The New York Times is happily reporting, with credulity, that the President plans to “slash deficit, despite stimulus spending.”. The Washington Post reports on his “stern speech,” which rapped the Bush administration for leaving Obama with a record deficit. Nevermind that large parts of that deficit were incurred due to TARP, which Obama supported, and a 2008 stimulus plan, which Obama criticized for not costing enough. But despite Obama’s pretensions to “fiscal responsibility,” there are some who dare doubt the tax-and-spender’s ability to deliver. For one, the non-partisan Tax Policy Center predicts:
In 2009, the federal deficit will be larger as a share of the economy than at any time since World War II. The current deficit is due in part to economic weakness and the stimulus, and in part to policy choices made in the past. What is more troubling is that, under what we view as optimistic assumptions, the deficit is projected to average at least $1 trillion per year for the 10 years after 2009, even if the economy returns to full employment and the stimulus package is allowed to expire in two years. The longer-run picture is even bleaker. We estimate a fiscal gap – the immediate and permanent increase in taxes or reduction in spending that would keep the long-term debt/GDP ratio at its current level -about 7-9 percent of GDP, or between $1 trillion and $1.3 trillion per year in current dollars.
Economist Jeffrey Miron of Harvard called Obama’s proposed goal “wildly optimistic:”
Most of the savings would come from spending less on the war in Iraq, streamlining government and raising taxes on those who make more than $250,000, an administration official told CNN. “First, tax increases will probably not produce as much revenue as being forecast, and second, he hasn’t really touched the two really important programs that account for a huge fraction of our future liabilities … Social Security and Medicare,” Miron said Monday on CNN’s “American Morning.” “Unless he does something about those, he’s just kicking a can down the road,” he said.
Consider the can kicked. Meanwhile, any of you worried about oversight of the stimulus spending, worry no more!
President Obama has turned to his own vice president to oversee implementation of the $787 billion economic stimulus package, part of which will be available this week for state Medicaid programs. Vice President Joe Biden, in his new role, would meet regularly with key members of the Cabinet, governors and mayor to make sure their efforts are speedy and effective. He is expected to make regular reports to the president that will be posted online at www.recovery.gov.
In the words of late-80s advertising and pop-culture references, “Joe knows spending.”
