President Barack Obama would lose his quiet struggle against nicotine addiction if he dispatched the Secret Service to score him a carton of Camels. So why is Obama fighting Washington’s addiction to debt by…sinking Washington deeper into debt?
On Monday, Obama correctly criticized Republicans as the "folks who presided over a doubling of the national debt…" Former President George W. Bush, largely in cahoots with GOP lawmakers, amassed $3.35 trillion in deficits from 2002-09. This disgraceful legacy has crippled Republicans from coast to coast and relegated the party to fiscal therapy for the foreseeable future.
But rather than correct the GOP’s recent debt-swelling ways, Obama is exacerbating this mess.
"Obama pledged to fix what he considers Republican governing errors, not double down on them," Heritage Foundation fiscal analyst Brian Riedl wrote Wednesday. "Adding the ‘stimulus’ bill to a realistic budget baseline yields a projected 2010 — 2017 cumulative budget deficit of $8.4 trillion – 2.5 times the size of President Bush’s deficits over the equivalent eight-year time period."
The $789 billion Obama-Pelosi-Reid-Collins-Snowe-Specter spending blitz is a bargain compared to the $2.25 trillion in fresh bailout funds that Secretary Timothy Geithner unveiled in the Treasury’s Cash Room Tuesday. This will buy America "new programs and extraordinary action," Geithner promised.
Congress must pass an omnibus appropriations bill before March 6. Cost: $400 billion.
And don’t forget the regular federal budget, which funds FBI, FDA, FTC, and hundreds of other beloved acronyms. It likely will weigh in at more than $3 trillion.
If all this stimulus worked — from 2008’s $168 billion in tax-rebate checks to the $13.35 trillion bailout-and-nationalization orgy that turned Bush’s final days pornographic — the economy would be hot and bothered. Instead, this constant stimulation functions like Viagra in reverse.
Whether you applaud this spending or consider it the latest shambles erected by America’s reckless political class, the question remains: From where will all this money come?
"There is no tooth fairy," economist and author Stephen Moore told the Manhattan Institute Wednesday. "That’s the fundamental fallacy of the Keynesian model. The money has to come from somewhere."
"The government cannot put into the economy what it first did not take out," said Americans for Tax Reform’s John Kartch. "That would be like scooping up water from one side of a lake, dumping the water into the other side of the lake, and announcing that you’ve just filled the lake."
Try this Washington accounting right now: Take your house keys from one pocket and transfer them to the other. Congratulations! You now own two homes.
To fund his continuation of Bush’s breathless spending, Obama probably will shake the tin cup and pray that lenders come running.
"Over two years, Washington is set to borrow a staggering $3.5 trillion from a shrinking global savings pool," Riedl explained. But who has $3.5 trillion these days? U.S. and foreign banks are gasping. Europe’s governments are wheezing. What will happen when China is too winded to attend Treasury’s bond auctions? Either the Fed will buy those bonds, re-enacting the aforementioned house-key trick, or the Treasury will decorate its increasingly dreary bonds by offering investors higher interest rates. Steeper interest, of course, will slam the economic brakes just as Uncle Sam floors the accelerator.
Washington also could raise taxes. This foolishly would siphon the gas tank before refilling it, while inefficiently spilling several gallons on the ground.
Why not just print enough money to pay these bills? If that worked, Zimbabwe’s annual inflation would not stand at 231 million percent.
What will happen when America’s gargantuan debt is revealed as little more than government-issued Kleenex? Dr. Larry Parks of the Foundation for the Advancement of Monetary Education warns that "our monetary system is unstable and will blow up, because there is no longer any market-based self-correcting mechanism for increasing financial leverage, increasing debt, or increasing the money supply."
It’s almost enough to make one start smoking.
(Deroy Murdock is a columnist with Scripps Howard News Service and a media fellow with the Hoover Institution on War, Revolution and Peace at Stanford University. E-mail him at deroy.Murdock(at)gmail.com)