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Tuesday, February 2, 2010
A Budget for a European Welfare State
By Heritage Foundation @ 11:10 AM :: 4846 Views :: National News, Ethics

Last Friday, President Barack Obama accepted an invitation from House Republicans to speak and answer questions at the Republican House Issues Conference. During the Q&A period, Rep. Paul Ryan (R-WI) pressed the President:

“The spending bills that you've signed into law, the domestic discretionary spending has been increased by 84 percent. You now want to freeze spending at this elevated level beginning next year. ... So my question is, why not start freezing spending now?"

President Obama replied:

"The fact of the matter is, is that most of the increases in this year's budget, this past year's budget, were not as a consequence of policies that we initiated but instead were built in as a consequence of the automatic stabilizers that kick in because of this enormous recession. So the increase in the budget for this past year was actually predicted before I was even sworn into office and had initiated any policies. ... Now, the reason that I'm not proposing the discretionary freeze take into effect this year -- we prepared a budget for 2010, it's now going forward -- is, again, I am just listening to the consensus among people who know the economy best. And what they will say is that if you either increase taxes or significantly lowered spending when the economy remains somewhat fragile, that that would have a de-stimulative effect and potentially you'd see a lot of folks losing business, more folks potentially losing jobs. That would be a mistake when the economy has not fully taken off."

First of all, note that the President never contradicted Rep. Ryan's factual claim that discretionary spending under President Obama has increased 84%. But more importantly, notice how eagerly the President attempts to make it seem like he had no choice in the matter by shifting the blame for our nation's deficits to other administrations. Earlier in that same Q&A, the President said he did not want "to re-litigate the past." Fair enough. Our focus should be on our future policies, and the budget the Obama administration released yesterday is a great place to start. Heritage Foundation fellow Brian Riedl has completed a quick analysis of the budget released yesterday, and this is what President Obama's policies would do:

  • Permanently expand the federal government by nearly 3 percent of gross domestic product (GDP) over 2007 pre-recession levels;

  • Raise taxes on all Americans by more than $2 trillion over the next decade (counting health care reform and cap and trade);

  • Raise taxes for 3.2 million small businesses and upper-income taxpayers by an average of $300,000 over the next decade;

  • Leave permanent deficits that top $1 trillion in as late as 2020; and

  • Double the publicly held national debt to over $18 trillion.

Riedl adds:

"Before the recession, federal spending totaled $24,000 per U.S. household. President Obama would hike it to $36,000 per household by 2020 — an inflation-adjusted $12,000-per-household expansion of government."

The deficit reduction measures proposed in the President's budget are all more rhetoric than action. The Pay-as-You-Go provisions and spending freeze cover such tiny fractions of the budget and are so filled with loopholes that they are destined to be ineffectual. The President's Deficit Reduction Commission is compromised by a lack of legislative "fast track" protections, a deadline that sends recommendations to a lame duck Congress, and a complete lack of any public hearings that allow for Americans' input.

Commenting on the President Obama's budget, Rep. Ryan tells National Review Online:

"This budget presents a choice of two futures. ... This budget is about more than specific programs or policies. It is really about the American idea, and whether we want to move towards a European-style welfare state."

Or as then-California Gov. Ronald Reagan put it in a slightly different context over 40 years ago:

"This is the issue of this election: Whether we believe in our capacity for self-government or whether we abandon the American revolution and confess that a little intellectual elite in a far-distant capitol can plan our lives for us better than we can plan them ourselves."

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