Sen. Jeff Sessions (R., Ala.), ranking member on the Senate Budget Committee, has said the president’s jobs plan — with its $450 billion price tag — “makes a mockery of the recent debt-limit deal.” He’s right.
More spending, more debt: The Budget Control Act passed in August called for $917 billion in deficit reduction spread out over the next decade. Most of that, however, is slated to take place in latter years, with just $7 billion in cuts set to occur next year. The plan President Obama is proposing would spend $450 billion now — money that would have to be borrowed now — thus dramatically increasing the deficit now. The total cost of the plan would not only wipe out the $7 billion in savings scheduled for next year, it would eat up nearly half of the $917 billion in long-term savings, which is still a largely speculative figure at this point, given the fact that future Congresses could simply call the whole thing off if they so pleased. When you take into account the additional interest payments on that $450 billion, the price tag grows considerably.
Stimulus 2.0: Not only is the president’s plan merely a rehash of the first stimulus package, which failed spectacularly. It is actually more expensive in annual terms. The original stimulus cost $800 billion but was spread out over two years. Obama’s new plan would spend more than half that in one year.
“Paid for”? But how? And when? “The American Jobs Act will not add to the deficit,” the president said Thursday. “It will be paid for. And here’s how.” Those hoping for a detailed proposal were left wanting. Instead, Obama passed the buck to Congress — specifically the twelve-member supercommittee created in the Budget Control Act — urging them to find additional savings on top of the $1.5 trillion (over ten years) specified in the bill. The supercommittee won’t put forward a proposal until late November, yet Obama wants Congress to pass his jobs bill immediately. An Associated Press fact check rightly describes Obama’s claim that his plan will be paid for as “a highly iffy proposition.”
It will only be paid for if a committee he can’t control does his bidding, if Congress puts that into law and if leaders in the future – the ones who will feel the fiscal pinch of his proposals – don’t roll it back. . . .
White House aides suggested that new deficit spending in the near term to try to promote job creation would be paid for in the future — the “out years,” in legislative jargon — but they did not specify what would be cut or what revenues they would use. . .
Essentially, the jobs plan is an IOU from a president and lawmakers who may not even be in office down the road when the bills come due. . . .
It’s hard to see how the program would not raise the deficit over the next year or two because most of the envisioned spending cuts and tax increases are designed to come later rather than now, when they could jeopardize the fragile recovery. Deficits are calculated for individual years. The accumulation of years of deficit spending has produced a national debt headed toward $15 trillion. Perhaps Obama meant to say that, in the long run, his hoped-for programs would not further increase the national debt, not annual deficits.
In other words, Congress might decide to “pay” for it later, if they feel like it. Good to know.