The President’s Budget Speech Tomorrow

by Douglas Holtz-Eakin

“My fellow Americans, I come to you today to apologize. I now understand that budget really is policy, and my budgets have endorsed a policy of a federal debt crisis and ensuing economic ruin. I appointed a fiscal commission that delivered a clear and unwavering message: our problem is explosive federal spending and it must be reined in. Yet I have offered only programs that increase spending and avoid the reforms necessary to sustain our social safety net for the next generation. And at every juncture I have used my rhetorical skills to morph real questions about our budgetary future into an opportunity for class warfare and demagoguery. I apologize. I understand now that being elected means that you have to do the job of President: leadership. It begins today and starts with the House budget.”

Okay, it’s a pretty good fantasy, but probably not what Americans will hear. It is true that the president’s budget is a path to a destructive debt spiral, but I don’t expect the president to offer any specifics to change that trajectory.

The Bowles-Simpson Commission delivered a very simple message:

— The federal debt is a large problem that must be addressed quickly;
— The debt problem is a spending problem;
— All spending must be controlled, especially entitlement spending; and
— The road to higher revenues is tax reform.

The president will undoubtedly praise the idea of doing the real work that Bowles-Simpson envisions and that the House budget undertakes. But it is unlikely that he will put out specific Medicare and Medicaid reforms; he will probably assert again that Obamacare will bend the health-care cost curve (despite there being no evidence of this happening) so that both programs will survive. He will resist any changes to Obamacare itself, as if setting up two new entitlement programs was somehow an act of budgetary stringency.

I do expect him to offer Social Security “reform” — raising the taxable maximum — because it offers him the opportunity to raise taxes and engage in class warfare. And he will repeat his call for higher taxes on the so-called rich. But don’t expect taxes to go up before 2012. The same craven political logic that drove the lame-duck deal on income taxes and his 2012 budget submission will prevail again.

Beyond that, expect vagaries, calls on Congress, expressions of deep concern, and the full monty of teleprompter-driven eloquence. But don’t expect tough choices or leadership.

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