The deficit is down, so President Obama is congratulating himself for a job well done. “All kinds of good stuff is happening,” the president said last week. “I mean, we have cut our deficit by more than half.”
At $486 billion, the deficit has indeed declined, but from the $1.4 trillion peak achieved in Mr. Obama’s stimulus-fueled first year in office. He can hardly celebrate cutting in half what he first tripled. Today’s deficit is still higher than it was in George W.’s last year in office. In fact, Mr. Obama’s cumulative deficits add up to $3.5 trillion more than the 2008 level of deficits.
Credit for this year’s not-as-bad-as-it-could-be news goes to the modest slowdown in spending growth, the result of the sequestration and House Speaker John A. Boehner’s insistence on modest spending restraint. Sequestration is not an honest way to get spending under control, but it was all that was available to the Republicans. Tax increases have further increased the flow of cash into the Treasury at the expense of economic growth.
The nonpartisan Congressional Budget Office warns that this is a temporary lull and that the deficit storm will return in full fury next year, reaching $600 billion under the most realistic assumptions. The deficit will keep going up because the politicians won’t do anything about the entitlements that drive the deficit wider.
More and more spending is proceeding as though on autopilot. Obligations to programs like Social Security and various health insurance programs continue to rise, consuming an ever greater share of the available budget. Mandatory spending will grow four times as fast as discretionary spending. Soon Congress will have no options left for “gentle” restraint. Every dollar the government spends has to come from somewhere — either from taxes today, or from borrowing, which must eventually be paid by taxes in the future.
At some point, there must be a consensus decision by grown-ups that the government tries to do too much. The accountants at the Congressional Budget Office express this with the warning that America is on an “unsustainable fiscal path.” Yet timid politicians are afraid to act. They’re afraid they’ll lose the plush of the parlor car if they evict their constituents from the gravy train.
Someone must eventually have the courage to say enough is enough. So far, that person has not been Barack Obama. The national debt — the figure that combines the public debt with the debt of Social Security and Medicare — is $17.9 trillion and rising rapidly. Mr. Obama can’t crow about “deficit reduction” until he actually starts reducing the debt.