DeficitFree.com Blog
President Obama: Deficit cutter?
Written by on November 14, 2009, 02:19 PM
Examiner.com
If President Obama gets the health care bill passed, he might move onto deficit reduction next year, according to POLITICO. To put the level of spending in perspective, here is one stat about spending that really jumps out:
On the practical side, Obama has spent more money on new programs in nine months than Bill Clinton did in eight years, pushing the annual deficit to $1.4 trillion. This leaves little room for big spending initiatives.
This might mean that cap and trade is not viable, at least for next year:
For starters, the White House has not dropped plans for an aggressive global warming bill early next year that will be loaded with new spending on green technology and jobs – that would be paid for with tax increases. Democratic lobbyist Steve Elmendorf says the White House focus on deficit reduction could easily kill the cap-and-trade effort. “I think this means cap-and-trade has to go to the backburner,” he said.
The administration may have to bet on whether voters are serious about holding Congress accountable for high deficits. Hopefully,"deficit reduction" will not be a charade similar to earlier this year when Obama asked cabinet secretaries to cut $100 million apiece from their budgets, which is pocket change in the federal budget. There are probably not any significant spending cuts which could receive bipartisan support next year, and the Democratic majority seems to be in a spending mood.
The Obama administration might decide that the risk of having a steadily climbing unemployment rate trumps the risk of having high deficits, and push forward for more programs to aid the economy. From a political standpoint, that could make a lot of sense, and it is a calculation made in previous administrations. In that sense, it might be a rare area of agreement between Obama and Dick Cheney (Cheney said in 2002 that Reagan proved "deficits don't matter").
Still, the important development is not that there will be any cuts, but that some major initiatives might get delayed, and possibly put off for good. It would be wise for everyone to expect, absent an unexpectedly quick economic recovery, that deficits will stay above $1 trillion a year for the foreseeable future and that there will not be any major push to cut them next year.
President-Elect Obama, promising to cut wasteful spending in November 2008:
If President Obama gets the health care bill passed, he might move onto deficit reduction next year, according to POLITICO. To put the level of spending in perspective, here is one stat about spending that really jumps out:
On the practical side, Obama has spent more money on new programs in nine months than Bill Clinton did in eight years, pushing the annual deficit to $1.4 trillion. This leaves little room for big spending initiatives.
This might mean that cap and trade is not viable, at least for next year:
For starters, the White House has not dropped plans for an aggressive global warming bill early next year that will be loaded with new spending on green technology and jobs – that would be paid for with tax increases. Democratic lobbyist Steve Elmendorf says the White House focus on deficit reduction could easily kill the cap-and-trade effort. “I think this means cap-and-trade has to go to the backburner,” he said.
The administration may have to bet on whether voters are serious about holding Congress accountable for high deficits. Hopefully,"deficit reduction" will not be a charade similar to earlier this year when Obama asked cabinet secretaries to cut $100 million apiece from their budgets, which is pocket change in the federal budget. There are probably not any significant spending cuts which could receive bipartisan support next year, and the Democratic majority seems to be in a spending mood.
The Obama administration might decide that the risk of having a steadily climbing unemployment rate trumps the risk of having high deficits, and push forward for more programs to aid the economy. From a political standpoint, that could make a lot of sense, and it is a calculation made in previous administrations. In that sense, it might be a rare area of agreement between Obama and Dick Cheney (Cheney said in 2002 that Reagan proved "deficits don't matter").
Still, the important development is not that there will be any cuts, but that some major initiatives might get delayed, and possibly put off for good. It would be wise for everyone to expect, absent an unexpectedly quick economic recovery, that deficits will stay above $1 trillion a year for the foreseeable future and that there will not be any major push to cut them next year.
President-Elect Obama, promising to cut wasteful spending in November 2008:
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