12.31.2010 0

Obama’s Spending “Freeze”

  • On: 01/26/2011 09:06:41
  • In: Fiscal Responsibility
  • By Robert Romano

    On January 25th, Senate Minority Leader Mitch McConnell declined to criticize Barack Obama for avoiding entitlement reform in his State of the Union Address. “I’m not surprised he’s not going to say what he’s going to do on entitlements. I wouldn’t either,” he told Politico’s Mike Allen.

    “If we’re going to do anything serious on entitlements we’re not going to negotiate it in public,” McConnell said. That’s too bad. If there was a time that a serious dialogue was needed with the American people on the spending epidemic we face, with a $14 trillion national debt, this was it.

    But alas, Obama did not propose reining in the nation’s unsustainable entitlement obligations. Net spending will increase every year on end under his proposals, until one day the public treasury will no longer be able to sustain it. He merely proposed a spending freeze to so-called discretionary spending. Of course, all spending by a government is optional. Or is it?

    What the American people may not understand is that every year, money is drawn from the Treasury, and we go deeper into debt to pay for entitlement obligations whether or not Congress votes to spend the money.

    It’s called “mandatory” spending. And it is pretty much on autopilot. The faceless bureaucracy collects payroll taxes, it borrows money endlessly, and it dispenses benefits every year with increases, without any votes.

    A recent proposal by Americans for Limited Government President Bill Wilson would chop a total of $677.5 billion out of the $3.5 trillion budget. That included $460 billion in cuts to “mandatory” spending: “unemployment could be cut by $150 billion, getting back to a more limited approach (less than 6 months) totaling about $40 billion. Food stamps could be cut by $50 billion, the earned income tax credit could be eliminated saving $50 billion, and other tax credits too could be killed saving $43 billion. Medicaid could be cut by $150 billion, as could CHIP by $20 billion, by reducing eligibility (which would require repealing ObamaCare in part).”

    Wilson also called for the long-term restructuring Social Security and Medicare by phasing out the programs for Americans 50 years or younger. That’s important because even under the scenario outlined by the Social Security and Medicare trustees, the “trust funds” will run out in 2037 and 2029, respectively. Then, exploding benefits would have to come solely out of annual revenue.

    It gets worse. An editorial by TheWeek.com notes that as the entitlement programs grow, there will be little room in the budget for anything else: “Without serious structural changes in entitlement programs, mandatory spending combined with interest payments will comprise 72 percent of the 2017 budget, which increases from $3.834 trillion to $4.872 trillion.” Entitlements and interest owed on the debt will be 100 percent of revenue by 2025, warns the Simpson-Bowles fiscal responsibility commission.

    TheWeek.com’s editorial ominously cautions, “Waiting only makes the reforms more difficult and puts us deeper into the hole from which we must climb.” Which is why the American people desperately need their elected leaders to stop kicking the can and propose real budget reform now.

    The Daily Caller’s Jon Ward called McConnell’s comments “a nod to the brutal political attacks, which come from both sides but are particularly vociferous from the left, that always greet lawmakers who propose making any changes to the existing system.” In other words, it’s too politically risky to propose policies that would save the nation from certain insolvency.

    Consider that for a moment. So favored in Washington is spending money that we do not have, that it is politically inconceivable to even propose not spending it. Never mind the reprobation that awaits politicians when the Social Security and Medicare trust funds go belly up, politicians are more afraid of what will happen if they are honest about the dire fiscal emergency we will face.

    To Senator McConnell’s credit, he did urge that Congress act immediately, which is more than can be said of Obama. Speaking of the opportunity to take on “mandatory” spending, he said, “It’s right now. It’s in the next six to nine months” before the legislative branch is “overcome by the presidential campaign.” He is right.

    But somebody is going to have to put this issue on the table in order for it to be dealt with in the next six to nine months. Legislators in both houses respectively will need to introduce legislation to even get this necessary conversation started — before it’s too late.

    Robert Romano is the Senior Editor of Americans for Limited Government.

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