- - Wednesday, February 26, 2014


President Obama’s 2015 budget is due next week, and word is leaking from 1600 Pennsylvania Avenue to expect it to be very green, with higher taxes. The document isn’t just printed on recycled paper, it’s recycling the stale economics that haven’t worked since he took office more than four years ago. It will proclaim an end to the age of austerity, a curious proclamation considering there’s nothing austere about anything we’ve seen from him yet.

Mr. Obama has his foot firmly on the accelerator, blowing past the spending limits set by Congress in favor of “investments” in government education, manufacturing and job-training schemes. To “pay for” this, the president wants to punish the successful with higher taxes. That won’t come close to covering the cost of added spending because raising tax rates on high-income earners rarely raises revenues. The “1 percent” can afford the best tax lawyers in town, and the rich have the luxury of adjusting their earnings and hours, even “adjusting” where they live to minimize the taxes.

The White House has no interest in balancing income and expense. The imperative is to spend now and let a future administration worry about the effect of so much borrowing.

Mr. Obama’s latest plan suggests he has abandoned even the pretense of entitlement reform. Past budgetary submissions suggested a technical fix to the mechanism used to calculate the amount of Social Security checks. By using what’s called a “chained” consumer price index, the checks would adjust for the effect of inflation, but more modestly. The “chained” method measures the increase in the cost of goods over time by taking into account the tendency of consumers to select less expensive goods when they’re available. It’s a baby step toward reform. The expected slowdown of Social Security costs is so modest that it would have taken 75 years of “savings” to make up for the decline in Social Security balances between 2010 and 2012. That was too “austere.”

The entitlement crisis is here and now. Without major reform, the shortfalls in disability funds will be so large that benefits will have to be cut by more than 20 percent by 2016. Public debt is 73 percent of gross domestic product already, compared to 39 percent when Mr. Obama took office. Add the debt of Social Security and Medicare and the figure goes to 103 percent; this was about where Greece was five years ago. The fiscal oracles at the Congressional Budget Office foresee America’s debt soaring under every conceivable scenario. It took Greece about four years to reach default and bankruptcy. No nation, not even China, will bail out the United States.

The denizens of Capitol Hill, fortunately, are preparing to bury this presidential budget, without the obsequies, in the same graveyard where Mr. Obama’s budgets always go. Even Democrats understand that sometimes the urge to recycle is no urge at all.



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