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Wednesday, Feb. 3, 2010

Hope in the Deep Freeze

Obama shouldn’t cut spending to appease critics

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On the eve of his first “State of the Union” address, Barack Obama confided that he would "rather be a really good one-term president than a mediocre two-term president." But his proposal to freeze domestic spending is exactly the kind of policy that could result in four years of stagnation—rewarded by an election defeat at the hands of dispirited and disillusioned voters. If he continues to surrender his mandate, he just might become a mediocre one-term president.

In Obama's remark to ABC News, there was a hint of self-righteous vanity, as if to suggest that he is already somehow exceeding his two predecessors, each of whom served two terms. Actually, he has yet to display the political moxie of either Bill Clinton or George W. Bush, both presidents who managed to push through much of their agenda—for better and worse—regardless of the circumstances they faced. By contrast, Obama has too often allowed his priorities to languish and his supporters to despair in a void of "bipartisanship."

The most troubling example yet is his sudden turn toward a spending freeze, which appears to be nothing more than pandering to the angry right. There are many reasons why this will not work as policy or politics, beginning with the nature of the proposal and concluding with its certain impact.

By exempting the military, homeland security, veterans and international affairs, the plan will affect less than one-fifth of the entire federal budget, total less than 3% annually and save about $25 billion per year over the coming decade. The president's conservative critics in Congress and the media will eagerly and easily lampoon this level of cutting as insignificant and insufficient (although the Republicans will offer no realistic alternative).

As a sop to citizens concerned about the deficit, the Obama freeze is unlikely to make any impression. It smacks of a cynical gesture designed to respond to the latest polls.

Spending Is Necessary During a Recession

Worse than the politics is the premature decision to reduce the deficit, which directly contradicts the logic of the stimulus program adopted by the president upon assuming his office and undermines the impact of that program. Small as the freeze is, the cuts in spending will nevertheless reduce economic demand at a time when unemployment, low wages and declining benefits continue to devastate the middle class and working poor.

Reducing deficits is sound policy, of course, in times of steady growth. But as Obama's own economic team understands, the "common sense" that urges us to balance the budget every year like any household actually makes no sense at all for government. Historically, America has won wars, built the nation and spread prosperity through deficit spending—and then returned to balanced budgets when deficits were no longer required to stimulate growth. Both the debt and the deficit following World War II were much higher than today in real terms, and were drastically reduced by growth rather than austerity.

At least, that is what Democrats believe—or are supposed to believe. Even the budget-balancing Democrats of the Clinton era have endorsed higher deficits during the Great Recession because there is simply no other source of economic stimulation when banks refuse to lend, consumers won't consume and businesses cut employment.

What is Obama's excuse for crushing the hopes of his supporters and forfeiting the argument to his enemies? He cannot cite rising interest rates or consumer price indexes to prove that the deficit should suddenly become his top priority. Inflation and interest rates remain reasonably stable so far—and so does stubborn unemployment, despite signs that the recession has ended. The only thing that has changed since last year's “State of the Union” address is the political situation confronting the president, to which he now responds with meek resignation.

There is no such thing as "a really good one-term president." A really good president sticks to principle, fights for progressive policy, improves people's lives and wins re-election. After one year, that is what Americans still expect of Obama. He has no right to disappoint them.

2010 Creators.com.


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