates during their lifetimes voted for Barack Obama for president, despite the fact that he had compiled a strongly liberal record in the Illinois state legislature and U.S. Senate.
Well, now we have President Obama’s first budget. Its numbers are more important than its words. And the numbers show his governing philosophy has not changed since he was a legislator.
– James C. Capretta is a fellow at the Ethics and Public Policy Center. He served as an associate director at the Office of Management and Budget from 2001 to 2004.