Obama’s solution to deficit: spending, ObamaCare, and tax hikes
posted at 2:50 pm on April 13, 2011 by Ed Morrissey
We expected Barack Obama to offer little new in his speech on the budget; I’m not sure we expected as much repetition as we got. Bookended by rhetoric on the kind of America in which he wanted to live, Obama gave a four-step plan to confront the massive and crippling deficits ahead of us that entirely relies on the kind of proposals he’s already aired in the past. He gave little in the way of specifics, and made no mention at all of his deficit commission again. Instead of offering specifics on cuts, Obama instead offered specifics on … more spending:
The first step in our approach is to keep annual domestic spending low by building on the savings that both parties agreed to last week – a step that will save us about $750 billion over twelve years. We will make the tough cuts necessary to achieve these savings, including in programs I care about, but I will not sacrifice the core investments we need to grow and create jobs. We’ll invest in medical research and clean energy technology. We’ll invest in new roads and airports and broadband access. We will invest in education and job training. We will do what we need to compete and we will win the future.
For a budget-cutting speech, it certainly seemed that Obama was a lot more interested in defending spending than defunding government. Of course, that depends on what part of government we’re cutting. Obama spent most of his time looking at the Pentagon instead of anywhere else:
The second step in our approach is to find additional savings in our defense budget. As Commander-in-Chief, I have no greater responsibility than protecting our national security, and I will never accept cuts that compromise our ability to defend our homeland or America’s interests around the world. But as the Chairman of the Joint Chiefs, Admiral Mullen, has said, the greatest long-term threat to America’s national security is America’s debt.
Just as we must find more savings in domestic programs, we must do the same in defense. Over the last two years, Secretary Gates has courageously taken on wasteful spending, saving $400 billion in current and future spending. I believe we can do that again. We need to not only eliminate waste and improve efficiency and effectiveness, but conduct a fundamental review of America’s missions, capabilities, and our role in a changing world. I intend to work with Secretary Gates and the Joint Chiefs on this review, and I will make specific decisions about spending after it’s complete.
Obama did mention health-care spending in entitlements — but as expected, he claimed that ObamaCare has already reformed government health-care spending. He mentions no new spending reductions in this area, nor any commitment to do anything else but ObamaCare. He also mischaracterizes the GOP plan and somehow misses the fact that everyone’s paying for the system we have now already:
The third step in our approach is to further reduce health care spending in our budget. Here, the difference with the House Republican plan could not be clearer: their plan lowers the government’s health care bills by asking seniors and poor families to pay them instead. Our approach lowers the government’s health care bills by reducing the cost of health care itself.
Er, no it doesn’t. It provides Medicare recipients with $15,000 vouchers and has them use it to buy private insurance. Anyone on Medicare knows that its recipients end up paying a significant portion of medical bills now under the current system. The voucher program would allow seniors to look for programs in a competitive environment that gets better provider coverage with lower co-pays than what is currently the experience in the existing single-payer system. Either way, seniors end up paying for their medical coverage through taxes and out-of-pocket expenses.
Already, the reforms we passed in the health care law will reduce our deficit by $1 trillion. My approach would build on these reforms. We will reduce wasteful subsidies and erroneous payments. We will cut spending on prescription drugs by using Medicare’s purchasing power to drive greater efficiency and speed generic brands of medicine onto the market. We will work with governors of both parties to demand more efficiency and accountability from Medicaid. We will change the way we pay for health care – not by procedure or the number of days spent in a hospital, but with new incentives for doctors and hospitals to prevent injuries and improve results. And we will slow the growth of Medicare costs by strengthening an independent commission of doctors, nurses, medical experts and consumers who will look at all the evidence and recommend the best ways to reduce unnecessary spending while protecting access to the services seniors need.
Now, we believe the reforms we’ve proposed to strengthen Medicare and Medicaid will enable us to keep these commitments to our citizens while saving us $500 billion by 2023, and an additional one trillion dollars in the decade after that. And if we’re wrong, and Medicare costs rise faster than we expect, this approach will give the independent commission the authority to make additional savings by further improving Medicare.
But let me be absolutely clear: I will preserve these health care programs as a promise we make to each other in this society. I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs. I will not tell families with children who have disabilities that they have to fend for themselves. We will reform these programs, but we will not abandon the fundamental commitment this country has kept for generations.
Obama then got around to Social Security, but only offered a single paragraph with even less clarity than he provided on the rest of his “plan”:
That includes, by the way, our commitment to Social Security. While Social Security is not the cause of our deficit, it faces real long-term challenges in a country that is growing older. As I said in the State of the Union, both parties should work together now to strengthen Social Security for future generations. But we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market.
Most of the rest of the speech was dedicated to “spending reductions” in the tax code, his Overseas Contingency Operations/Kinetic Military Action code for “tax hikes”:
The fourth step in our approach is to reduce spending in the tax code. In December, I agreed to extend the tax cuts for the wealthiest Americans because it was the only way I could prevent a tax hike on middle-class Americans. But we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. And I refuse to renew them again.Beyond that, the tax code is also loaded up with spending on things like itemized deductions. And while I agree with the goals of many of these deductions, like homeownership or charitable giving, we cannot ignore the fact that they provide millionaires an average tax break of $75,000 while doing nothing for the typical middle-class family that doesn’t itemize.
My budget calls for limiting itemized deductions for the wealthiest 2% of Americans – a reform that would reduce the deficit by $320 billion over ten years. But to reduce the deficit, I believe we should go further. That’s why I’m calling on Congress to reform our individual tax code so that it is fair and simple – so that the amount of taxes you pay isn’t determined by what kind of accountant you can afford. I believe reform should protect the middle class, promote economic growth, and build on the Fiscal Commission’s model of reducing tax expenditures so that there is enough savings to both lower rates and lower the deficit. And as I called for in the State of the Union, we should reform our corporate tax code as well, to make our businesses and our economy more competitive.
All right — Obama wants tax deductions curtailed. But which tax deductions? He never put any specific recommendation on the table. He just says that he’s going to tell Congress to figure it out. Couldn’t he have committed to even one specific proposal, rather than just list a few possibilities? How hard would it have been to say, for example, “The home mortgage interest deduction should be limited to no more than $20,000 in a year”? Apparently, too hard for this President.
This is my approach to reduce the deficit by $4 trillion over the next twelve years. It’s an approach that achieves about $2 trillion in spending cuts across the budget. It will lower our interest payments on the debt by $1 trillion. It calls for tax reform to cut about $1 trillion in spending from the tax code. And it achieves these goals while protecting the middle class, our commitment to seniors, and our investments in the future.
If it was possible to fail to meet the already-low expectations set for this speech beforehand, Obama managed to do it. Not only did Obama fail to resurrect his own deficit commission’s plan, he offered nothing specific in response to the specifics Paul Ryan and the GOP have already laid on the table. It’s almost impossible to present a substantive criticism of the proposal because it contains nothing substantive, an impression that more and more people have of this White House.
Update: Actually, he mentioned the “Fiscal Commission” twice, three times if you count his introductions in the beginning. However, he never presented any of their ideas, except in the final reference, which uses the most ambiguous reference possible, and only to tax hikes:
I believe reform should protect the middle class, promote economic growth, and build on the Fiscal Commission’s model of reducing tax expenditures so that there is enough savings to both lower rates and lower the deficit.
“Tax code expenditures” are, of course, the “kinetic military action” code for tax hikes.