Obama's Fiscal Fantasyland; Only True Keynesians Still Think We Can Spend Our Way to Prosperity
Byline: Richard W. Rahn, SPECIAL TO THE WASHINGTON TIMES
Irresponsible refers to Congress and the Obama administration - and here's why. For thousands of years, businesses, organizations, governments and even individuals have relied on a basic tool to make sure they do not spend or borrow more than they can service - it is called a budget. Yet, for the first time since 1974, when the current rules were put into effect, the U.S. House of Representatives does not intend to pass a budget resolution. The main purpose of the budget resolution is to set discretionary spending caps for the coming fiscal year.
Without a budget resolution, members of Congress are, in essence, able to spend as much money as they wish, subject only to the limitation of getting half plus one of the other members to go along with the spending proposal. The budget procedure was put in place to make sure members of Congress would not spend money as irresponsibly as many teenagers might if they were given unlimited credit cards. If teenagers were in charge of the federal budget, we might end up with a $1.5 trillion deficit this year. Ah, but we are going to have a $1.5 trillion deficit this year - and who's in charge?
In the face of the unprecedented congressional spending binge, President Obama has been asking Congress to spend even more. Not content with actively promoting the eventual bankruptcy of the United States, Mr. Obama is urging foreign leaders also to increase their government spending - which is truly bizarre. Look at the facts. All of the major European countries have been increasing government spending and deficits at unsustainable rates. The talk for the past couple of months has been about which countries would follow Greece in going over the financial cliff. Responsible economists, financial leaders and, most important, the markets have been telling European leaders they must cut government spending. Over the past couple of weeks, a number of those leaders have responsibly and courageously come forth with real spending-reduction programs. Britain's new government, despite being a coalition government, has proposed a 25 percent cut in most government departments. Can you imagine the howls from Congress and the U.S. news media if a U.S. president proposed even a 5 percent cut, though a far larger one is needed?
Mr. Obama increasingly appears to be living in a fiscal fantasyland. In his letter to the Group of 20 on June 18, the president wrote: My administration will cut the budget deficit we inherited in half by FY 2013 and work to reduce our fiscal deficit to 3 percent of [gross domestic product] by FY 2015.. The president already has put forward two budgets, including projections for the next decade, but they contain no specifics for reaching such a goal. …