February 12, 2013

Among the sillier positions the president has taken is the assertion that we are nearly done with debt reduction. How President Obama can assert this rubbish with a straight face while confronting a $16 trillion debt and warnings from every bipartisan commission, Medicare trustees and the Congressional Budget Office is an indication of how ensconced in the left-wing cocoon is the president.

Senator Mitch McConnell isn't buying Obama's take on the debt-Andrew Harrer/Bloomberg
Sen. Mitch McConnell isn’t buying President  Obama’s take on the debt-Andrew Harrer/Bloomberg

Neither Republicans nor Democrats take this seriously. Former Senate Budget Committee chairman Kent Conrad (D-N.D.) isn’t buying it:

To get us on a path that is declining in terms of debt as a share of gross domestic product requires a package of about $5 trillion total,” former Sen. Kent Conrad, D-N.D., told reporters during a Fix the Debt press briefing today at the National Press Club. “If you look at [the Congressional Budget Office's] most recent numbers, that’s about the size of the package that we need, somewhere in about the $5 trillion range, to get this debt going down as a share of the economy. And we’re still going to have debt, at the end of this period, publicly held debt of 70 percent of GDP. That’s 100 percent of GDP as gross debt.”

Republicans find Obama’s assertion on the debt preposterous. And they have some math on their side. The Post explains:

Deficit hawks have reacted with alarm to the administration’s position. Since a calamitous recession hit in December 2007, the amount the government owes outside investors has more than doubled, soaring from about $5 trillion to more than $11.6 trillion. By the end of this year, the debt will top $12 trillion, according to new projections from the nonpartisan Congressional Budget Office — about 76 percent of the nation’s economy.

 

Cutting an additional $1.5 trillion would indeed stabilize the debt, leaving it growing at about the same rate as the broader economy for the rest of the decade, the CBO said. However, the debt would remain above 73 percent of gross domestic product — the highest level in U.S. history except for the period after World War II.

 

That’s much higher than the 62 percent target policymakers set three years ago when Obama appointed the Bowles-Simpson fiscal commission. And because policymakers have avoided changes to the big federal health and retirement programs, the debt would start rising again after 2023 as the bulk of the baby-boom generation retires.

It would be reassuring if the moderate Democrats who assured us Obama was really concerned about a fiscal train wreck would denounce his irresponsibility and/or concede they were conned.

But the president will have a bigger problem than Republicans to worry about if he ignores the massive debt: rating firms and the bond market. In 2011 an actual deal on the debt (which gave birth to the sequestration now in contention) didn’t stop a downgrade in the U.S. credit rating. If the president suggests we are all done economizing, what economic tumult will result?

At least we know the president isn’t interested in a balanced deal on the budget, entitlement reform or spending restraint. He’s interested in maintaining the endless cycle of tax hikes, spending and borrowing. Like an addict in denial, he sees no problem with his reckless behavior; he’s convinced himself everything is perfectly fine.

It, however, is a recipe for economic disaster and a stance the vast majority of Americans reject. Interestingly, Gallup reports that 65 percent of Americans disapprove of his handling of the debt, while only 31 percent approve. (Overall, Obama’s handling of the economy is rated poorly, with only 39 percent approving and 60 percent disapproving.) Among independents, a paltry 24 percent approve of his handling of the debt.

Like the debt itself, the president’s obtuseness about the debt is not economically or politically sustainable. The only question is whether he rethinks his indifference to the debt or whether it takes another mid-term “shellacking” to knock some sense into him. I figure it will be the latter.

 

Jennifer Rubin writes the Right Turn blog for The Post, offering reported opinion from a conservative perspective.