President Obama does not care much about deficits — other than worrying that big debt might matter in his reelection campaign.
In his first three budgets combined, Obama borrowed nearly $5 trillion. Currently, the government is borrowing about 45 percent of everything that it spends. The 2012 budget that Obama proposed in February would add nearly $10 trillion to existing U.S. debt over the next ten years. It would spend $3.7 trillion in 2012 and result in the largest annual deficit in U.S. peacetime history, which is why it was rejected in the Senate by a 97–0 vote.
Under Obama, the government over the last two and a half years has borrowed on average about $4 billion each day. That staggering sum is far in excess of the $1.6 billion per day borrowed during the eight-year tenure of George W. Bush, who until Obama had borrowed more than any other peacetime president.
Apparently in Obama’s worldview there are advantages to deficits that would explain his fondness for unprecedented borrowing. In Keynesian terms, massive government red ink is supposed to foster economic prosperity by creating goods and services that the private sector purportedly cannot.
The administration certainly has created an additional 100,000 federal jobs and expanded food stamps to nearly 50 million recipients — and in the process enlarged the pool of potentially grateful constituents. Obama’s belief in the superior wisdom of the state explains why almost all the cabinet secretaries in his administration came out of state or federal government, not from private enterprise.
Massive deficits not only enable more federal hiring and entitlements, but at some point lead to higher taxes. This gorge-the-beast notion is the flip side of the Reagan-era idea of “starving the beast” of big government by cutting federal revenue through reduced taxes.
To Obama, higher taxes are not necessarily bad if they serve to redistribute income from the affluent to the less well-off — a sort of “spread the wealth” government way of addressing the supposedly inherent unfairness of private-sector compensation.
So why has Obama suddenly turned to deficit reduction?
In a word, politics: The downside of massive borrowing finally outweighed the upside of bigger government. The tea-party-inspired midterm election brought Republicans to power in the House of Representatives and scared congressional Democrats silly. That’s why Democrats in the Senate voted unanimously to reject Obama’s record-deficit 2012 budget — the sort of intervention that is the fiscal equivalent of a concerned family forcing a bingeing relative into rehab.
That political anxiety explains why Obama is now referring to his long-neglected Bowles-Simpson commission on fiscal responsibility and reform — as if the earlier public-relations move were suddenly welcome proof of the president’s long-held fiscal sobriety and sincerity.
The mega-borrowing also did not lead to the robust economic recovery of the cyclical sort that usually follows a steep recession. Unemployment is still at 9.2 percent. GDP growth remains anemic. Energy prices are still sky-high. The housing market continues to be depressed. Consumer and business confidence is flat.
Finally, it is almost impossible to find any major economist who still argues for greater deficits. Those who once advocated printing our way out of the doldrums — such as Austan Goolsbee, Peter Orszag, Christina Romer, and Larry Summers — have all left the administration, or intend to before the end of Obama’s first term. They seem more likely to assign the administration’s 2009–2011 economic record to others than claim it proudly as their own.
Note that there is no current example that might suggest that big deficit spending leads to national prosperity. The unsustainable debts of Greece, Ireland, Italy, Portugal, and Spain have nearly wrecked the European Union. Most consider a fiscally prudent Texas or Utah to be a better job creator than debt-ridden blue states such as California, Illinois, and New York. Scholars who analyzed the 2008 financial meltdown see its origins not just in Wall Street greed, but also in massive government intervention in the subprime-mortgage market and in misdirected federal efforts to ensure that bankers made loans to unqualified homebuyers.
So opposition to the president’s budget proposals amounts to more than just a know-nothing rant about no tax increases, period. The unease reflects genuine puzzlement — and, yes, anger — over a president addicted to debt, who suddenly wants to preach to others about their responsibility to pay back what he once so zealously advocated that we borrow.
In short, those in recovery rarely make good puritans.
— Victor Davis Hanson is a classicist and historian at the Hoover Institution, Stanford University, and the author, most recently, of The Father of Us All: War and History, Ancient and Modern. © 2011 Tribune Media Services, Inc.