Fiscally Sustainable Paths and Balanced Budgets Aren’t Mutually Exclusive
Here’s an idea. When you are leading a country that has $16 trillion of debt and roughly $46 trillion of unfunded liabilities for entitlement programs, it’s safe to say that getting on a “fiscally sustainable path” and balancing the budget are not mutually exclusive. On the contrary, the latter would be hugely helpful for achieving the former.
Conservatives know this, which is why Heritage Action has called for Congress to balance the budget over a period of ten years, if not sooner. This can and ought to be accomplished through real entitlement reform, real spending cuts, and tax reform that does not produce revenues above the historic average.
But if you’re just listening to the rhetoric of President Obama’s press secretary Jay Carney, you’d think balancing the budget is a bad thing. At the very least, you’re made to believe that it’s unnecessary and that only radical conservatives could possibly think otherwise.
And heaven forbid you ask him a question about entitlement reform! Only a caveman would be dull enough to dare! The Weekly Standard highlights Mr. Carney’s fury when asked whether entitlement reforms would actually make it into the President’s budget, rather than just making a fleeting appearance in the pre-budget rhetoric:
His indignation was not exactly justified — especially considering how clear he made it today that the President has no intention of balancing the budget, which would require serious entitlement reform:
The broader effort underway here is to try to, through the budget process, achieve a compromise that allows for both entitlement reform and tax reform, that produces the savings necessary to achieve that $4 trillion-plus target over 10 years of deficit reduction to put our economy on a fiscally sustainable path. And that is the president’s goal: Deficit reduction large enough to put our economy on a fiscally sustainable path so that the ratio of debt-to-GDP is below 3 percent for a period of time that would allow concurrently, through investments and other policy decisions, allow the economy to grow.
It should not be deficit reduction for deficit reduction’s sake. The goal here should be economic growth and job creation.
There are a few words and phrases that jump out here.
“Investments.” How are investments doing under an Obama presidency?
The President’s tax plan will have a damaging effect on business investment substantially by 2022, which is demonstrated in this chart:
What about the President’s investments, i.e., the places he’s funneled our taxpayer dollars? Let’s just cut to the chase.
The President’s Keynesian stimulus and investments — from transportation investments to energy investments — have failed to help the economy. His taxpayer funded green energy “investments” have been about as successful as you were in the first grade when you tried to keep that goldfish you won at the county fair alive for longer than four days.
“Policy decisions.” Have his policy decisions been that great for economic recovery? Mr. Carney is a very hopeful man, but Heritage explains what President Obama’s “policy decisions” have done for us so far:
So why is the current recovery stubbornly slow? Either the U.S. economy is terribly unlucky or some factors have been holding growth back—factors that the CBO and other forecasters have not so far incorporated.
Anti-employment policies emanating from Washington are a prime candidate, including Obamacare (which makes employees more expensive) and the perpetual extension of unemployment insurance (which stanches the urgency of finding a job). Other contributing factors include uncertainty and Europe’s ongoing depression. For policymakers in Washington, undoing the anti-employment policies of the past few years is the clearest path toward freeing the economy from its persisting mediocrity.
“Fiscally Sustainable Path.” Like Jay Carney ruthlessly reminded the reporter who dared to ask him about entitlement reform, we can’t exactly “predict the [President’s] budget.” But we can learn from the past. His 2013 budget proposal raised spending from $3.8 trillion at that time to $5.8 trillion in 2022. That’s not “fiscally sustainable.” Heritage explained back then:
Throughout the decade, outlays hold stubbornly above 22 percent of gross domestic product (GDP), more than twice the New Deal’s share of the economy in its peak years. In constant dollars, outlays are more than three times the peak of World War II.
In 2012, his budget results deliver a fourth consecutive annual deficit exceeding $1 trillion and then make it worse with another round of not-so-shovel-ready construction projects and government “investments” totaling $178 billion. Among these are the typical road, bridge, and school construction, but then they go alarmingly beyond the usual “infrastructure” arguments to fund teachers’ pay.
Mr. Carney, please stop fooling yourself, because you’re not fooling us.