The collectivist in chief 

President Obama on Wednesday unveiled his vision to address the nation's long-term debt crisis. While he deserves credit for using his perch to draw attention to the magnitude of the problem, his proposals to raise taxes and slash military spending while doing little to address the entitlement reforms won't avert the crisis. Below, I've rounded up the good, the bad and the ugly from Obama's speech.

The good:

Just the fact that a liberal president has to make a speech about long-term debt reduction tells you how much the ground has shifted. Obama has been delaying this discussion for the past two years, and ignored it in his 2012 budget proposal, but the release of House Budget Committee Chairman's Rep. Paul Ryan's plan forced his hand.

The speech did two important things. It laid out the magnitude of the problem, noting that by 2025, just the nation's health care programs, Social Security and interest payments will eat up all our tax dollars, meaning a much worse future for America's youth. It also emphasized that there are no easy choices – that we can't have low taxes and massive social spending, that we can't solve the budget problem merely by eliminating waste and abuse, but that we need to look toward entitlement spending. It was also important for him to note that, “if we don’t make any changes at all, we won’t be able to keep our commitments to a retiring generation...”

Obama also called on additional cuts to domestic spending a simpler tax code with fewer deductions and loopholes. Both are important starting points for a discussion, but, alas...

The bad:

While at one point of the speech, Obama talked about needing to make “tough choices,” at another part of the speech, he said, “We don’t have to choose between a future of spiraling debt and one where we forfeit investments in our people and our country.” In other words, his idea of shared sacrifice doesn't involve cutting government spending to his pet projects or to seriously reforming Medicare, Medicaid and Social Security.

Obama didn't offer any proposal whatsoever on Social Security. To be fair, Ryan's budget avoided the issue too. But Obama preemptively ruled out most proposals by saying Social Security would have to be reformed, “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.” The only thing that leaves is hiking payroll taxes – which he already did to help pay for ObamaCare.

On Medicare, Obama proposed to give more power to the board of experts created by the national health care law to contain costs. In other words, a further move toward rationing, which critics have always warned would be the natural consequence of expanding the government's role in health care.

His Medicaid proposal would change the payment process to states, rewarding cost containment.

He reiterated his promise to raise taxes on the rich after 2013 by letting the Bush tax rates expire. And while he is talking about getting rid of deductions for mortgage interest and charity, he's putting money toward deficit reduction rather than making revenue neutral changes that would keep tax rates lower.

And while he promised more cuts in discretionary spending, he was short on details as to where they would come from.

When you add all of this together, it still doesn't reach the deficit target set by Ryan, or even his own Fiscal Commission. Obama claims his proposals would reduce deficits by $4 trillion, as the other plans do, but only after stretching the budget window to 12 years as opposed to the standard 10. On top of that, his estimate relies on White House budget projections, which are much rosier than the Congressional Budget Office estimates underlying the other proposals.

Obama called on slashing the military budget by $400 billion. Yet America is currently spending a relatively low percentage of its GDP on defense, and in the past, whenever we've slashed the military budget, we've come to regret it. This was true when the U.S. entered World War II, and when the nation was attacked on Sept. 11, following a decade of the so-called “peace dividend” budget cuts.


The ugly:

Obama had it right when he declared that, This debate over budgets and deficits is about more than just numbers on a page, more than just cutting and spending. It’s about the kind of future we want. It’s about the kind of country we believe in.”

Whereas the Ryan proposal would achieve cost controls by giving individuals and states more control, Obama relies on the federal government and experts imposing centralized cost controls. And Obama thinks that the way to achieve economic growth is to punish those who already pay the highest share of taxes as well as start small businesses and create wealth.

While Obama said that Americans are rugged individualists, a self-reliant people with a healthy skepticism of too much government,” in reality he outlined a collectivist vision for America's future. In Obama's America “we would not be a great country” without a cradle-to-grave welfare state, and the nation's entitlement programs that are causing the very problems that prompted his speech, are sacrosanct.

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Philip Klein

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