"We’re out of money," President Obama admitted. "We’re operating in deep deficits," he said in a C-Span interview last week.
While Obama is refreshingly realistic, he resembles a man who strolls into a bar, sees that his wallet is empty, and then slaps a round of drinks for everyone onto his wheezing credit card.
Rather than use America’s rapidly deteriorating public finances to restore fiscal discipline after G.W Bush’s deplorable spend-o-rama, Obama is digging America into a deeper hole — not with a shovel, but with a backhoe. If he continues, the ensuing canyon walls will collapse and crush us.
Look how spectacularly Washington squanders your money:
— General Motors recently requested $2.6 billion in fresh bailout money. On May 22, Washington gave GM $4 billion, 154 percent of what it wanted. This gift arrived just days before GM was expected to declare bankruptcy. The Treasury might as well have deposited $4 billion in the nearest landfill.
— The so-called Bridge to Software is an $11 million taxpayer-funded project in Redmond, Washington. It will connect the east and west campuses of Microsoft — a company with $20 billion cash. Across the entire budget, such lunacy soon spells fiscal doom.
— Thanks to recession-driven revenue shortfalls and the endless Bush-Obama bailouts and stimuli, the federal deficit will explode from 2008’s $458 billion to at least $1.84 trillion in 2009. Despite April 15’s tax collections, the federal government went into deficit that month, for the first time. Washington incinerated all those hard-earned tax payments within a fortnight.
— Last year was the first in which Medicare disbursements outran revenues. Medicare is expected to go kaput in 2017, two years sooner than expected. Come 2016, Social Security checks similarly will outpace payroll taxes.
— Publicly held debt’s share of Gross Domestic Product has soared from 33 percent in 2001 to 44 percent in 2008 and will hit 77 percent in 2013, Standard & Poors forecasts. Federal IOUs total $8 trillion. Beyond that, $45 trillion in unfunded liabilities constitute a long-term Red River on the national ledger. Financial analysts thus warn that America could lose its sterling AAA bond rating, sending interest rates skyward.
Washington has greeted all of this, not by cutting outlays, but by monetizing them. As commentator Glenn Beck puts it: "We’ve gone from tax-and-spend to tax-and-print."
Obama now faces a domestic "Nixon goes to China" moment that could transform him into one of America’s finest presidents or convert him into Jimmy Carter II.
Just as Richard Nixon’s anti-Communist record gave him the latitude to re-engage Maoist China, Obama’s solid-Left credentials grant him the leeway to padlock dozens of government agencies, terminate hundreds of federal programs, and finally slay the entitlement monsters that will devour this Republic. Obama can do this without becoming paralyzed by liberal catcalls about feeding Granny crocodiles.
A few concrete steps would help Obama succeed.
— Obama should implement zero-based budgeting. Every federal commission, agency, and department should justify its spending from the first dollar up, rather than simply ladle fresh cash onto last year’s often bloated and duplicative budget.
— Each federal transfer and entitlement payment should be affluence-tested. Poor people without options should keep vital assistance. The middle class should get middling help, at best. And the wealthy finally should be told to fend for themselves — from subsidized "farmers" who inhabit Manhattan’s luxury co-ops, to millionaire seniors on subsidized pharmaceuticals, to CEOs swimming laps in bailout money.
— Finally, if Washington cannot cut the federal budget, its growth at least should not exceed inflation. According to the Heritage Foundation’s Brian Riedl, had fiscal bed wetter George W. Bush’s total expenditures merely matched inflation, $3.3 trillion would have gone unspent, averaging some $400 billion annually.
President Obama did not groom himself to become the elegant, eloquent man who steered America into a fiscal Grand Canyon. Instead, he should harness his intellect and charisma to retreat from the precipice. He has just enough time, if he U-turns right now.
(Deroy Murdock is a columnist 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)