The announcement that President Obama was going to adopt a new deficit-busting stance next year was met with a good bit of derision.
But you can’t propose a budget that would double the national debt in a decade, rack up $176 billion a month in deficit spending, pound the table for a $1.3 trillion health care plan and expect to be taken seriously on spending.
Even so, the White House is clear: in the 2010 State of the Union, Obama will preach a new gospel of fiscal restraint.
The idea of Obama as deficit hawk will be hard to swallow, even for a nation so credulous that only recently have voters come to question the wisdom of spending trillions of dollars on a quixotic effort to change the climate.
But by the end of January, after the president has talked enough times about his laser focus on spending, what seems absurd now will only seem improbable.
The arguments will be the usual ones from the Obama White House: It’s Bush’s fault and the economic crisis demanded it. No matter that the improvident budgets of the Bush era look restrained compared to the frantic spending of 2009. And no matter that Obama has passed up every chance to enforce fiscal discipline, except on the military.
Obama’s stimulus package was a cash dump for Democratic interest groups, and the president has greeted earmark-stuffed spending bills with open arms.
But before he takes aim at the exploding deficit, the president is first going to turn his laser beam on the issue of unemployment. He’s going to hold a White House summit next month because one of every six members of the work force is unemployed or can only find a part-time job.
And before he turns on the unemployment laser, the president is going to keep his health care zapper on high for 38 more days in order to try to pass the Rube Goldberg legislation soldered together by Nancy Pelosi and Harry Reid.
Oh, and don’t forget Obama’s laser focus on revamping the goals for the Afghan war. That beam has been hot for about 10 weeks now, not counting the time spent before the old new Afghan strategy was announced last March, and may soon burn through the administration’s foggy thinking and produce a strategy that could take effect next year.
That’s more beams than you get in a “Star Wars” movie. But it’s like one of those dreadful prequels that George Lucas made after he was too rich to be edited: all special effects and no plot.
So why would the president add deficit reduction to his space opera right now?
The president may have literally bowed down to the emperor of Japan, but it’s the Chinese government to which our policies are increasingly in a state of obeisance.
The U.S. government owes Chinese banks about $922 billion, and Obama needs them to keep floating us more and more credit.
The Chinese, meanwhile, are on the verge of a credit crisis of their own.
The nation managed an 8.9 percent growth rate in the third quarter while we were ecstatic just to be in positive territory. To do it, China has been juicing its economy with the abandon of Jose Canseco pumping steroids.
Aside from printing money at a pace that would make even Ben Bernanke blush, the Chinese government has been making huge domestic loans — $1.27 trillion from January to September, a 136 percent increase over the same period last year.
The Chinese credit bubble has inflated so big and so fast that many economists are starting to warn global investors about a coming crash. While the United States had strong enough fundamentals to limp out of our credit bust, still dysfunctional China might be set back for decades.
If China is forced to get its own fiscal house in order, it would be big trouble for our debt-dependent government. As Obama meets with Chinese leaders this week, the out-of-control U.S. deficit will be the backdrop to every conversation — human rights, pollution, trade policy and everything else. If China trims Obama’s line of credit, the U.S. will have to increase the interest rates we pay on loans to stay afloat. High interest rates in a weak economy equal double-dip recession.
Obama may have thrilled his moderate supporters still clinging to the belief that the competent, pragmatic president they promised us is just around the corner. But the real audience for the fiscal hawk talk was in Beijing.
Chris Stirewalt is the political editor of The Washington Examiner. He can be reached at [email protected]
