Thoughts on Obama’s Budget Address

First off, on the whole, I thought the speech was well crafted and well delivered. I know that most conservatives cringe when I say this, but I think that the Democrats have found their Ronald Reagan. Obama’s ability to communicate is unmatched in anything we have witnessed in American politics over the last 20 years. One of the amazing things about the modern American presidency is the amount of power that can be wielded in the office despite the fact that the office has very little power given to it by the Constitution. This is due to the fact the president can use the “bully pulpit” to advocate for his position. The reason that Reagan and, to a lesser extant, Clinton were so effective was their ability to be persuasive to the American people and, by extension, to Congress. One of George W. Bush’s weaknesses was his inability to effectively articulate his argument – a point not lost on the late night comics.

Obama is such a strong communicator that it is as though he is trying to inspire us out of our current condition much the way Reagan did in the early 1980’s. In fact, I read an interesting article today by Howard Fineman of Newsweek and MSNBC, where he draws this parallel. Fineman’s cautionary tale (and one that I echo) is that while President Reagan did inspire us out of the economic malaise of the late 1970’s and early 1980’s, he never cut spending or got the deficit under control after we recovered. If (& when) we do recover from the current recession, it will be President Obama’s difficult task to try and cut the deficit.

Which brings me to the details of the speech. If you read my post on Tuesday, you will know that I was looking forward to President Obama providing some detail on his pledge to cut the deficit in half by the end of his first term. By my count, he gave eight different ways he was going to do this. They were:

1. Eliminate education programs that don’t work
2. Eliminate payments to agri-business companies that don’t need them
3. Eliminate no bid contracts which wasted billions in Iraq
4. Reform defense spending to stop paying for Cold War weapons we don’t use
5. Eliminate waste, fraud & abuse in the Medicare program
6. Eliminate tax breaks for companies that ship job overseas
7. Eliminate tax breaks for wealthiest 2 percent of Americans
8. Reform in Medicare and Medicaid through comprehensive health care reform which will bring about long term savings
   

Another interesting point he made was what he referred to as the “Deficit of Trust” we have in government when it comes to spending. Along these lines, he is advocating openness and honesty in budgeting, which includes doing ten year projections and including the cost of both wars in our budget projections. The significance of the ten year projections relates to PAYGO, which those of you have read my writing before know, I am a big supporter of. In the early part of this decade, one of the “tricks” that the republicans used to avoid PAYGO was to limit the time of certain spending projects or tax cuts in order to avoid PAYGO which requires an equal offset for every spending increase or tax cut.

Earlier today, President Obama submitted the actual proposed budget to Congress. The total price tag = $4 Trillion. Yes, you read that right. It projects a deficit of $1.75 Trillion. Just for some reference, last year’s budget was $3.1 Trillion with a deficit of $1.3 Trillion. Some of the increases are due to the President’s pledge to be more honest with the items stated above, but make no doubt about it, there are definite increases.

All in all, I thought the President’s address set a perfect tone for difficult times. It also provided quite a few details on cutting the budget, which is what I was looking for. However, as they say, the devil is in the details and I was disappointed when I saw the price tag of the budget that came out today. The bottom line is that we will only know in time whether President Obama will be able to make good on his promise to cut the deficit or whether he will fall prey to the same trap that President Reagan did in allowing the deficit to soar as high as his oratory.