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Right Turn
Posted at 12:52 PM ET, 07/26/2011

Perspective on the debt

To hear President Obama tell it, if Republicans would only sock it to corporate jet owners, students would not face cutbacks in education loans. Reader and blogger John Wohlstetter shares this interesting analysis:

To put the corporate jet versus students juxtaposition in perspective, the most popular student aid program is the Pell Grant, named for the late Senator Claiborne Pell of Rhode Island. A look at the Department of Education budget shows that for FY 2010 Pell Grants totaled $17.5 billion and that the estimated total for FY 2012 is $36.2 billion — a 107 percent jump in two fiscal years.
Bloomberg News reports that the revenue loss to the Treasury due to the corporate jet tax break is estimated at $3 billion for the coming decade. But the President made no mention of the revival of the break in 2009 in his own stimulus bill. It is also included in the equipment first-year expensing provision of the bipartisan tax deal made by the President with Congress in December 2010.
Let’s do the math: The revenue loss for the decade due to corporate jets is one-twelfth of what Obama proposes to spend for Pell Grants alone in FY 2012 (which begins October 1, 2011). And the $300 million cost for FY2012 of the corporate jet break is less than one percent of the Pell grant amount.

The Democrats’ constant refrain is that if we’d tax billionaires and slash defense, we’d solve our fiscal problems. Let’s take the “good war” that Barack Obama supported as a candidate and for which he offered a surge (to end just in time for the election). According to the Congressional Research Service, the entire cost of the Afghanistan war since Sept. 11, 2001, has been $444 billion. That would be a little more than half of the president’s useless stimulus plan. The entire Defense Department budget for 2011 was $700 billion (far less than the stimulus). Obama has raised domestic discretionary spending in two and a half years by $128 billion, or nearly 25 percent (from $522.4 billion in 2008 to $650 billion in 2011). And two-thirds of the budget is mandatory spending, which dwarfs everything else. So let’s get real.

The point of this is that we can’t solve the debt by taxing corporate jet owners. We can’t (even if we wanted to) eliminate the entire Pentagon budget and get anywhere need the cuts we would need. We look to domestic discretionary and entitlement spending because, as Willie Sutton is often quoted as having said of banks, that’s where the money is. And the president should be honest enough to drop the apples-to-oranges nonsense and put forth his own, concrete plan that moves toward paying down our debt.

Now I don’t want to ignore some hooey being spilled on the right, either. It is becoming fashionable not only for Obama but for Senate hardline conservatives to proclaim that the bond rating agencies will downgrade our AAA credit rating. In the conservatives’ scenario, this happens if we don’t pass cut, cap and balance. First, what planet are they on? There aren’t the votes there; every adult with an IQ above room temperature can see that there are not 60 votes in the Senate for this. Second, the only bond rating agency to say it may downgrade with a debt ceiling deal of less than $4 trillion is Standard & Poor’s. (And economics reporter Jim Pethokoukis finds this highly unlikely.) What the rating agencies all have said is that with no deal, it’s very likely that the U.S. credit rating will be downgraded. So who is playing with fire: the folks trying to make a deal or the folks whose only acceptable deal is an impossible one?

Frankly, the adults in the room these days seem to be the Senate and House leaders. At least they aren’t buying the gibberish from the hard right or the White House.

By  |  12:52 PM ET, 07/26/2011

Categories:  Budget

 
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