In his new book on the Obama economic team, Ron Suskind quotes former administration official Larry Summers complaining: “We’re home alone. There’s no adult in charge. Clinton would never have made these mistakes.”
Put aside the misbegotten nostalgia for Bill Clinton, whose new status as an elder statesman wipes from memory his bouts of reckless immaturity. The Summers comment (subsequently denied, of course) stands as the best summation of the current occupant of the White House, who constantly congratulates himself on his high-minded leadership without exercising any.
Barack Obama has prided himself on his courage in offering painful entitlement reforms behind closed doors. Cynics thought Obama’s courage would desert him as soon as he had to reveal his proposals in the light of day. After Obama’s latest budget speech, the cynics must be doing cartwheels. On Social Security? Nothing. On Medicare? He insists he’ll veto any changes in benefits unless they are coupled with tax increases that won’t pass Congress. We’re left with technical adjustments to Medicare and Medicaid.
Of $4.4 trillion in deficit reduction, $1.1 trillion of it is from inevitable reduced expenditures in Afghanistan and Iraq. That makes fully a quarter of Obama’s plan a gimmick. He gets another $1.2 trillion from the cuts enacted in the debt-limit deal. So, fully half of his bold plan is accounted for by savings already baked in the cake.
The action in Obama’s proposal is the $1.5 trillion in tax increases. When you subtract the estimated $430 billion in (highly speculative) savings from reduced interest payments over time, he wants about a 3 to 1 ratio of tax increases to new spending cuts. Because he can offer no reliable assurance that government health-care costs won’t keep escalating despite his new bureaucratic controls, the only thing certain in the Obama plan is higher taxes.
Ever since Walter Mondale’s debacle in 1984, Democrats have been chary of embracing new taxes. President Obama now wants to emblazon them on his battle flag. There’s a certain logic to it. Taxes on the rich are the only deficit-reduction measure that his base can abide, and it polls well. Obama clearly thinks that wielding Warren Buffett’s support for higher taxes on “millionaires and billionaires,” as Obama invariably puts it, is a rhetorical clincher.
Except what Obama supports is raising taxes on people who are paupers compared with the Sage of Omaha. Half of Obama’s tax increase consists of allowing the Bush tax cuts on upper-income taxpayers to expire. “Upper-income” includes couples making $250,000 a year. If Buffett wants to put his money where his mouth is, he should give away all his wealth, move with his wife to the suburbs of New York, Washington, or San Francisco, adopt a few young kids, and live on an income of $250,000 a year. Once he has to worry about expenses again, he might not appreciate being lumped with “millionaires and billionaires.”
Even the Obama tax increases are dubious. The Bush tax cuts are scheduled to expire in full at the end of next year. If President Obama plans to preserve the bulk of them on the middle class while letting only the slice on the top expire, that’s really a $2.3 trillion tax cut compared with current law. The balance of Obama’s new revenue is from loophole closings he wants as part of an epic, but unspecified, tax reform.
President Obama’s plan isn’t serious and isn’t meant to be taken seriously. It’s mood music. He merely wants something to say when asked how he’ll pay for his $447 billion jobs bill, which also has no chance of passing Congress. The most he can hope for now is shifting some of the blame for the economy. In his new guise as a populist crusader, the president thinks he can lift himself above an increasingly discredited Washington. In his transparent gamesmanship and self-evident impotence, he’s actually keeping himself mired at its level.
There’s no adult in the White House. We’re home alone.