The Bush administration said deficits didn’t matter and proceeded to rack up a record string of deficits. The Obama administration professes to believe the contrary, the president telling his Cabinet recently, "We can no longer afford to spend as if deficits do not matter … We can no longer afford to leave the hard choices for the next budget, the next administration, or the next generation."
He has an odd way of showing his concern for the deficit. New White House forecasts show higher than expected deficits: $1.8 trillion this year, almost four times the previous record set by President Bush, and $1.3 trillion next. Right now, 46 cents of every $1 the federal government spends is borrowed money.
And as for not postponing the hard choices, the White House forecasts show that, even assuming a fully recovered economy, the deficits will not dip below $500 billion a year for the next decade, meaning that, yes, the problem of the deficit will pass to the next president.
The White House argues that big spending — the Wall Street bailout, the stimulus package — is a necessary but temporary evil to jump-start the country out of recession. Even so, there’s nothing in his budgets or his economic policy speeches to indicate a serious assault on the deficit once the current crisis passes. And what additional revenues there are in his budget are earmarked to offset the cost of his health-care reforms, not deficit reduction.
Last week, Obama essayed a token round of budget cuts by asking Congress to kill or cut 121 programs for a savings of $17 billion, one-half of one percent of next year’s projected $3.4 trillion in federal spending. His proposal immediately ran into a storm of opposition on Capitol Hill, mostly from his own Democrats, as lawmakers rallied around their pet programs.
Maybe deficits really do matter to Obama but it’s fair to ask whether our new president grasps how fully the culture of spending has become institutionalized in Washington. One way or another, he will soon learn.