Google+
Close

The Corner

The one and only.

Another Debt ‘Plan’ in the Works



Text  



The headlines regarding the White House budget office’s mid-session review, released today (a mere 48 days after the statutory deadline of July 16), are focusing on the administration’s downgraded economic forecast, which now predicts that the unemployment rate will stay above 9 percent through the 2012 election. The White House has also adjusted economic growth projections for 2011 down to 1.7 percent, compared to February’s forecast of 2.7 percent.

The reduced expectations are explained in familiar fashion:

The recession was deeper than originally reported, and the headwinds the economy has encountered are stronger than anticipated. First, revised estimates showed that the recession included the worst six-month period of contraction since quarterly data has been collected, falling at an average annualized rate of 7.8 percent in the fourth quarter of 2008 and the first quarter of 2009. Second, 2011 has seen drags on the economy in the form of a sharp rise in oil prices, the disruption to global supply chains as a result of the earthquake in Japan, a slowdown of growth in Europe, a sluggish rebound in the housing market, and uncertainty surrounding congressional action on the debt ceiling, all of which have delayed the recovery further. In sum, economic growth and job creation, while positive, have not been strong enough to bring down the unemployment rate to an acceptable level.

In other words, “It’s out of our hands.”

But I would argue that the most noteworthy (and outrageous) aspect of the report is this little nugget:

The President will recommend an ambitious, comprehensive, and balanced deficit reduction plan to Congress in September that would place the country on firm fiscal footing by the middle of this decade.

It has been nearly a year since President Obama’s own fiscal commission unveiled their “comprehensive” plan to reduce the deficit by $4 trillion over a decade. Instead of embracing that plan, the president ignored it, opting instead to release a budget so odious the Senate voted it down 97 to 0. Obama then delivered a speech in April in which he outlined a new “framework” that would allegedly reduce the deficit by $4 trillion over twelve years. But as CBO director Doug Elmendorf pointed out, “We don’t estimate speeches.” So there’s no way of knowing what was actually in the president’s new “plan,” which wasn’t even a plan as such.

Then there was the supposed “grand bargain” that Obama offered up during his debt-ceiling negotiations with House Speaker John Boehner (R., Ohio), which existed only insofar as the White House repeatedly assured us that it did (with some help from the mainstream media), since we weren’t allowed to see it. Neither were House Republicans. But rest assured, it was a really awesome plan, and the president “put everything on the table” and made some really difficult concessions. From the report:

Considering that both parties had agreed on the size of the deficit reduction necessary—$4 trillion over the next decade—there was hope that a balanced package of that size, which included both spending cuts and revenue measures, could be agreed to. In pursuit of this goal, the President called for an agreement on a bold plan that would have included many significant compromises for him and his party. Unfortunately, congressional Republicans would not agree to a package that included revenue increases. Agreement on a smaller package limited to spending cuts was finally reached over the last weekend in July, just before the Government exhausted its options for continuing to finance obligations under the existing debt limit.

Now, as it turns out, we may finally get a glimpse of this “ambitious, comprehensive and balanced” plan later this month. One might have expected that, given his commitment to a $4 trillion deficit package, Obama would have used the opportunity afforded by the mid-session review — which is often used by presidents as a chance to update or tweak their budget policies — to put down on paper the “framework” outlined in his April speech, which would only require additional deficit reduction of $1.6 trillion to $1.9 trillion over a decade on top of the $2.1 trillion to $2.4 trillion called for in the recent debt-ceiling package.

On second thought, that might have been a naïve expectation. As the report states, the update is “not meant to prejudge any specific spending or receipt proposals to be recommended by the Administration and considered by the Committee.” Which raises the question, if the administration was never planning to offer anything more than a boilerplate document, what took them so long to release it? Time and again, this president has failed to provide substantive leadership on the debt issue, and this is just the latest evidence to suggest that (a) the administration doesn’t want to address the issue, or (b) simply doesn’t have a clue what they’re doing. And those aren’t mutually exclusive.



Text