If you think the debt has consequences, well, these are consequential times. Our debt is now more than $16.36 trillion and growing at an ever-quickening rate. Our debt equals approximately $51,959 per person. But it’s logical to assume that most of the debt will be repaid by income taxes — and considering only 44 percent of Americans pay income taxes, that’s $142,457 per taxpayer.
What does President Obama know that we don’t? Does he believe the line (wrongly attributed to Dick Cheney) that “deficits don’t matter”? It’s true that the government is the borrower, the banker and the currency printer, all wrapped in one. So theoretically, there will always be more money to borrow. Today’s largest borrower isn’t the Chinese government, it’s the U.S. government itself.
Anyway, history and economics tell us that inflation is what will stop a self-perpetuated government spending machine. Inflation often brings political turmoil. Well, after four years of Obama spending, where’s the inflation? Where’s the political upheaval? We just had an election that affirmed the status quo. No inflation, no political upheaval so far.
In the first two months of fiscal year 2013, the federal budget deficit was $292 billion, a 24 percent increase over the same period last year. And in just these two months, outlays increased by $87 billion, or 16 percent over the 2012 budget. (We’re currently operating in the 2013 budget.)
Which brings us to the “fiscal cliff.” If we take everyone at their word and we believe going over the cliff will be a financial calamity, then it appears that House Speaker John Boehner is leading. And perhaps he’s mentoring President Obama.
What President Obama knows about the federal budget and the U.S. economy comes from on-the-job training, while Boehner has been a student, participant and leader in the American political system since he was elected to Congress in 1990. Of course, President Obama and his supporters would never allow themselves to believe, much less admit, that they need Boehner to school them on the art of the deal in Washington.
However, in politics, deceit is often an advantage. If Obama really wants to lead us off the cliff, then he’s doing a fine job, Boehner is just spinning his wheels and, so far, Republicans are getting the blame. As this Insider has reported all along, the president probably finds the aftermath of going over the cliff desirable; taxes are high, defense is slashed, more citizens are dependent on the government, and everyone is going to have to temper their ambitions when it comes to what is possible inside the American Dream.
Let’s hope Boehner and Obama are still talking. Both men have advantages and disadvantages that are useful in negotiations. Boehner is wiser in the ways of Washington and has a better command of the budget and what policies have produced economic growth in the past. But the speaker has an unruly caucus. He is not a dictator, and it won’t be easy for him to keep a healthy majority of Republicans on board with a deal that also satisfies Obama.
Obama has a big advantage in that he has to persuade only himself; he doesn’t have an unruly caucus that must vote in favor of his plan. The Senate will be easy once Obama gives the word. The White House communications machine is unrivaled and, to many in the media, Obama can do no wrong. On the other hand, Obama is burdened by a tired ideology, is ambivalent about economic growth and is biased toward feeling the free fall of flying over the cliff.
By Washington standards, I would say it’s Advantage, Obama.